Petition for Writ of Certiorari — Six Flags Over Georgia, Ltd. v. Brennan

Supreme Court brief1973

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—_ 5° . TILED

\? EILE COPY MAY 29 1978

| MICHAEL RODAK, JRC

In The

Supreme Court of the United States

October Term 1972

SIX FLAGS OVER GEORGIA, LTD.., and

GREAT SOUTHWEST ATLANTA CORP.,

Petitioners

PETER J. BRENNAN, Secretary of

Labor, United States Department of Labor,

Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

ARTHUR J. RIGGS

JOHNSON, BROMBERG. LEEDS &

RIGGS,

ISth Floor, 211 N. Ervay.

Dallas, Texas 75201

Counsel for Petitioners

INDEX

Page

RE eT TN TE NR TD l

ERE TRIED EONS NE ES Re nn Ne 2

Ee re eee WB snc ssncccsecssescncenssescsecctonses 2

UI I cae cis alist couacel 3

PRAT Ree CO WOU CAR oon oac a ccevivcceeccccvcccceccscscoces 4

REASONS FOR GRANTING THE WRIT...................... 8

a 18

APPENDIX **A*’°—OPINIONS IN THE LOWER

SREP TEST OR RISE RCE CR Paras a OR IC a 19

APPENDIX **B’’-—STATUTORY PROVISIONS............ 34

APPENDIX **C’’—OPINION OF U. S. COURT

OF APPEALS FOR THE FIFTH CIR-

CUIT—

HODGSON V. COLONNADES. INC..

Et..

WE PE Mivincncgchadevinensarepicunscsinunnecni’ 45

INDEX OF CITATIONS

Dases:

4. H. Phillips, Inc. v. Walling,

ee A caine acicbbekanicisichanneesanentcsewontsts 15

Addison et al v. Holly Hill Fruit Products,

ne TE 8.9

Jodgson v. Colonnades, Inc., 472 F. 2d 42

ns Seria cetenanianduniichiinilaiiicenckwnenescats 5,7. 8, 15

Kirschbaum Co. v. Walling, 316 U.S. S17,

iat eilontniaseraitncusianernibinanmniaksdneuiineaeneaenreeonrcceoes 8

AcComb v. Hunt Foods, Inc., 167 F. 2d, 905

(CA 9, 1948), cert. den. 335 U.S. 845 (1948) ...........000.. 11

Mitchell v. Stinson, 217 F. 2d 210

il acs ace naremceipaiied 12

Malling v. Connecticut Co., 62 F. Supp. 733

(D.C. Conn. 1945), affirmed 154 F. 2d, 552

(CA 2, 1946), cert. den. 329 U.S. 667 (1947) 000... 13

NE sialisaiciacaiil

Statutes and Regulations:

Nc ETD cap vokissadacanienuiseisscisdtpindiwecboacis essen: 2

Fair Labor Standards Act of 1938, Public

Law 89-601, C. 676. 75th Cong., 3rd Sess..

52 Stat. 1060, as amended, 29 U.S.

a I occ emer ee a irda 3

EC SRE AIDE iat MSc iT sels te ESE SOR 8

a 2 Oe ea 4, 18

I a a eee, Sate as 7

SEER ee RRR De DEER MERE LURAY Pict a) el Laer 18

NS aE NCR RA RT OAS HORS MOP Ne CIOS, .

Sy BAITS ETE RRR ST TRE RT SENN a en 8

I a ie ee 16

ES RTE ae, 8) ee

REN AANA AE MN eI RON ER Rr? 4

I 8 i eo eee ee 3

een

I hd ot Ae 4

LEI aT hc PPD EN MCRAE MRS, 4

2 SRAER Ai eos EST Seen Oe TT Pe eT EE Lee 4

Miscellaneous:

Administrator of Wage and Hour Division

interpretative Bulletin No. 6................ccccssccccsseessceess 13

C.C.H. Labor Law Reporter, | Wages

A I i ne a naauedianesas 15

yg 8 Reber en aieli RRR pees len DO eee ae AA: 14

UPI TE pose OO cc te 14

HR Report No. 75, 87th Congress, Ist Session,

I i da re et 7

Errata

Statement "(Exhibit A Omitted)"

appearing at p. 33 should appear at p. 29.

ens , ; PL RAG CAI

ake se ee

a aa

In The

Supreme Court of the United States

October Term, 1972

No.

SIX FLAGS OVER GEORGIA, LTD.. and

GREAT SOUTHWEST ATLANTA CORP..,

Petitioners

Vv.

PETER J. BRENNAN, Secretary of Labor,

United States Department of Labor,

Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

The Petitioners pray that a Writ of Certiorari issue to

review the judgment and opinion of the United States Court

of Appeals for the Fifth Circuit entered in the above case

on February 22, 1973.

OPINIONS BELOW

The opinion of the District Court for the Northern Dis-

trict of Georgia is unreported and is set forth at pages 45-50

of the printed Appendix! and Appendix *‘A*’ hereto. The

opinion of the Court of Appeals for the Fifth Circuit, as

subsequently supplemented, is likewise set forth in Appen-

dix ‘‘A’’ hereto and is reported in 474 F. 2d 18 and in —~

F. 2d —.

JURISDICTION

The judgment of the Court of Appeals was entered Feb-

ruary 22, 1973. A supplement to its opinion together with

the denial of a timely petition for rehearing en banc was

entered April 10, 1973; this petition for certiorari is filed

within ninety (90) days of that date. The jurisdiction of this

Court is invoked under 28 U.S.C. §1254(1).

QUESTIONS PRESENTED

(1) Where an exemption under the Fair Labor Standards

Act of 1938, as amended, applies by its specific terms to

any employee employed by a particular type of business

establishment, may such an exemption nevertheless be con-

strued to apply only to such employee while he performs

certain types of work for such business establishment?

Specifically, is all construction and reconstruction work

performed by the employees of an exempt business estab-

lishment for such establishment nevertheless to be consid-

ered nonexempt work?

(2) Under what circumstances may a court by inter-

pretation alter the plain and unambiguous language of the

statutory exemption provisions of the Fair Labor Standards

Act to reach what it feels is a desirable social result?

1. References to the printed Appendix are referred to throughout this Petition by

the letter “R™’.

STATUTES INVOLVED

Pertinent provisions of the Fair Labor Standards Act of

1938 Public Law 89-601, C. 676, 75th Cong., 3rd Sess., 52

Stat. 1060, as amended, 29 U.S. Code §201-219, are set

forth in Appendix **B’’, infra. The provisions particularly

involved in this case are contained in Section 13(a)(3) which

reads as follows:

‘*13(a) The provisions of Section 6. . .and Section 7

(governing Overtime and minimum wage) shall not ap-

ply with respect to— ...

**(3) any employee employed by an estab-

lishment which is an amusement or recreational

establishment, if (A) it does not operate for more

than seven months in any calendar year, or (B)

during the preceding calendar year, its average

receipts for any six months of such year were not

more than 33 4/3 per centum of its average

receipts for the other six months of such year; or

Other provisions of the Act which involve a common or

similar question of statutory construction are Section 13(a)

(9) which states that the overtime and minimum wage provi-

sions of the Act shall not apply to:

‘(9) any employee employed by an estab-

lishment which is a motion picture theater: or”’

Section 13(b)(8) which states that the overtime provisions

of the Act shall not apply to:

*(8) any employee employed by an _ estab-

lishment which is a hotel, motel, or restaurant; or

any employee who (A) is employed by an estab-

lishment which is an institution (other than a hos-

pital) primarily engaged in the care of the sick, the

alee onl

aged, or the mentally ill or defective who reside

on the premises, and (B) receives compensation

for employment in excess of forty-eight hours in

any workweek at a rate not iess than one and one-

half times the regular rate at which he is em-

ployed; or”

Section 13(b)(19) which staies that the overtime provi-

sions of the Act shall not apply to:

**(19) any employee of a bowling establishment

if such employee receives compensation for em-

ployment in excess of forty-eight hours in the

workweek at a rate not less than one and one-half

times the regular rate at which he is employed.”

See also Sections 13(a)(2) and (4) with respect to the re-

tail and service establishment exemption.

STATEMENT OF THE CASE

Suit was brought by the Secretary of Labor (hereinafter

called the “‘Secretary™’) against Petitioners to enjoin certain

alleged violations of the Fair Labor Standards Act of 1938,

as amended, and to compel the payment of overtime to

certain employees together with interest thereon: jurisdic-

tion was duly involved (29 U.S.C... §215 and 217). Petition-

ers answered setting up the minimum wage and overtime

exemption of Section 13(a)(3) of the Act [29 U.S.C. 213(a)

(3)] as an affirmative and controlling defense. After inter-

rogatories by the Secretary and answers thereto hy Petition-

ers. Petitioners filed a Motion fer Summary Judgment

supported by the affidavit of Wayne H. Gallagher. « Vice-

President (R 16-37). the Secretary filed a Cross-Motion for

Summary Judgment and the case went to the District Court

RePacnats

on agreed facts and the following statement of the issue to

be decided (R 44):

‘The sole question for decision is as to whether or

not this exemption [§13(a)(3)] applies to employees of

the amusement park establishment during workweeks

in which they spend all or part of their time assisting in

the erection of buildings, rides, towers, fences. signs.

driveways, walkways, parking lots, or other struc-

tures. . . at the place of business known as Six Flags

Over Georgia and are not paid time and one-half their

regular rate of pay for all hours worked over 40 in a

workweek, the parties are in agreement that otherwise

the exemption applies.”’

By order with accompanying findings of fact and con-

clusions of law (R 45-50 and Appendix ‘*‘A’’ hereto) the

District Court held as a matter of law that the activities in

question are not ‘‘characteristic of amusement park opera-

tions or the activities of amusement park employees”’ (a

proposition which the Court of Appeals upheld in its sup-

plemental opinion of April 10), that ‘‘it is the nature of the

work performed which is controlling’ (R 48) and gave judg-

ment for the Secretary.

The Court of Appeals affirmed per curiam stating:

“It is the character of the work, not the source of

the remuneration, that controls .. . The nature of the

Work is what gives rise for the need for an exemption:

the exemption is not a subsidy accorded to an em-

ployer because of his principal activities”’.

For this proposition the Court cited its very recent case

of Hodgson v. Colonnades, Inc., 472 F. 2d 42 (C.A. 5,

1973), involving substantially the same interpretation with

respect to the 13(b)(8) exemption as applied to hotels [29

PON elie SOO

U.S.C. §213(b(8)]. Copy of this opinion is attached as Ap-

pendix **C”’.

The uncontroverted facts are set forth in Mr. Gallagher's

affidavit (R 16-37) and may be summarized as follows:

One of the Petitioners, Great Southwest Atlanta Corp.,

operates an amusement park establishment near Atlanta,

Georgia, known as Six Flags Over Georgia. This is admit-

tedly a seasonal amusement park establishment within the

meaning of the 13(a)(3) Exemption to the Fair Labor Stan-

dards Act. The permanent staff includes a regular main-

tenance crew of some 100 persons consisting of mechanics,

fiberglass men, electricians, carpenters, painters, landscape

men, general labor, animation men, plumbers, sound men,

artists, sign painters and janitors. All of such employees are

employed exclusively in connection with the operation of

the Six Flags Over Georgia amusement park. }

In reliance upon the clear language of the 13(a)(3) exemp-

tion, the Company's labor contract with the Carpenter's

Union provides for overtime after 50 hours during certain

seasons of the year and this same condition applies at Peti- |

tioners’ sister parks of Six Flags over Texas and Six Flags

over Mid-America.

The primary duty of the park’s maintenance crew is the

repair and maintenance of the existing park establishment.

Large numbers of people attend the park and this requires

constant activity by the maintenance crew to maintain the

park as a safe and pleasant public attraction. As a part of

this work and to update park entertainment, new rides are

installed. old ones are reworked. new structures are built,

—"

and old structures are rehabilitated, moved and refurbished,

new fences are put up, and new walkways are put in. A

large amount of this work is contracted out. However,

some of the park maintenance crew assist or participate in

those types of work which the Secretary deems to be con-

struction or reconstruction of park establishment facilities

as contrasted with repair and maintenance of such facilities.

The Secretary contends that the 13(a)(3) amusement park

exemption does not apply to employees during workweeks

in which they do construction or reconstruction work and

during which they admittedly do not receive overtime com-

pensation for all hours worked over 40 in a workweek.2

The District Court and the Court of Appeals, as above

indicated, affirmed the Secretary’s position on the broad

2. While the basis of decision of the Courts below is far broader, the principal

contention of the Secretary was that in the light of Section 3(sX3) of the Act [29

U.S.C. 203(sX3)] which covers enterprises

“engaged in the business of construction or reconstruction, or both”

All construction and reconstruction work is covered regardless of the business

establishment exemptions. This view was supported by the Court of Appeals for

the Fifth Circuit in Hodgson v. Colonnades, Inc. 472 F. 2d 42, 48-49 (CAS, 1973).

However, it is clear that Congress in referring to the “‘business of construction or

reconstruction” was using the term in the normal sense of a construction firm or a

construction company and there is no indication that an exempt business estab-

lishment that performs incidental construction activities for itself is engaged in the

business of construction. Thus, in discussing the original provision in the 1961

amendments the House of Representatives Labor Committee Report (the almost

identical language appears in the Senate Labor Committee Report) states:

“The Committee believes that difficulty could arise in applying the con-

cepts of ‘establishment’ and ‘sales* as contained in the bill as introduced, to

the Construction Industry which performs its work under contracts and has

employees of its contractors at many different job sites. The Committee has

deliberately refrained from using these terms in section 3.5). [Later to

become 3(s)(3).] Under the bill it is clear that if a construction contractor is

engaged in construction activities at a number of construction sites, all of

these activities will be considered as being performed for the enterprise.

and all the employees will come under the Act if the enterprise has an

annual volume of business of $350,000 or more.“ [HR Report No. 75, 87th

Congress. Ist Session, March 13, 1961: Emphasis supplied].

price. mua

general principle that the character of the work determines

all Section 13 exemptions even where the exemption applies

by its specific terms to all employees employed by a certain

type of business establishment.

REASONS FOR GRANTING WRIT

1. Conflict in standards of interpretation to be applied in

connection with the statutory exemptions.

This decision and the court’s earlier decision in Hodgson

v. Colonnades, Inc., 472 F. 2d 42, 46 (CA 5, 1973) are in

direct conflict with the standards of construction of the ex-

emption provisions announced by this Court in Addison et

al v. Holly Hill Fruit Products, Inc., 322 U.S. 607. 616-618

(1944); by the 9th Circuit in McComb v. Hunt Foods, Inc.,

167 F. 2d, 905, 906, 908 (CA 9, 1948), cert. den. 335 U.S.

845 (1948); by the Ist Circuit in Mitchell v. Stinson, 217 F.

2d 210, 214, 215 (CA 1, 1954); and impliedly approved by

the 2nd Circuit in Walling v. Connecticut Co., 62 F. Supp.

733 (D.C. Conn. 1945), affirmed 154 F. 2d, 552 (CA 2,

1946), cert. den. 329 U.S. 667 (1947) in that they seek to

limit the clear and unequivocal scope of the business estab-

lishment exemption to work of a certain nature.

As this Court has pointed out Congress did not elect to

extend the Fair Labor Standards Act to the full extent of

possible coverage Kirschbaum Co. v. Walling. 316 U.S.

517, 521-522 (1942).

The Fair Labor Standards Act, as it is presently consti-

tuted, covers practically every type of business enterprise

(29 U.S.C. §203(r). §203(s). 206 and 207). Then in Sections

acca Sinbelivdiec™ "4 Sted EN ET he AR aS RET

13(a) and 13(b) [29 U.S.C. §213(a) and (b)] the Act spells

out no less than thirty-three exemptions. Some depend

upon the work of the employee, some depend upon the

business of the employer, some extend only to certain seg-

ments of a type of business. These exemptions have been

built up over the thirty-five years of the Act’s existence and

through major statutory revisions in 1949, 1961 and 1966.

They are carefully delineated. (See Appendix **B”’, infra).

In discussing the proper standards of interpretation with

respect to the exemptions under the Fair Labor Standards

Act, this Court stated through Mr. Justice Frankfurter

(Addison et al v. Holly Hill Fruit Products, Inc., 322 U.S.

607 at 616-618 (1944)—a case overturning the Adminis-

trator’s definition of ‘area of production”’):

‘The wider a delegation is made by Congress to an

administrative agency the more incomplete is a statute

and the ampler the scope for filling in, as it is called,

its details. But when Congress wants to give wide dis-

cretion it uses broad language. Thus, in the Interstate

Commerce Act, Congress prohibited a lower rate for a

longer than a shorter haul, but it gave an authority to

the Interstate Commerce Commission, undefined ex-

cept as the general purposes of that Act implied the

basis for affording exemption, to grant relief from this

prohibition. Intermountain Rate Cases (United States

v. Atchison, T. & S. F. R. Co.), 234 U.S. 476, 34

S.Ct. 986, 58 L.Ed. 1408. Again in the National Labor

Relations Act, Congress gave the Board authority to

take such action ‘‘as will effectuate the policies of this

Act.” §10(c), 49 Stat. 449, 454, 29 U.S.C. §160(c), 29

U.S.C.A. §160(c). The “‘policies’’ of the Act were so

broadly defined by Congress that the determination of

‘the relation of remedy to policy is peculiarly a matter

for administrative competence’’. Phelps Dodge Corp.

v. National Labor Relations Board, 313 U.S. 177, 194,

Ages evra

61 S. Ct. 845, 852, 85 L.Ed. 1271. In the Fair Labor

Standards Act, Congress legislated very differently in

relation to the problem before us. To be sure the Fair

Labor Standards Act like the National Labor Relations

Act was based on findings and a declaration of broad

policy. But Congress did not prescribe or proscribe ,

generally and then give broad discretion for adminis-

trative relief as in the Interstate Commerce Act or for

remedies as in the National Labor Relations Act. Con-

gress did otherwise. It dealt with exemptions in detail

and with particularity, enumerating not less than

eleven exempted classes based on different industries,

on different occupations within the same industry, (the

classification in some instances to be defined by the

Administrator, in some made by Congress itself. in

others subject to definition by other legislation). on

size and on areas. In short the Administrator was not

left at large. A new national policy was here formu-

lated with exceptions, catalogued with particularity and

not left within the broad dispensing power of the Ad-

ministrator. Exemptions made in such detail preclude

their enlargement by implication.

‘**We should of course be faithful to the meaning of

a statute. But after ail Congress expresses its meaning

by words. If legislative policy is couched in vague lan-

guage. easily susceptible of one meaning as well as

another in the common speech of men, we should not

stifle a policy by a pedantic or grudging process of

construction. To let general words draw nourishment

from their purpose is one thing. To draw on some

unexpressed spirit outside the bounds of the normal

meaning of words is quite another. For we are here not

dealing with the broad terms of the Constitution “as a

continuing instrument of government” but with part of

a legislative code ‘‘subject to continuous revision with

the changing course of events’*. United States v. Clas-

sic. 313 U.S. 299, 316. 61 S.Ct. 1031, 1038. 85 L.Ed.

1368.

‘*Legislation introducing a new system is at best em-

pirical, and not infrequently administration reveals

— pets: — RNS A | lee TRS ta IEP PL EE SSE POOL WIE TOME REY

eal - ataiataael

gaps or inadequacies of one sort or another that may

call for amendatory legislation. But it is no warrant for

extending a statute that experience may disclose that it

should have been made more comprehensive. ‘The nat-

ural meaning of words cannot be displaced by refer-

ence to difficulties in administration.” Commonwealth

v. Grunseit (1943) 67 C.L.R. 58, 80. For the ultimate

question is what has Congress commanded, when it

has given no clue to its intentions except familiar

English words and no hint by the draftsmen of the

words that they meant to use them in any but an ordi-

nary sense. The idea which is now sought to be read

into the grant by Congress to the Administrator to de-

fine ‘the area of production’ beyond the plain geo-

graphic implications of that phrase is not so

complicated nor is English speech so poor that words

were not easily available to express the idea or at least

to suggest it. After all, legislation when not expressed

in technical terms is addressed to the common run of

men and is therefore to be understood according to the

sense of the thing, as the ordinary man has a right to

rely on ordinary words addressed to him.

‘The details with which the exemptions in this Act

have been made preclude their enlargement by implica-

tion. While the judicial function in construing legisla-

tion is not a mechanical process from which judgment

is excluded, it is nevertheless very different from the

legislative function. Construction is not legislation and

must avoid ‘that retrospective expansion of meaning

which properly deserves the stigma of judicial legisla-

tion." Kirschbaum Co. v. Walling, 316 U.S. 517, 522,

62 S.Ct. 1116, 1119, 86 L.Ed. 1638. To blur the dis-

tinctive functions of the legislative and judicial process

is not conducive to responsible legislation. ”’ [Emphasis

Supplied].

As the Court of Appeals for the Ninth Circuit pointed out

in sustaining the first processing exemption (McComb v.

Hunt Foods, Inc., 167 F. 2d 905, 906, 908, (CA 9, 1948),

EDEL NS ee |

Bea cay

cert. den. 335 U.S. 845 (1948)] **The Fair Labor Standards

Act was fashioned to accomplish certain results—to benefit

labor and also to make specific beneficial exemption provi-

sions for a certain class of employers defined in the Act.”

These provisions excepting activities from coverage apply

in as full measure as those activities brought within the

scope of the Act where supported by adequate proof.

As the Court of Appeals for the First Circuit pointed out

in construing the fish canning exemption (Mitchell v. Stin-

son, 217 F. 2d 210, 214, 215 (CA 1, 1954)

*‘Upon examination of the exemption contained in

§$213(b) (4) and upon comparison of it with the other

exemptions contained in §213 it can be seen that the

language of the exemptions is not parallel. The differ-

ence in terminology employed by Congress strongly in-

dicates that Congress differentiated as to whether

employees were to be exempt because they were em-

ployed by a particular employer. employed in a par-

ticular capacity. employed in a particular industry. or

employed in connection with a particular industry.

Thus, where the words ‘any employee of a carrier by

air * * **: ‘any employee employed by any retail or

service establishment * * **; ‘any employee of a street.

suburban, or interurban electric railway * * **: and

‘any employee of an emplover engaged in the business

of operating taxicabs” are used, it is the nature of the

employer’s business which is determinative as to

whether or not a particular employee is to be included

within the exemption.”

The District Court for the District of Connecticut consid-

ered a similar question in connection with an exemption

which applied to “‘any employee of a... local trolley or

motor bus carrier.“" The defendant operated a trolley and

bus line and also a powerhouse. The question for decision

was whether the exemption applied to the powerhouse em-

eee ” {SRL Bl ROCA I RATT

ployees. The Government argued that the exemption ap-

plied only to vehicular drivers and not to powerhouse

employees.

‘Since only about ten percent of all local trolley

lines .. . manufacture their own power (and accordingly)

the powerhouse operation is not an essential or usual part

of local trolley . . . business.”

The Court struck this argument down on the ground that

there was no limitation in the exemption. *‘Were there no

other uses of the power produced than in the operation of

the trolley lines the exemption would apply.’ Judgment was

given for the Government only on the ground that a sub-

stantial portion of the power produced was sold to custom-

ers in the regular course of an electric utility business.

[Walling v. Connecticut Co., 62 F. Supp. 73 (D.C. Conn.

1945): affirmed 154 F. 2d 552 (CA 2, 1946): cert. den. 329

U.S. 667 (1947)].

It is further to be noted that the broad and unrestricted

scope of the establishment exemption when applied to a

particular business was fully recognized by the Adminis-

trator of the Wage and Hour Division in his Interpretative

Bulletin No. 6 wherein he dealt with the original unre-

stricted retail and service establishment exemption. This

bulletin provides as follows:

“1. Section 13(a)(2) of the Act grants an exemption

from the minimum wage provisions of section 6 and

the maximum hour provisions of section 7, as follows:

‘The provisions of section 6 and 7 shall not ap-

ply with respect to * * * any employee engaged in

any retail or service establishment the greater part

of whose selling or services is in intrastate com-

**S. It should be noted that the test prescribed

in sections 6 and 7 is related to the nature of

employment of the particular employee. The crite-

rion used in section 13(a)(2), on the other hand, is

the nature of the establishment in which the em-

ployee is engaged. Thus, under sections 6 and 7

some employees of a given industry or of a given

employer may be covered and others may not be

covered. If, however, the exemption provided by

section 13(a)(2) is applicable because the greater

part of the selling or servicing of the retail or

service establishment is in intrastate commerce,

all employees engaged in the establishment are ex-

empted from sections 6 and 7.°° [Emphasis not

supplied: appears in original bulletin].

This interpretation has never been departed from. al-

though the current interpretative bulletin is less explicit (29

CFR §779. 302 and §779.308) and the Secretary argues for a

different application of its current language.

2. An important question of Federal Law is involved

which should be settled by this Court: failure of the Courts

below to follow established and usual course of judicial pro-

ceedings.

An important question to be decided is whether the

Courts below were correct in holding that business estab-

lishment exemptions of the Fair Labor Standards Act can

be restricted to certain types of work performed for it by

the establishment's employees. The holding of the Court

below that “‘it is the character of the work, not the source

of remuneration that controls’’ effectively destroys the

broad scope of the business establishment type of exemp-

tion that Congress has fashioned over some thirty-five years

and throws into question the application of such an exemp-

tion to many thousands of employees and thousands of em-

ployers, particularly in the hotel, motel, restaurant,

amusement park, motion picture theater, nursing home and

bowling alley industries who have relied for years without

question on the clear and unambiguous terms of the busi-

ness establishment exemption.* This is a question of great

and recurring significance.

Of equal importance is the assumption of the Court be-

low that it has not only the right but the duty to restrict

plain and unambiguous statutory provisions in the interest

of broad social purpose and the general admonitions of this

Court that exemptions to the Fair Labor Standards Act

‘must be narrowly construed’’ [Hodgson v. Colonnades,

Inc., 472 F. 2d, 42, 47 (CA 5, 1973)].4 This goes to the

whole question of the proper standards of statutory con-

struction.

The failure of the Court below to recognize the proper

and established standards of statutory construction repre-

3For example in discussing the amusement park exemption, the Labor Law editors

of Commerce Clearing House state:

‘For purposes of the exemption for employees of seasonal amusement or

recreational establishments, it does not matter how large the establishment's

annual volume of business is or what duties are performed by the individual

employees. An establishment which is a covered enterprise or part of a

covered enterprise is no less entitled to the benefit of the exemption than a

non-enterprise establishment.’’ C.C.H. Labor Law Reporter, | Wages and

Hours §25,223 [Emphasis supplied].

‘This Court stated in the case of A. H. Phillips, Inc. v. Walling, 324 U.S. 490 at

493 (1945), wherein the definition of establishment was first delineated: **Any

exemption from such humanitarian and remedial legislation must therefor be nar-

rowly construed, giving due regard to the plain meaning of statutory language and

the intent of Congress.*’ [Emphasis Supplied]

LAO ESC eb HE IBDN NS RENT SERRE TS a

sents a grave departure from the established and usual

course of judicial proceedings. This is emphasized by the

statutory history of the retail and service establishment ex-

emption which together with numerous other arguments

were presented to the Court below.

In 1938 the original statute exempted from both the min-

imum wage and overtime requirements of the Act:

‘‘Any employee engaged in any retail or service es-

tablishment, the greater part of whose selling or servic-

ing is in intrastate commerce.”

In 1949, this exemption was amended to exempt from the

minimum wage and overtime provisions of the Act:

‘‘Any empioyee employed by any retail or service

establishment, more than 50 per centum of which es-

tablishment’s annual dollar volume of sales of goods or

services is made within the state in which the estab-

lishment 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.”

Thereafter, in 1961, Section 13(a)(2) of the Act was fur-

ther amended to provide that the minimum wage and over-

time provisions of the Act shall not apply to:

‘*Any employee employed by any retail or service

establishment more than 50 per centum of which estab-

lishment’s annual dollar volume of sales of goods or

services is made within the state in which the estab-

lishment is located, if such establishment—

‘“(i) is not an enterprise described in Section

3(s), or

» Ali

> SAR

MotB PWG Ba AM Bm STF ALLO, LM

‘*(ii) is in such an enterprise and is a hotel, mo-

tel, restaurant, or motion picture theater; or is an

amusement or recreational establishment that op-

erates on a seasonal basis, or

‘*(iii) is in such an enterprise and is a hospital

or institution which is primarily engaged in the

care of the sick, the aged, the mentally ill or defec-

tive residing on the premises of such institution, or

a school of physically or mentally handicapped or

gifted children, or

Des

‘‘(iv) is in such an enterprise and has an annual

dollar volume of sales (exclusive of excise taxes

at the retail level which are separately stated)

which is less than $250,000.

‘*A retail or service establishment shall mean an es-

tablishment 75 per centum of whose annual dollar vol-

ume 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.’’ [Emphasis supplied].

Thereafter, the statute was further amended in 1966 to

state that there is exempted from the minimum wage and

overtime provisions of the Act [29 U.S.C. §213(a)(2)],

‘‘any employee employed by any retail or service es-

tablishment except an establishment or employee en-

gaged in laundering, cleaning, or repairing clothing of

fabrics, or an establishment engaged in the operation of

a hospital institution or school described in Section 3(s)

(4), if more than 50 per centum of such establishment's

annual dollar volume of sales of goods or services is

made within the state in which the establishment is

located and such establishment is not an enterprise de-

scribed in Section 3(s) or such establishment has an

annual dollar volume of sales which is less than

$250,000 (exclusively of excise taxes at the retail level

which are separately stated). [Emphasis supplied].

‘**A retail or service establishment shall mean an es-

tablishment 75 per centum of whose annual dollar vol-

ume 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.”

At the same time, Congress, having carefully restricted the

original broad scope of the retail and service establishment

exemption by excepting those businesses covered under

Sections 3(s), (2) and (4), gave the seasonal amusement

park exemption unrestricted separate status in Section 13(a)

(3) of the Act, gave motion picture theaters separate status

under Section 13(a)9) and provided separately for hotel,

motel, restaurant and nursing home industries in Section

13(b)(8) of the Act. If Congress had wished to except cer-

tain types of work from these exemptions it could have

done so, the failure to do so clearly indicates, we urge, the

stated congressional purpose to have these exemptions ap-

plied according to their terms without resort to the judicial

patina of interpretative alteration.

CONCLUSION

For the foregoing reasons it is respectfully submitted that

this petition for a writ of certiorari should be granted.

ARTHUR J. RIGGS

JOHNSON, BROMBERG, LEEDS &

RIGGS

ISth Floor, 211 N. Ervay

Dallas, Texas 75201

Counsel for Petitioners

APPENDIX ‘‘A”’

OPINIONS IN THE LOWER COURTS

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

CIVIL ACTION

NO. 14876

JAMES D. HODGSON

SIX FLAGS OVER

GEORGIA, LTD., ET AL.

ORDER

Plaintiff and defendants have submitted this case to the

court on stipulations of fact hereinafter set out. The ques-

tion to be decided is whether or not §213(a)(3) of the Fair

Labor Standards Act (29 U.S.C. §213(a)(3)) exempting em-

ployees of amusement and recreational establishments ap-

plies to certain employees of the amusement park during

those work weeks in which said employees spend all or part

of their time assisting in the erection of ‘‘buildings, rides,

towers, fences, signs, driveways, walkways, parking lots or

other structures . . . at the place of business known as ‘Six

Flags Over Georgia’ *’ and who are not paid time and one-

1834 —

half their regular rate of pay for all hours worked in excess

of 40 during a work week. Plaintiff and defendants have

stipulated that the exemption of §13(a)(3) does apply in all

other situations involving the employees of said amusement

park.

FINDINGS OF FACT

The parties have stipulated the following facts:

**1. Defendant Great Southwest Atlanta Corp. operates

an amusement park near Atlanta, Georgia, known as ‘Six

Flags Over Georgia.” The park operation is seasonal. It op-

erates on weekends during April and May, seven days a

week from June through Labor Day, and on weekends from

Labor Day until the park closes at Thanksgiving. Over 90%

of the park’s receipts are made during the six peak oper-

ating months.

**2. Great Southwest Atlanta Corp.. as general partner of

the limited partnership known as Six Flags Over Georgia.

Ltd. is operating an amusement or recreation establishment

known as Six Flags Over Georgia: employees are employed

by said amusement or recreational establishment who are

engaged in commerce, including employees handling or oth-

erwise working on goods which have been moved in or

produced for commerce. Said amusement or recreation es-

tablishment is part of an enterprise within the meaning of

section 3(s) of the Fair Labor Standards Act of 1938. as

amended, (29 U.S.C. §203(s) ). Six Flags Over Georgia is

an amusement or recreational establishment within the

meaning of §13(aX3) of the Act [29 U.S.C. §213(a)(3) }.

Se oe

‘3. The park was built during 1966 and 1967 at a total

construction cost of some twelve million dollars and an-

nually entertains almost two million guests. During the park

season the park employs some 1,625 workers, but the per-

manent work force is approximately 215, of which some

100 are maintenance employees such as gardeners, painters,

carpenters, electricians, plumbers, janitors, laborers, and so

forth. All of these are employed by Great Southwest At-

lanta Corp. exclusively in connection with the Six Flags

Over Georgia park operation. It is certain that members of

the maintenance employee group as set forth in Exhibit B

to Defendants’ Answers to Plaintiff's Interrogatories, which

is incorporated herein by reference, are the subject of this

litigation.

‘4. The maintenance employees are covered by a collec-

tive bargaining agreement with Industrial Local Union No.

2546, United Brotherhood of Carpenters and Joiners of

America, AFL-CIO, which covers wages, hours, and work-

ing conditions and provides, among other things, that:

‘Time and one-half the employee’s regular hourly

rate of pay will be paid for all hours worked in excess

of forty in a work week during those work weeks com-

mencing with Labor Day and ending with the last work

week before April 15. Time and one-half the em-

ployee’s regular hourly rate of pay will be paid for all

hours worked in excess of fifty in a work week during

all other work weeks (i.e., for those work weeks fall-

ing between the last full work week prior to April 15

and Labor Day).”

Similar provisions are to be found in the labor agreements

which cover the two amusement parks operated by defen-

dants’ affiliates and known as Six Flags Over Texas and Six

Flags Over Mid-America respectively.

**5. The maintenance employees maintain the grounds,

rides, buildings and other attractions in the park in order to

keep the park safe for and attractive to the public. In addi-

tion, from time to time in order to keep the park safe for

and attractive to the public, new rides are installed, old

ones are reworked, new fences are put up, new structures

are built and old ones are remodeled or refurbished, as

described in Exhibit A to Defendants’ Answers to Plain-

tiff’s Interrogatories, which is incorporated herein by refer-

ence. A large portion of this work is contracted out and

most of the work is done during the off season: however, as

is detailed in the answers to the plaintiff's interrogatories

and in defendants’ affidavit in support of its Motion for

Summary Judgment. some of this work is done during the

park season and some of the maintenance crew may per-

form or assist in this work.”

CONCLUSIONS OF LAW

Section 13(aX3) of the Fair Labor Standards Act (29

U.S.C. §213(aX3) ) provides that the minimum wage and

overtime provisions of the Act shall not apply to:

‘‘any employee employed by an establishment which

is an amusement or recreational establishment, if (A) It

does not operate for more than seven months in any

calendar year, or (B) During the preceding calendar

year. its average receipts for any six months of such

year were not more than 33'/s per centum of its aver-

age receipts for the other six months of such year.

Plaintiff relies heavily on an unreported order from the

Southern District of Florida (Hodgson v. Colonnades. Inc..

et al., C.A. No. 69-430-Civ-EC dated 7-26-71) wherein the

enn neeenneneiennennren een

court held that regular employees of the hotel defendant

who were engaged in a constant program of modernization

of the hotel facilities (as opposed to mere maintenance and

repair as a necessary incident to the operation of the hotel) *

were not exempt from the minimum wage and overtime _

provisions of the Act provided for in §13(b\(8) (29 U.S.C.

§213(b)\(8) ).

We think the situation in Colonnades is analogous. The

construction of amusement park facilities such as rides.’ ex-

hibition buildings, refreshment centers and the like are not

characteristic of amusement park operations or the activi-

ties of amusement park employees. It was the purpose of

Congress to include within the coverage of the Act employ-

ees of construction contractors who build for themselves as

well as for others (Wirtz v. Allen Green & Associates, Inc..

379 F.2d |98 at 200 (6th Cir. 1967) ), and it makes no differ-

ence whether or not the employer characterizes himself as a

construction contractor or not since it is the nature of the

work performed which is controlling. (Shultz v. W. R.

Hartin & Son, Inc., 428 F.2d 186 at 190 (4th Cir. 1970).

The facts agreed on by the parties show that defendants’

employees whose work is at issue herein involved them-

selves in the business of constructing or reconstructing fa-

cilities within the amusement park although included on the

payroll of the amusement facility as employees of the

amusemert park. The designation given such employees by

defendants is not controlling: it is the nature of the work

performed by such employees which is controlling. Shultz

v. W. R. Hartin & Son. Inc.. supra.

If the employer regularly and substantially engages

in an otherwise non-exempt business other than the

one for which the exemption was designed, however,

strict construction of the exemption requires that it not

be extended to that other business merely because the

principal business of the employer is exempted. To do

so would hardly be fair to those who must compete in

that other business as their major activity. Walling vy.

Connecticut Co., 62 F.Supp. 735. (Emphasis added.)

In Connecticut Co., the defendant (a local trolley carrier)

contended that all of its employees were exempted under

the provisions of the Act regardless of the work performed

even though extraneous to the business of a trolley carrier.

In affirming the lower court's holding, the Second Circuit,

in commenting upon the defendant's contention, stated that

the defendant’s position would be a correct literal inter-

pretation of the exemption, but to follow such a literal in-

terpretation would mean that **... no matter in what

business, however extraneous to its functioning as a ‘local

trolley carrier’ defendant engaged, those employed in that

extraneous business would be exempt. The policy of the

Act, disclosed in its history. precludes the acceptance of

such a literal construction.” Walling v. Connecticut Co.,

154 F.2d 552 (C.A. 2 1946).

A literal interpretation of the exemption here at issue and

upon which defendants rely. would support defendant's

contention that even those of its employees engaged in con-

struction activities at the amusement center would be in-

cluded within the exemption of the Act, but such a reading

cannot prevail if it results in the emasculation or deletion of

a provision which a less literal reading would preserve.

Markham vy. Cabell, 326 U.S. 404, 409, 66 S.Ct. 193 (1945).

= . = : aw et EE mr Sty OP Cast POC aed

- :

=~ ORS aE eae,

Exemptions under the Act are to be narrowly construed

against the employer. Schultz v. Louisiana Trailer Sales,

Inc., 428 F.2d 61, 67 (C.A. 5 1970).

The plaintiff's interpretation of employment within a busi-

ness exempted under the Act supports his contention that

the employees here at issue are not entitled to the exemp-

tion.

In order to meet the requirements of actual employ-

ment ‘by’ the establishment, an employee, whether

performing his duties inside or outside the estab-

lishment, must be employed by his employer in the

work of the exempt establishment itself in activities

within the scope of its exempt business. (See Davis v.

Goodman Lumber Co., 133 F.2d 52 (CA 4) (holding

§$13(a)(2)inapplicable to employees working in manufac-

turing phase of employer's retail establishment)):

Wessling v. Carroll Gas Co., 266 F.Supp. 795 (N.D.

Iowa); Oliveira v. Basteiro, 18 WH Cases 668 (S.D.

Texas). See also Northwest Airlines v. Jackson, 185

F.2d 74 (C.A. 8): Walling v. Connecticut Co., 154 F.2d

522 (C.A. 2) certiorari denied, 329 U.S. 667, and Wa-

bash Radio Corp. v. Walling, 162 F.2d 391 (C.A. 6). 29

CFR 779.308.

Because of experienced and informed judgment, adminis-

trative rulings, interpretations and opinions, although not

binding upon the court, are entitled to careful consideration

and weight. Wirtz v. Keystone Readers Service, Inc.. 418

F.2d 249 (1969).

The court concludes that the work of the employees here

in dispute is not exempted under the Act, and plaintiff is

entitled to the relief prayed for including an injunction

against defendants and their agents and all persons in con-

cert or participation with them from violating the provisions

AS AP ere

of 15(a)(2) and 15(a\(S) of the Fair Labor Standards Act (29

U.S.C. §215(a2) and §215(a)(5)) and the withholding of

payment of any overtime compensation determined to be

due such employees under the Act, together with interest

thereon at the rate of 6% per annum. However, defendants

are allowed 30 days from this date in which to respond to |

plaintiff's computations of overtime pay due such employ-

ees, and both parties are ordered to submit to the court

within 45 days such computations at which time the court

will receive from plaintiff a proposed final decree, including

the computation of such sums.

IT IS SO ORDERED.

This, the 7th day of August, 1972.

RICHARD C. FREEMAN

UNITED STATES DISTRICT JUDGE

United States District Court

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

Civil Action File No. 14876

JAMES D. HODGSON, Secretary of Labor,

United States Department of Labor,

Plaintiff.

SIX FLAGS OVER GEORGIA, LTD.

and GREAT SOUTHWEST ATLANTA CORP.,

Defendants.

JUDGMENT

This cause was submitted to this Court sitting without a

jury on stipulated facts. The court entered its findings of

fact and conclusions of law by Order on August 7, 1972,

and directed the parties to submit back wage computations,

which have now been received. It is hereby:

ORDERED. ADJUDGED and DECREED that defen-

dants. Six Flags Over Georgia, Ltd. and Great Southwest

Atlanta Corporation, their officers, agents, servants, em-

ployees and all persons in concert or participation with

them be, and they hereby are, permanently enjoined from

violating the provisions of the Fair Labor Standards Act of

1938, as amended [29 U.S.C. 201 et seq.], hereinafter re-

ferred to as the Act, in the following manner.

1. Defendants shall not, contrary to Sections 7 and

1S(a) (2) of the Act [29 U.S.C. 207 and 215(a) (2)], employ

any employee engaged in construction activities in an enter-

prise engaged in commerce or in the production of goods

for commerce, within the meaning of the Act, for work-

weeks longer than 40 hours unless such employee receives

compensation for his employment in excess of 40 hours at a

rate not less than one and one-half times the regular rate at

which he is employed. It is

FURTHER ORDERED, ADJUDGED and DECREED

that the defendants be, and they hereby are, restrained

from withholding payment of overtime compensation found

due their employees for the periods of employment and in

the amounts as set forth in Exhibit “*A™’ attached hereto

and made a part hereof. It is

FURTHER ORDERED that within thirty days following

entry of this judgment. defendants shall deliver to plain-

tiff’s attorneys a certified or cashier's check payable to

**Wage and Hour—Labor™ in the total amount set out in

Exhibit **A™’ hereto less deductions required by law as to

each employee plus interest thereon at the rate of 6% per

annum from the median dates of the periods of employment

as to each employee until the back wages are paid. Plaintiff

shall distribute the payment received from defendants to

the persons named in Exhibit “‘A™ in the respective

amounts due each, or to their surviving heir or heirs if that

ENE SR DOD AB OT A A OER,

eee

is necessary, and any money not so paid within a period of

one (1) year from the date of receipt thereof, because of

inability of either the defendants or plaintiff to locate the

proper persons, or because of their refusal to accept it,

shall be deposited with the Clerk of this Court who forth-

with shall deposit such money with the Treasurer of the

United States pursuant to 28 U.S.C. 2041 (1964).

It is FURTHER ORDERED, ADJUDGED and DE-

CREED that the costs of this action be, and they hereby

are, taxed against the defendants for which execution may

issue.

Dated this 5 day of September, 1972.

Richard C. Freeman

UNITED STATES DISTRICT JUDGE

OSES OREN:, eat a, |

IN THE

United States Court of Appeals

FOR THE FIFTH CIRCUIT

No. 72-2990

PETER J. BRENNAN, Secretary of Labor,

United States Department of Labor,

Plaintiff-Appellee,

versus

SIX FLAGS OVER GEORGIA, LTD., and

GREAT SOUTHWEST ATLANTA CORP.,

Defendants-Appellants.

Appeals from the United States District Court for the

Northern District of Georgia

(February 22, 1973)

Before ALDRICH*, SIMPSON and CLARK,

Circuit Judges.

PER CURIAM: The Secretary of Labor brought this ac-

tion against Six Flags over Georgia, Ltd. and Great South-

west Atlanta Corp, hereinafter, collectively, GSA, to enjoin

alleged violations of the Fair Labor Standards Act and to

compel the payment of overtime to certain employees. On a

stipulated record both parties moved for summary judg-

ment. The court ruled in favor of the Secretary and GSA

appeals.

GSA operates an amusement park at Atlanta, Georgia of

very substantial size. During the season it has over 1,600

Hon. Bailey Aldrich, Senior Circuit Judge of the First Circuit, sitting by desig-

nation.

2 alll Bey oes FERRO k A OT PY GAO 1th LE RES SOB OTM

employees, sharply reduced during the off-season, of which

some 100 are engaged in maintenance and repairs. From

year to year the park remodels, and erects new structures,

new buildings, and new places of entertainment, in order to

maintain public interest. This new construction is mostly

done during the off-season, much of the work being con-

tracted out. During the off-season GSA pays all of its em-

ployees wages within the act, but during the season it does

not, by virtue of the exemption afforded by 29 U.S.C.

§213(a\(3) to amusement and recreational establishments.

During the season a small amount of new work is done by

what are normally maintenance employees. It is for this

that the Secretary asserts liability.

GSA concedes, as it must, that a general contractor em-

ployed by it to do this construction work would not be

conducting a recreational establishment. GSA is in no better

position. It is the character of the work, not the source of

the remuneration, that controls. Cf. Hodgson v. Colon-

nades, Inc., 5 Cir., 1/16/73 (fact employees ‘‘changing the

premises*’ are on hotel payroll irrelevant). The nature of

the work is what gives rise to the need for an exemption:

the exemption is not a subsidy accorded to an employer

because of his principal activities.

Nor does it make any difference that the employee is

doing mixed work. In any week that any particular em-

ployee does some non-exempt work he is covered fully, not

pro rata. Hodgson v. Wittenburg Livestock Co., 5 Cir.,

1972, 68 L.C. ©32.734; Mitchell v. Hunt, 5 Cir., 1959, 263

F.2d 913. GSA says that this makes an accounting problem

for it. With the legislation on the books, the problem is of

its own making.

AFFIRMED.

ASE Bee |

IN THE

United States Court of Appeals

FOR THE FIFTH CIRCUIT

No. 72-2990

PETER J. BRENNAN, Secretary of Labor,

United States Department of Labor,

Plaintiff-Appellee,

versus

SIX FLAGS OVER GEORGIA, LTD., and

GREAT SOUTHWEST ATLANTA CORP.,

Defendants-Appellants.

Appeal from the United States District Court for the

Northern District of Georgia

ON PETITION FOR REHEARING AND PETITION

FOR REHEARING EN BANC

(Opinion Feb. 22, 1973, 5 Cir., 1973, —— F.2d ——.).

(April 10, 1973)

Before ALDRICH,* SIMPSON and CLARK,

Circuit Judges.

Hon. Bailey Aldrich, Senior Circuit Judge of the First Circuit, sitting by desig-

nation.

PER CURIAM: Upon consideration of the petition for

rehearing the opinion of the Court is amended by inserting

at the end of the penultimate paragraph, ending at the top

of page 3 of the slip opinion, the following language: **The

district court warrantably found that this construction was

not amusement park work.”’

The petition for rehearing is otherwise DENIED and no

member of this panel nor judge in regular active service on

the Court having requested that the Court be polled on

rehearing en banc, (Rule 35, F.R.A.P., Local Fifth Circuit

Rule 12) the petition for rehearing en banc is DENIED.

(Exhibit A Omitted)

APPENDIX ‘‘B”’

STATUTORY PROVISIONS

Sec. 3.

(s) “*Enterprise engaged in commerce or in the production

of goods for commerce’’ means an enterprise which has

employees engaged in commerce or in the production of

goods for commerce, including employees handling, selling,

or otherwise working on goods that have been moved in or

produced for commerce by any person, and which—

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

ary 31, 1969, is an enterprise whose annual gross vol-

ume 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 separately 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 (exclusive of excise taxes at the retail level

which are separately stated):

(2) is engaged in laundering, cleaning, or repairing

clothing or fabrics:

(3) is engaged in the business of construction or re-

construction, or both; or

(4) is engaged in the operation of a hospital, an in- ;

stitution primarily engaged in the care of the sick, the

aged, the mentally ill or defective who reside on the

yer P ee ee eee

fh al

ie .

premises of such institution, a school for mentally or

physically handicapped or gifted children, a preschool,

elementary or secondary school. or an institution of

higher education (regardless of whether or not such

hospital, institution. or school is public or private or

operated for profit or not for profit).

Sec. 6 (a) Every employer shall pay to each of his em-

ployees 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. wages at the following rates:

(1) not less than $1.40 an hour during the first year

from the effective date of the Fair Labor Standards

Amendments of 1966 and not less than $1.60 an hour

thereafter, except as otherwise provided in this sec-

tion:

Sec. 7. (a1) Except as otherwise provided in this sec-

tion, no employer shall employ any of his employees who

in any workweek is engaged in commerce or in the produc-

tion of goods for commerce. or is employed 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 above specified at a rate not less

than one and one-half times the regular rate at which he is

employed.

Sec. 13. (a) The provisions of sections 6 (except section

6(d) in the case of paragraph (1) of this subsection) and 7

shall not apply with respect to—

(1) any employee employed in a bona fide executive,

administrative, or professional capacity (including any

employee employed in the capacity of academic admin-

istrative personnel or teacher in elementary or secon-

dary schools) or in the capacity of outside salesman (as

such terms are defined and delimited from time to time

by regulations of the Secretary, subject to the provi-

sions of the Administrative Procedure Act, except that

an employee of a retail or service establishment shall

not be excluded from the definition of employee em-

ployed in a bona fide executive or administrative ca-

pacity because of the number of hours in his

workweek which he devotes to activities not directly

or closely related to the performance of executive or

administrative activities, if less than 40 per centum of

his hours worked in the work-week are devoted to

such activities); or

(2) any employee employed by any retail or service

establishment (except an establishment or employee

engaged in laundering, cleaning, or repairing clothing

or fabrics or an establishment engaged in the operation

of a hospital, institution, or school described in section

3(s4)), if more than 50 per centum of such estab-

lishment’s annual dollar volume of sales of goods or

services is made within the State in which the estab-

lishment is located, and such establishment is not in an

enterprise described in section 3(s) or such estab-

lishment has an annual dollar volume of sales which is

less than $250,000 (exclusive of excise taxes at the

retail level which are separately stated). 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; or

(3) any employee employed by an establishment

which is an amusement or recreational establishment,

if (A) it does not operate for more than seven months

in any Calendar year, or (B) during the preceding calen-

dar year, its average receipts for any six months of

such year were not more than 33/3 per centum of its

average receipts for the other six months of such year:

(4) any employee employed by an establishment

which qualifies as an exempt retail establishment under

clause (2) of this subsection and is recognized as a

retail establishment in the particular industry notwith-

Standing that such establishment makes or processes at

the retail establishment the goods that it sells: Pro-

vided. That more than 85 per centum of such estab-

lishment’s annual dollar volume of sales of goods so

made or processed is made within the State in which

the establishment is located: or

(5) any employee employed in the catching, taking,

propagating, harvesting, cultivating. or farming of any

kind of fish. shellfish. crustacea. sponges. seaweeds. or

other aquatic forms of animal and vegetable life. or in

the first processing. canning or packing such marine

products at sea as an incident to. or in conjunction

eee |

with, such fishing operations, including the going to

and returning from work and loading and unloading

when performed by any such employee; or

(6) any employee employed in agriculture (A) if such

employee is employed by an employer who did not,

during any calendar quarter during the preceding calen-

dar year, use more than five hundred man-days of agri-

cultural labor, (B) if such employee is the parent,

spouse, child, or other member of his employer’s im-

mediate family, (C) if such employee (i) is employed as

a hand harvest laborer and is paid on a piece rate basis

in an operation which has been, and is customarily and

generally recognized as having been, paid on a piece

rate basis in the region of employment, (ii) commutes

daily from his permanent residence to the farm on

which he is so employed, and (iii) has been employed

in agriculture less than thirteen weeks during the pre-

ceding calendar year, (D) if such employee (other than

an employee described in clause (C) of this subsection)

(i) is sixteen years of age or under and is employed as

a hand harvest laborer, is paid on a piece rate basis in

an operation which has been, and is customarily and

generally recognized as having been, paid on a piece

rate basis in the region of employment, (ii) is employed

on the same farm as his parent or person standing in

the place of his parent, and (iii) is paid at the same

piece rate as employees over age sixteen are paid on

the same farm, or (E) if such employee is principally

engaged in the range production of livestock: or

—_—~S ~~

- “ ws --* < Dare DU} en Rd? Re ae

(7) any employee to the extent that such employee is

exempted by regulation, order, or certificate of the

Secretary issued under section 14; or

(8) any employee employed in connection with the

publication of any weekly, semiweekly, or daily news-

paper with a circulation of less than four thousand the

major part of which circulation is within the county

where published or counties contiguous thereto: or

(9) any emplovee employed by an establishment

which is a motion picture theater: or

(10) any switchboard operator employed by an inde-

pendently owned public telephone company which has

not more than seven hundred and fifty stations: or

(11) any employee or proprietor in a retail or service

establishment which qualifies as an exempt retail or

service establishment under clause (2) of this sub-

section with respect to whom the provisions of sec-

tions 6 and 7 would not otherwise apply. engaged in

handling telegraphic messages for the public under an

agency or contract arrangement with a telegraph com-

pany where the telegraph message revenue of such

agency does not exceed $500 a month: or

(12) any employee employed as a seaman on a vessel

other than an American vessel: or

(13) any employee employed in planting or tending

trees. cruising, surveying, or felling timber, or in pre-

paring or transporting logs or other forestry products

to the mill, processing plant, railroad, or other trans-

portation terminal, if the number of employees em-

ployed by his employer in such forestry or lumbering

operations does not exceed eight; or

(14) any agricultural employee employed in the grow-

ing and harvesting of shade-grown tobacco who is en-

gaged in the processing (including, but not limited to,

drying, curing, fermenting, bulking, rebulking, sorting,

grading, aging, and baling) of such tobacco, prior to

the stemming process, for use as cigar wrapper to-

bacco. ,

Sec. 13.

. a

(b) The provisions of section 7 shall not apply with re-

spect to—

(1) any employee with respect to whom the Secre-

tary of Transportation has power to establish quali-

fications and maximum hours of service pursuant to ;

the provisions of section 204 of the Motor Carrier Act,

1935; or

(2) any employee of an employer subject to the pro-

visions of part I of the Interstate Commerce Act; or

(3) any employee of a carrier by air subject to the

provisions of title II of the Railway Labor Act: or

(4) any employee employed in the canning, process-

ing, marketing, freezing, curing, storing, packing for }

shipment, or distributing of any kind of fish, shellfish,

or other aquatic forms of animal or vegetable life, or

any byproduct thereof; or

ae E ie oh Fae pt 02% 3 osm ap Ra RUT APOE

(5) any individual employed as an outside buyer of

poultry, eggs. cream, or milk, in their raw or natural

State, or

(6) any employee employed as a seaman: or

(7) any driver, operator, or conductor employed by

an employer engaged in the business of operating a

street. suburban or interurban electric railway. or local

trolley or motorbus carrier. if the rates and services of

such railway or carrier are subject to regulation by a

State or local agency: or

(8) any employee employed by an establishment

which is a hotel. motel. or restaurant: or any employee

who (A) is employed by an establishment which is an

institution (other than a hospital) primarily engaged in

the care of the sick, the aged. or the mentally ill or

defective who reside on the premises, and (B) receives

compensation for employment in excess of forty-eight

hours in any workweek at a rate not less than one and

one-half times the regular rate at which he is em-

ployed: or

(9) any employee employed as an announcer, news

editor, or chief engineer by a radio or television station

the major studio of which ts located (A) in a city or

town of one hundred thousand population or less. ac-

cording to the latest available decennial census figures

as compiled by the Bureau of the Census, except

where such city or town is part of a standard metropol-

itan statistical area, as defined and designated by the

Bureau of the Budget. which has a total population in

excess of one hundred thousand, or (B) in a city or

town of twenty-five thousand population or less, which

is part of such an area but is at least 40 airline miles

from the principal city in such area; or

(10) any salesman, partsman, or mechanic primarily

engaged in selling or servicing automobiles, trailers,

trucks, farm implements, or aircraft if employed by a

nonmanufacturing establishment primarily engaged in

the business of selling such vehicles to ultimate pur-

chasers; or

(11) any employee employed as a driver or driver's

helper making local deliveries, who is compensated for

such employment on the basis of trip rates, or other

delivery payment plan, if the Secretary shall find that

such plan has the general purpose and effect of reduc-

ing hours worked by such employees to, or below, the

maximum workweek applicable to them under section

7(a); or

(12) any employee employed in agriculture or in con-

nection with the operation or maintenance of ditches,

canals, reservoirs, or waterways, not owned or oper-

ated for profit, or operated on a sharecrop basis, and

which are used exclusively for supply and storing of

water for agricultural purposes; or

(13) any employee with respect to his employment in

agriculture by a farmer, notwithstanding other employ-

ment of such employee in connection with livestock

auction operations in which such farmer is engaged as

an adjunct to the raising of livestock, either on his own

FO MERRIE OH ei

account or in conjunction with other farmers, if such

employee (A) is primarily employed during his work-

week in agriculture by such farmer, and (B) is paid for

his employment in connection with such livestock auc-

tion Operations at a wage rate not less than that pre-

scribed by section 6(a\(1): or

(14) any employee employed within the area of pro-

duction (as defined by the Secretary) by an estab-

lishment commonly recognized as a country elevator.

including such an establishment which sells products

and services used in the operation of a farm. if no

more than five employees are emploved in the estab-

lishment in such operations: or

(15) any employee engaged in ginning of cotton for

market. in any place of employment located in a

county where cotton is grown in commercial quan-

tities. or in the processing of sugar beets. sugar-beet

molasses, Sugar-cane. or maple sap. into sugar (other

than refined sugar) or syrup: or

(16) any employee engaged (A) in the transportation

ind preparation for transportation of fruits or vegeta-

bles. whether or not performed by the farmer. from

the farm to a place of first processing or first marketing

within the same State. or (B) tn transportation,

whether or not performed by the farmer. between the

farm and any point within the same State of persons

employed or to be employed in the harvesting of fruits

or vegetables: or

(17) any driver employed by an employer engaged in

the business of operating taxicabs: or

(18) any employee of a retail or service estab-

lishment who is employed primarily in connection with

the preparation or offering of food or beverages for

human consumption, either on the premises, or by

such services as catering, banquet, box lunch, or curb

or counter service, to the public, to employees, or to

members or guests of members of clubs; or

(19) any employee of a bowling establishment if such

employee receives compensation for employment in

excess of forty-eight hours in any workweek at a rate

not less than one and one-half times the regular rate at

which he is employed.

APPENDIX “*C”

OPINION OF U. S. COURT OF APPEALS

FOR THE FIFTH CIRCUIT—HODGSON v.

COLONNADES, INC., ETC., ET AL.

IN THE

United States Court of Appeals

FOR THE FIFTH CIRCUIT

No. 72-1029

JAMES D. HODGSON. SECRETARY OF LABOR

UNITED STATES DEPARTMENT OF LABOR.

Plaintiff-Appellant-

Cross Appellee.

Versus

COLONNADES. INC.. ETC.. ET AL...

Detendants-Appellees-

Cross Appellants.

\ppeals from the United States District Court for the

Southern District of Florida

(January 16, 1973)

Before COLEMAN. AINSWORTH and DYER.

Circuit Judges.

COLEMAN, Circuit Judge: The Secretary of Labor

brought suit against Colonnades, Inc., and its president,

John D. MacArthur under the Fair Labor Standards Act? to

enjoin them from violating the Act’s minimum wage, over-

time, and record keeping provisions and to restrain them

from withholding payment of minimum wage and overtime

compensation due certain named employees.

The District Court

Enjoined Colonnades from violating the Act’s over-

time requirements? as to those of its employees en-

gaged in construction work and from withholding

overtime compensation due them in the amount of

$6,612.88 including interest;

Denied injunctive relief against John D. MacArthur

personally;

. Denied the Secretary’s motion to amend his com-

plaint to include some 52 other employees alleged

also to have been affected by overtime violations;

and

. Held that prior to the 1966 amendments to the Act

the defendants were not within coverage under ei-

ther Section 203(s)(1), the applicable dollar amount

129 U.S.C. §201, et seq., hereinafter called the Act.

229 U.S.C. §207.

}

of gross volume of sales, or Section(s)(4), the defini-

tion of a construction enterprise.*

The District Court found that Colonnades had violated

the Act’s overtime requirements in that Colonnades’ con-

struction employees were not exempt under Section

213(b\(8)4, the exemption to the overtime provision for any

employee of a hotel. The Court further found that Colon-

nades* construction employees came within the Act for the

first time as a result of the 1966 amendments under Section

3Pror to the 1966 Amendments to the Act Section 203601 )stated

(s) “Enterprise engaged in commerce or in the production of goods for

commerce” means any of the following in the activities of which employees

are so engaged. including employees handling. selling. or otherwise working

on goods that have been moved in or produced for commerce by any

person:

(1) any such enterprise which has one or more retail or service estab-

ashments if the annual gross volume of sales of such enterprise is not less

than $1,000,000, exclusive of excise taxes at the retail level which are

separately stated and if such enterprise purchases or receives goods for

resaie that move or have moved across State lines (not in deliveries from

the reselling establishment) which amount in total annual volume to

$250,000 or more:

ind Section 203094 stated

(s) “Enterprise engaged in commerce or in the production of goods for

-ommerce’™” means any of the following in the activities of which emplovees

are so engaged. including employees handling. selling, or otherwise working

on goods that have been moved in or produced for commerce by any

nerson:

(4) any such enterprise which ts engaged in the business of construction

or reconstruction, or both. if the annual gross volume trom the business of

such enterprise is not less than $350,000

*Section TCHR), 29 -ULS.C. S2IBCHIOND states:

The provisions of section 207 of this ttle shall net apply with respect to]

(8) any emplovee emploved by an establishment which ts a hotel .

‘

203(s1)5 as amended. By coming within the Act for the

first time under the 1966 Amendments, Colonnades’ con-

struction employees would be considered “‘newly covered”

and would be subject to the “‘catch-up provisions” of Sec-

tion 207(a(2).®

Facts

John D. MacArthur is the principal owner of Colonnades,

Inc., which owns and operates hotels in Palm Beach

County, Florida. The center of the MacArthur hotel opera-

tion is the Colonnades Beach Hotel, fronting the Atlantic

Ocean. Five smaller hotels are located nearby and are con-

nected to the main hotel by colonnaded walkways. This ho-

tel complex has 400 guest rooms, a large convention hall

accommodating 500 people, a bowling and putting green,

swimming pool, dining facilities, and three kitchens. Mac-

Arthur purchased the hotel in 1960 or 1961. At that time the

hotel was much smaller, with only a little over 100 rooms.

MacArthur was advised to tear down the original buildings

*Section 203(s1) as amended states:

(s) * ‘Enterprise engaged in commerce or in the production of goods for

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 separately stated). and beginning February |. 1969. is

an enterprise whose annual gross volume of sales made or business done ts

not less than $250,000 (exclusive of excise taxes at the retail level which are

separately stated):

*The District Court erred in its findings of fact and conclusions of law when it

Stated that “‘overtime compensation shall be computed with reference to Sections

6b) and 7(aX2)."° Section 6(b) refers to the minimum wage provisions and not to

overtime compensation.

and start over from scratch. He testified that he ‘decided

they were wrong” and “proceeded to fix it up.”* Extensive

construction projects were undertaken. Two major construc-

tion projects were the addition of 139 new rooms on top of

the main building and the addition of several floors on top

of the convention center. These additions were constructed

hy numerous independent contractors and subcontractors.

Also. MacArthur was continually improving and changing

the premises. The labor for this constant improvement pro-

gram was performed by emplovees on the hotel’s payroll. In

the joint stipulation the parties agreed that Colonnades* con-

struction employees performed the following tasks:

(a) Applied waterproof stucco to the exterior walls of

hotel buildings.

(b) Dug ditches and connected piping for a sprinkler

system on the hotel lawn.

to construct an addition to the seawall on the ho-

tel’s ocean-front.

(d) Received construction materials from suppliers.

moved those materials onto the hotel elevators,

and unloaded those materials on upper floors of the

hotel for use by employees of outside contractors,

(e) Erected forms and poured concrete to build side-

walks connecting various hotel buildings.

(1) Constructed outside steps to be used as fire escapes

on hotel buildings.

(2) Constructed a penthouse apartment on top of the

main hotel building. and

CAR my te

(h) Cleaned up construction debris left by employees

of various outside independent contractors who

were engaged to build four additional floors on the

main hotel building.

During the period specified in the complaint (the period

since April 7, 1967) the employees named were not paid

overtime for workweeks in excess of forty hours.

Both parties appeal from those findings not in their favor.

We affirm the District Court's decision as to: |

}

1. The denial of injunctive relief against John D.

McArthur personally, and

The finding that Colonnades’ construction employ- |

ees were not subject to the exemption to the over-

time provisions of the Act under Section 213(b\8).

We reverse the District Court's decision as to:

1. The refusal to allow the Secretary to amend his

complaint to include additional employees of Colon-

nades and

2. That Colonnades did not come within the definition

of a construction enterprise within Section 203(s)(4).

The Law

A. Injunctive Relief Against John D. MacArthur

Section 203(d) defines *“‘employer™’ to include ‘‘any per-

son acting directly or indirectly in the interest of an em-

ployer in relation to an employee . . .”” (

The Secretary claimed that MacArthur

(1) participated in the day-to-day supervision of the ac-

tivities giving rise to the violations:

(2) had the authority to hire and fire the employees in

question: and

(3) supervised the supervisors.

The Secretary contends that “‘courts have repeatedly held

that corporate officers who have a proprietary interest in

their companies and who actively participate in their day-to-

day affairs” are proper party defendants under Section 2177

and can be enjoined from continuing to withhold unpaid

wages due to affected employees.

The District Court found that “an injunction directed to

MacArthur personally would be inappropriate and unneces-

sury.” It said “the evidence indicated that the management

and operations of the hotel were regularly supervised by

others.”

“Each case must be considered tn light of the total situ-

ation or whole activity to determine whether an employer-

emplovee relationship exists.” Wirtz +. Lone Star Steel

Company. supra at 669 and Wirt- v. Soft Drinks of Shreve-

pert. Inc.. 336 F.Supp. 980. 987 (WoD) Ea. 1971). The total

employment situation should be considered in regard to the

aciy MacArthur performed “in the interest of the emplover

Comstruction Co.. supra at 1257. Also to be considered are

Recon 237 8 ESC tT the apphcable stocete tor minnie proceedings

under the baat Labor Standards Act

the “‘economic realities’ of the situation, Goldberg y.

Whittaker House Cooperative, 366 U.S. 28, 33, 81 S.Ct.

933, 936, 6 L.Ed.2d 100 (1961).

We are not inclined to reverse the action of the District

Court as to MacArthur personally. As to the corporation,

the injunction should not be disturbed.

B. The Section 213(b8) Exemption

Section 213(b\(8) provides as follows:

The provisions of Section 207 (overtime) shall not ap-

ply with respect to any employee employed by an es-

tablishment which is a hotel . . .

The District Court held as to the employees here involved

that Colonnades was not within the exemption. It found as

follows:

The Colonnades is not an unusual or a typical hotel

from the standpoint of the services and facilities it pro-

vides for its guests. The hotel is unusual, however, in

that a full-time crew is maintained for the principal

purpose of building, remodeling, and rendering sub-

stantial alterations to the premises ... (Colonnades

claims) that the hotel’s unusual policy of continuing

renovation and change should not cause it to lose the

exemption.

In the court’s view the central flaw of this argument

is the assumption that the ‘unusual’ policies of this

particular hotel are immaterial to the exemption. The

primary function of the construction crew had little if

anything to do with the daily operation of the hotel as a

SO et ais F200 4A IER 2

facility for the accommodation of guests. A hotel is

esseatially as service facility. The 13tbye&) exemption

contemplates that the duties of the establishment's em-

ployees will be reasonably related to and directed to-

ward that end.

The Interal interpretation and apphcation of the ex-

emption which the hotel urges runs contrary to the

over-all purpose of the Act and the exemption itself.

Des rescore amply supports this view. Yo bether emplovees

are exempt from the requirements of the Four Labor Stan-

dards Act involves a question of fact. Walling «. General

Industries Co.. 330 ULS. S548. S80. 97 SCI. S83. RRS, 9]

Li '. O88 (1947) and Hodesons) Kiiges Cou and Ice Co..

6 Cir, 1970, 435 F.2d 377. 382. cert. den 202 ULS.. 973, 91

S.C 1660, 29 Lo Fd.2d 137. Therefore. the findings of fact

mete by the District Court mav not he set aside untess

clearly erroneous. Walling +. General Industrics Co... surra

at “50: Hodevon v. Klages Coal and dee o> supra at 382.

and Wirtz vy. Atlanta Life Ins. Co. ® Cir). i868. 3ib 2d

Ole 647.

An exemption frem the coverage of (he Act “must be

$0; S98. 65 S.Ct SOT ROS SO Eb le sd Mitch.

« Stenson, 1 Cir.. (8S4. 217 Bld Di. 2.4 Ene exemp-

th must be applied erly to thes rlainty and

urotokohhy within its terms ane sport ips. dni 4

We ero SM at AQ? Suey, Pea Levee)! / Bre A capper nny sky,

po UAE TLS. SS BOR RAKE HS3, SS Fudd 393

POs Strict rst on of the exert TOUUITES

e anced

that it not be extended to another business merely because

the principal business of the employer is exempted, Walling

v. Connecticut Co., 62 F.Supp. 733, 735 (D.C. Conn. 1945),

affirmed 2 Cir., 1946, 154 F.2d 552.

Therefore. we agree that Colonnades’ construction em-

ployees® did not come within the Section 213(b)(8) exemp-

tion.

C. Amending the Complaint

The plaintiff's original complaint asked for relief for 64

employees. During the trial, the plaintiff sought to amend

the complaint to add an additional 63 employees. This

would involve approximately $27,000 additional in back

wages.

The original list of 64 names resulted from a list sub-

mitted to a Wage and Hour Compliance Officer prior to the

filing of the complaint. The plaintiff sought to obtain from

the defendant its payroll records,’ granted by the District

Court. The payroll records were inspected. From these

records the plaintiff was able to uncover all the names of

the construction workers employed during the pertinent pe-

riod, as well as the information necessary to compute the

full extent of the wage underpayments. The trial began on

November |6, 1972. The trial court denied the plaintiff's

motion to amend, stating that no case “‘cited to the court

supports the motion that the complaint may be so drastic-

ally amended on the day of the trial.”

*The Fair Labor Standards Act may be applied to a part of an employer's busi-

ness. Davis v. Goodman Lumber Co., 4 Cir., 1943, 133 F.2d 52, 54 and cases cited

therein.

Rule 34, F.R. Civ. P.

OSS ee +

= ree

Colonnades claims that up to trial it treated the suit as **a

$6.000 lawsuit involving 50 people.”* It then states that if

the plaintiff had amended his complaint prior to trial. Co-

jonnades would have “‘prepared for a $35,000 lawsuit in-

volving substantially over 100 employees. but (it) had no

way of knowing if any additional employees would be

added.”

The applicable part of Rule 15(b) states:

If evidence is objected to at the trial on the ground

that it is not within the issues made bv the pleadings.

the court may allow the pleadings to be amended and

shall do so freely when the presentation of the merits

of the action wi!l be subserved thereby and the object-

ing party fails to satisfy the court that the admission of

such evidence would prejudice him in maintaining his

action or defense upon the merits. The Court may

grant a continuance to enable the objecting party to

meet such evidence.

An amendment of a complaint will be allowed “unless

the opposing party is actually prejudiced.” 3 Moore's Fed-

eral Practice. $15.14 at p. 1011 (2d ed. 1968). This prejudice

must “put the objecting partys to some serious dis-

advantage.” and “it is not enough that (the obrecting party)

adh oonces an imagined grievance or seeks to rrotect some

tatical advantage.” Wright & Miller. Federai oO octies one

Precedure: Civil $1498. This. the v.rts sr the

amendment “must be seriously prejudiced” to oe > deiense

on the merits.” Id.

voy a

Colonnades does not make any allegation as to how it

was prejudiced in its defense except for its vague statement

that it would have defended the case differently if it had

known more money or a greater number of employees were

involved.?°

The issue on this point was really one of mathematical

computation. Colonnades had the records in its possession.

The identity of the employees and their hours of work were

there set forth.

The District Court should have allowed the amendment,

Shultz v. Mack Farland & Sons Roofing Co., 5 Cir., 1969,

413 F.2d 1296, 1302 and Monod v. Futura, Inc., 10 Cir.,

1969, 415 F.2d 1170, 1174.

D. Inclusion of Colonnades under Section 203(s)(4)

The District Court held that Colonnades did not come

within the ‘‘old’* Section 203(s)(4) as a construction enter-

prise. Unpaid overtime compensation was therefore com-

puted under Section 207(a)(2). which covers newly covered

employees who come within the Act for the first time under

the 1966 Amendments. The District Court held that Colon-

nades came within the Act for the first time under the 1966

Amendments by virtue of Section 203(s)(1) as amended:

‘The plaintiff makes much of the fact that the de-

fendant had expenditures for construction in excess of

$350,000 during the relevant periods. But this does not

101f Colonnades had been seriously prejudiced and could show it, the District

Court under Rule 15(b), F.R. Civ. P. could have granted Colonnades a continu-

ance to meet the changed situation so that Colonnades could have cured the

prejudice.

mean at all that the hotel was in the business of con-

struction. To the contrary, it was at all times engaged

in the business of operating a hotel. The hotel had no

profit or receipts of any kind from construction. Its

construction activities consisting solely of expanding

and modernizing existing structures and facilities for

its own account. The court finds and concludes that

the defendant hotel was not and is not engaged in the

business of construction within the meaning of the

Act.”

Colonnades claims that:

(It) was not engaged in ‘the business of construc-

tion.” It was engaged in the business of operating a

hotel. Any ‘construction’ activities consisted simply of

expanding and modernizing the existing functioning ho-

tel and were incidental to the business of operating the

hotel—not a separate business activity.

Colonnades* annual gross volume must exceed $350,000

from the construction business for Colonnades to come

within the *‘old™* Section 203(s)(4).!! Colonnades stipulated

that in every year in question there was “in excess of

$350,000 in addition to our capital assets on the premises.”

“Annual gross volume” should not be narrowly con-

strued. Wirtz v. Allen Green & Associates, Inc.. 6 Cir.,

1967, 379 F.2d 198, 200. The Court in Allen Green said that

“annual gross volume’ does not mean sales and agreed

with the District Court below that it meant “‘any gain of

"See note 3 supra.

ERTL ——

capital assets derived from construction activities ... to

the extent of their fair market value, irrespective of

whether the assets were in the form of money or its equiva-

lent in property.”’ Wirtz v. Allen Green & Associates, Inc.,

supra at 199. The Court in Allen Green said it was the

purpose of Congress to “‘include in the coverage of the Act

employees of construction contractors who build for them-

selves as well as those who build for others.”” Wirtz y.

Allen Green & Associates, Inc., supra at 200. Therefore, we

must hold that the District Court construed too strictly the

definition of *‘business’ in Section 203(s)(4).

The District Court on remand will compute the overtime

compensation due to the affected employees under Section

207(a)(1).

Affirmed in part, Reversed in part, and Remanded for

proceedings not inconsistent with this opinion.

ATS PLN APTA NR a

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.