Petition for Writ of Certiorari — Goldstein v. Dabanian (No. 452)

SUPREL. COURT. U,THE

Supreme Court of the Unit i sidies’’

JAMES R. BROWNING, Clerk

October Term, 1961

Nos, 4.9 2

CHARLES GOLDSTEIN, Petitioner

Vv.

MEGERDICH DABANIAN and EMMA K. DABANIAN

t/a EAST TIOGA CHECK SERVICE, Respondents

LOUIS SERNOVITZ and SIDNEY SINGER, Petitioners

Vv.

IRVING HERTZ t/a TERMINAL CHECK SERVICE, Respondent

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

M. STUART GOLDIN

STANLEY B. SINGER

JEROME N. BERENSON

Counsel for Petitioners

2000 Commercial Trust Bldg.

Philadelphia 2, Pa.

THE LEGAL INTELLIGENCER, 10 S. 37TH ST., PHILA. 4

INDEX

Page

Jurisdiction 1

Question Presented 2

Opinions Below ...—.—-—s—a=—a—sr.__.. 2

Statutes Involved _. 2

Statement a! 3

Reasons for Granting the Writ 4

ss et er | , 8

Appendix A—Opinion of Court of Appeals Below 9

Appendix B—Statute Involved _. 15

Appendix C—-Sur Petition for Rehearing 16

TABLE OF CITATIONS

Cases:

Arnold v. Ben Kanowsky, Inc., 1960, 80 S. Ct. 453, 361

U. S. 388, rehearing denied 80 S. Ct. 803, 362

ty TSR Ree sane aig ie ane ee,

Mitchell v. Birkett, D. C., Ark., 1960, 183 F. S. 291 7

Mitchell v. City Ice Co., C. A. Fla. 1960, 273 F. 2d 560 7, 8

Titchell v. Duplicate Photo Service, S. D. Calif. 1956,

31 L. C. 170,287 (not officially reported) | ue

Mitchell v. Gammill, C. A. La. 1957, 245 F. 2d 207 8

Mitchell v. Kentucky Finance Co., 1959, 359 U. S. 290

4, 5, 6, 8

Mitchell v. Sherry Corine Corp., C. A. 4, 264 F. 2d

831, certiorari denied, 360 U. S. 934 __.

National Bank v. Johnson, 104 U. S. 2711

I

TABLE OF CITATIONS—Continued

Cases: Page

Professional Credit Service Assn. v. O'Hara, 1941, 40

D. & C. 291 5, 6

Sucrs. de A. Mayol, Inc., C. A. 1, 280 F. 2d 477, Certi-

orari denied, 364 U. S. 902 Rete 6

Tobin v. Household Finance Co., D. C. —_ 1952, 106

F. S. 541, reversed on other grounds 208 F.2d 667 8

Walling v. Reid, C. A., Neb., 1943, 139 F. 2d 323

Federal Statute:

Fair Labor Standards Act of 1938, c. 676, 52 Stat.

1060, as amended, c. 736, 63 Stat. 910 (29 U.S.C.

201, et seq.)

Section §213[a] [2] —— | eo

Pennsylvania Statute:

Act of May 15, 1933, P. L. 624 . 5

Other Authority:

Standard Industrial Classification Manual, U. S. Bud-

get Bureau, 1957, p. 176 (banking) 7 6

li

IN THE

Supren.a Court of the United States

October Term, 1961

Nos.

CHARLES GOLDSTEIN, Petitioner

Vv.

MEGERDICH DABANIAN and EMMA K. DABANIAN

t/a EAST TIOGA CHECK SERVICE, Respondents

LOUIS SERNOVITZ and SIDNEY SINGER, Petitioners

Vv.

IRVING HERTZ t/a TERMINAL CHECK SERVICE, Respondent

PETITION FOR A WRIT OF CERTIORARI TO

. THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

To the Honorable, the Chief Justice and the Associate

Justices of the Supreme Court of the United States:

The Petitioners pray that a writ of certiorari issue

to review the judgment of the United States Court of

Appeals for the Third Circuit entered in the above-entitled

case on June 2, 1961 (petition for rehearing denied, June

29, 1961).

JURISDICTION

The judgment of the Court of Appeals was dated and

entered June 2, 1961 (App. A, p. 14), and the petition for

1

2

a rehearing was denied on June 29, 1961 (App. C, p. 16).

The jurisdiction of this-Ccurt is invoked under 28 U. S. C.

1254 (1).

QUESTION PRESENTED

Whether the business of cashing checks, issuing money

orders and accepting payment of utility bills constitutes

“sales of goods or services” by a “retail or service estab-

lishment” within the meaning of the exemption provided

in Section 13(a} (2) of the Fair Labor Standards Act.

OPINIONS BELOW

The findings of fact and conclusions of law of the

District Court (R. Appellants’ App. lla-18a) are not of-

ficially reported but do appear at 41 LC {/31,048. The

opinion of the Court of Appeals (App. A, infra, pp. 9-14)

is unreported also; however, it unofficially appears at 42

LC 131,113.

STATUTES INVOLVED

Pertinent provisions of the Fair Labor Standards Act

of 1938, c. 676, 52 Stat. 1060, as amended, c. 736, 63 Stat.

910 (29 U.S. C. 201 et seq.), are set forth in Appendix B,

infra, pp. 15-16). The provision particularly involved here

is Section 13(a) (2) which reads as follows:

_ The provisions of sections 6 and 7 shall not apply with

respect to . . . any employee employed by any retail

or service establishment, more than 50 per centum of

which establishment’s annual dollar volume of sales

of goods or service is made within the State in which

the establishment is located. A “retail or service estab-

lishment” shall mean an establishment 75 per centum

of whose annual dollar volume of sales cf goods or

services (or of both) is not for resale and is recog-

nized as retail sales or services in the particular in-

dustry; ...

3

STATEMENT

Petitioners were employed by Respondents for work

weeks in excess of 40 hours but were not paid at the rate

of one and one-half times the hourly rate for such time

in excess of said 40 hours (R. Appellants’ App. p. 13a).

This action was brought by the Petitioners to seek

payment of wages at the rate of time and a half for hours

worked by them in excess of forty hours a week as is re-

quired by 87(a) of the Fair Labor Standards Act, as

amended, 29 U.S. C. A. §207(a), for employees covered by

the Act.?

The Respondents brought a motion to dismiss the ac-

tions on the grounds that the Petitioners were not engaged

in interstate commerce and that even if Petitioners were

so engaged, that, they, the Respondents, were exempt from

the mandates of §7(a) of the Act because Petitioners were

employed in an administrative capacity or were employed

by a retail or service establishment within the dictates of

§13(a) (1 and 2) of the Act, 29 U.S. C. A. §213(a) (1 and

2), and Regulations of the Department of Labor promul-

gated persuant thereto (R. Appellants App. p. lla).

The lower court sustained the Respondent’s motion to

dismiss by stating,

“For the period of times material here, each of the

plaintiffs were not engaged in interstate commerce or in

the production of goods for such commerce within the mean-

ing of §§6(a) and 3 of the Act, 29 U.S. C. A. §§206/a),

203.” (R. Appellants’ App. 17a). The District Court

further stated, “Whether plaintiffs were exempt from the

provisions of the Act by reason of §13 thereof is unneces-

‘sary for decision in these actions.” (R. Appellants’ App.

p. 13a).

The Court of Appeals (Appendix A, pp. 9-14) found

that contrary to the district court’s delermination, the

1 Although two separate actions were filed they were considered

together in both the District and the Court of Appeals because the

circumstances in each are almost the same.

4

petitioners fell within the general coverage of the act.

but that the retail exemption provision of the Act was ap-.

plicable because the “check cashing service more nearly

approximates a hotel or barber shop than it does a bank

or personal loan company,”: and therefore the court was

in agreement with the result reached by the district court

but for a different reason (Appendix B. f. n. 6, p. 14).

The Petitioners then filed a petition for rehearing

(R. Appellants’ App. pp. ) which was denied by

the Court on June 29, 1961 .( Appendix C).

REASONS FOR GRANTING THE WRIT

The decision below is in conflict with this Court’s de-

cision in Mitchell v. Kentucky Finance Company, 359 U. S.

290 (1959). In that case this Court resolved the foregoing

conflict between the various Circuit Courts as to the ap-

plication of the “retail” exemption provided by the Fair

Labor Standard Act as amended in 1949 particularly as it

applied to banks, personal loan and credit companies and

other financial institutions. The decision of the Third Cir-

cuit undermines this Court’s decision and could reopen

many of the questions resolved by this Court and if per-

mitted to stand will create a form of exemption not con-

templated by Congress as evidenced in the legislative his-

tory of the 1949 amendments. Again, here as in the Ken-

tucky Finance Company case the issue presented would be

of great importance even if it were limited to the many

workers employed across the country in the vast and ex-

tensive check cashing business, but it is vastly magnified

by the implications of tlhe opinion which would enable many

other industries heretofore unquestionably ineligible for

the Section 13(a) (2) exemption to lay claim to it sub- -

stantially and adversely affecting the proper future ad-

ministration and enforcement of the Act. |

1. That respondents’ business does not qualify for ex-

emption as a “retail or service establishment” has been

settled, we submit, by this Court’s decision in Mitchell v.

5

Kentucky Finance Co., 35% U.S. 290 (1959!. To permit

the decision to stand is to create an exemption not contem-

plated py law and open the door for previcus ineligibles

to claim an exemption thus creating great confusion and

disruption in the future administration and enforcement

of the Act.

This Court in Kentucky Finance dealt with the ques-

tion of whether a small lean company, which met the “in-

dustry Fecognition” and cther percentage tests provided

by Congress in its 1949 amendments to $13{a) (2), could

thereby qualify for this exemption.

In holding that the business before it was not “other-

wise eligible under existing concepts” the Court concluded

that “enterprises in the financial field, none of which had

previously been considered to qualify for the exemption re-

gardless of the class of persons with which they dealt, and

regardless of whether they were thought of in the financial

industry as engaged in ‘retail financing’, remained un-

affected by the amendment of $13(a)(2)” (359 U.S. at

294-5, emphasis addedi. This Court added that ‘“(ainy

residuai doubt on this score” is dispelled by explicit state-

ments in the legislative history to the effect that “ ‘The

amendment does not exempt banks, insurance companies,

building and loan associations, credit companies, . . . tele-

phone companies, gas and electric utility companies, .. .

etc., because there is no concept of retail selling or servic-

ing in these industries. Where it was intended that such

businesses have an exemption one was specifically provided

by thelaw .. .’” (359 U.S. at 295).

The fee or rate charged by respondents varies accord-

ing to the face amount of the check (Rh. Appellees’ Appendix,

p. 7b) and this is the equivalent of, or similar to, the dis-

counting of commercial paper, particularly since the cus-

tomer remains liable for the full amount of the check, as an

endorser, if unpaid by the drawer or the dra:ver’s bank, and

‘ne discouniing of notes constitutes a phase of banking un-

der the Pennsylvania Banking Code of May 15, 1933, P. L.

624, as amended, 7 Purdon Statutes 819-2. See Professional

)

Credit Service Ass’n v. O’Hara, 40 D. & C. 291, 295. In

National Bank v. Johnson, 104 U.S. 271, 276, it is stated

that “the terms ‘loans’ and ‘discounts’ are synonyms.”

It seems clear therefore that check cashing or discount-

ing is more closely related to banking, small loan companies

or finance companies than to room renting by hotels or

haircutting by barbers. The U. S. Budget Bureau was not

frivolous in classifying check cashing agencies under the

major category of Banking in the Standard Industrial

Classification Manual, U. S. Budget Bureau, 1957, p. 176.

It thus iollows from this Court’s and Congressional

recognition of the inapplicability of any “retail” exemption

in the financial industry that respondent’s enterprise, like

the personal loan company in Kentucky Finance. is not

“eligible under existing concepts to achieve exemption.”

2. Even if the check cashing business is correctly

considerec to be within the retail concept, the cases should

be remanded for trial and proof by respondents that their

establishments meet the three percentage tests which are

prerequisites for the Act’s “retail” exemption. To permit

the bypassing of proof of these statutory requisites to the

“retail” exemption is to seriously hamper the orderly ad-

ministration and enforcement of the Act and is contrary

to this Court’s previous decisions in this area.

In particular, there is serious doubt that respondents

could establish that 75° of their sales are “not for resale”

within the statutory condition, since the checks and money

orders in which respondents deal are not “consumed” by

respondent’s:customers but are the subject of further trans-

fer and negotiation. In this connection, see Arnold v. Ben

Kanowsky, Inc., 361 U.S. 388 (sales of aircraft parts for

incorporation in aircraft which are then sold held “for re-

sale”) ; Mitchell v. Sherry Corine Corp., 264 F. 2d 831 (C.A.

4), certiorari denied, 360 U.S. 934 (sales of food to air-

lines for service to their passengers on interstate flights

held “for resale”); Sucrs. de A. Mayol, Inc. v. Mitchell,

280 F. 2d 477 (C.A. 1), certiorari denied, 364 U.S. 902

4

(sale of building materials for incorporation into the prop-

erty of the contractor’s customers held “for resale’’) ; and

Mitchell v. Duplicate Photo Service (S.D. Calif. 1956),

13WH Cases 71, 31 Labor Cases {70,287 (not officially re-

ported) (sale of movie star and other photographs to adver-

tising and publicity agencies for further distrbution to

movie fans, newspapers and others held “for resale’’).

Under these decisions it would appear that respondents,

who deal in items which, as in the above cases, are the sub-

ject of further commercial distribution beyond respond-

ents’ own customers, cannot sustain the burden of meeting

this necessary condition for exemption, and therefore

would not be entitled to the exemption even if the conjunc-

tive requirement of recognition in the industry were ade-

quately proved.

When the respondents received checks for collection

it was with the contemplation that these checks would be

taken to their own bank for collection and the bank would

charge them a fee for the handling and collection thereof

and this falls clearly within the definition of “resale” as

appearing in 29 C.F.R. 779.15(b).

It is to be seriously doubted that four self-serving ex

parte affidavits is sufficient evidence to establish the other

requisite to the exemption that 75‘ of respondents’ sales

are ‘‘recognized as retail sales or services in (not by) the

particular industry.” See Walling v. Reid, 139 F. 2d 323

(C.C.A. Neb. 1943), 29 C.F.R. $779.8(d). It is significant

to note that the District Court never made a _ judicial

determination as to the “retail exemption” but stated

“Whether plaintiffs were exempt from the provisions of

the Act by reason of $13 thereof is unnecessary for decision

in these actions.” (R. Appellants’ App., p. 17a).

In any event, in order for a retail exemption under

this section to apply, an employer must be recognized in

the particular industry as a retail establishment, and such

recognition is a question of fact for a jury, Mitchell v. Birk-

ett, 183 F.S. 291 (D.C. Ark. 1960), Mitchell v. City Ice

Co., 273 F. 2d 560 (C.A. Fla.1960), and any employer who

8

asserts his establishment is exempt as a retail establish-

ment, must assume the burden of proving that at least 75%

of his sales are recognized in his industry as retail, Arnold

v. Ben Kanowsky, Inc., supra, Mitchell v. Sorvas, 182 F. S.

800 (D.C.Pa. 1960), and this proof is not restricted to a

subjective test of what members of the industry think but

what is recognized in the industry as retail sales must be

proved objectively, Mitchell v. City Ice Co., supra, and it

must be remembered that the industry recognition test was

intended to be applied only where the establishment was

performing services susceptible of classification as “retail

services”, Tobin v. Household Finance Corp., 106 F.S. 541,

reversed on other grounds 208 F. 2d 67 (D.C.Pa. 1952),

Mitchell v. Kentucky Finance Co., supra, and the employer

must prove 75% of his sales are “not for resale” within the

statutory condition, Arnold v. Ben Kanowsky, supra,

and any exception from humanitarian and remedial legis-

lation of this chapter must be narrowly construed, and

judicial construction should not broaden exception to cover

businesses which Congress did not intend to include, Mit-

chell v. Gammill, 245 F. 2d 207 (C.A.La. 1957) ; Mitchell

v. Kentucky Finance Co., supra; Arnold v. Ben Kanowsky,

supra; Mitchell v. Sorvas, supra.

CONCLUSION

For the foregoing reasons, this petition for a writ of

certiorari should be granted.

Respectfully submitted,

M. STUART GOLDIN

STANLEY B. SINGER

JEROME N. BERENSON

Counsel for Petitioners

9

APPENDIX “A”

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

By GoopRIcH. Circuit Judge.

These two appeals present the same question, namely,

whether employees of the two defendants are engayed in

interstate commerce or the production of goods for com-

merce under the Fair Labor Standards Act, 29 U.S.C. A.

§206(a). The plaintiffs sued to recover unpaid overtime

compensation, liquidated damages and counsel fees.’ The

district court held that they were not engaged in com-

merce or the production of goods for commerce and dis-

missed the action. The decision is unreported.

It is agreed by all persons concerned that the question

here is not determined by the nature of the business in

which the employer is engaged but by the duties of the

individual employees. Mitchell v. H. B. Zachry Co., 362

U.S. 310 (1960) ; Mitchell v. Household Finance Corpora-

tion, 208 F. 2d 667 (3d Cir. 1953). These employees did

three things for their respective employers. One, for a fee

they cashed nonpersonal checks presented to them. These

checks, usually but not always, are payroll checks,” Two,

they issued money orders drawn on American Express or

National Express. Three, they accepted payment, for a

small fee, of utility company bills. Most of the customers

were persons who did not have individual bank accounts

of their own. The trial court decided that these plaintiffs

were not engaged in commerce or the production of goods

for commerce. He found it unnecessary to determine

1The Secretary of Labor submitted a brief to this Court as

amicus curiae.

2 Some personal checks in amounts up to twenty dollars were

also cashed for persons known by the particular employees.

10

whether they qualified under exceptions to the rule for

coverage described in the statute.

Contrary to the district court’s determination we think

that these employees fell within the general coverage of the

act. What they did was to cash these checks and at the end

of a business day total fhem up for deposit in the employ-

er’s bank account. While $1% of the checks were drawn

on local banks in Pennsylvania, 9% of them were drawn

on banks out of the state.

That the checks are “goods” within the meaning of

the statute was decided by the Second Circuit in Bozant v.

Bank of New York, 156 F. 2d 787 (2nd Cir. 1946), apply-

ing Western Union Telegraph Co. v. Lenroot, 323 U.S. 490

(1945). The Bozant case was discussed and approved in

our decision, Mitchell v. Household Finance Corporation,

supra. |

Nine percent of the checks had an out-of-state desti-

nation for presentment and payment. This, of course, con-

stitutes interstate commerce on the part of the employer.

See Mabee v. White Plains Publishing Co., 327 U. S. 178

(1946).

The handling: of the checks by these employees was

also a part of interstate commerce. In cashing the checks

and making the deposits in the appropriate bank, these

employees were forwarding goods in interstate commerce

just as truly as an initiating intrastate carrier is part of

the process of interstate commerce when it delivers the

goods consigned to an out-of-state destination to the car-

rier who takes them to the place of delivery. What the

employees did, in other words, was to start these checks on

the first lap of an interstate journey by depositing them

in a local bank. That being so, the employees are covered

by the act unless excluded by the exemptions.

The next question, therefore, is whether the plaintiffs

are exempt by reason either of being administrative em-

ployees or employees of a retail establishment. 29 U.S. C. A.

§§213(a) (1), (2). Let us turn first to the administrative

question and see what these employees did. The district

11

court in its consideration of the case was not called upon

to decide this question because it considered that the plain-

tiffs’ work was not part of interstate commerce. There is

no fact question presented, however. There is no dispute

as to what took place. The difference of opinion concerns

the effect of the acts done. Administrative employees are

defined in regulations of the Secretary.* These employees

had no one to direct in the operation of their part of the

business. They were the sole employees in the several offices

%**The term ‘employee employed in a bona fide . . . administra-

tive... capacity’ in section 13(a)(1) of the act shall mean any

employee:

(a) Whose primary duty consists of the performance of office

or nonmanual field work directly related to management policies

or general business operations of his employer or his employer's

customers; and

(b) Who customarily and regularly exercises discretion and in-

dependent judgment; and

(ec) (1) Who regularly and directly assists a proprietor, or an

employee employed in a bona fide executive or administrative ca-

pacity (as such terms are defined in this subpart); or

(2) Who performs under only general supervision work |

along specialized or technical lines requiring special training,

experience, or knowledge; or

(3)-Who executes under only general supervision special

assignments and tasks; and

(d) Who does not devote more than 20 percent of his hours

worked in the workweek to activities which are not directly and

closely related to the performance of the work described in

paragraphs (a) through ic) of this section; and

(e) Who is compensated for his services on a salary or fee

basis at a rate of not less than $75 | now $95] per week . . . ex-

clusive of board, lodging, or other facilities:

Provided, That an employee who is compensated on a salary or fee

basis at a rate of not less than $100 {now $125] per week (exclusive

of board, lodging, or other facilities), and whose primary duty con-

sists of the performance of office or nonmanual field work directly

related to management policies or general business operations of his

employer or his employer’s customers, which includes work requir-

ing the exercise of discretion and independent judgment, shall be

deemed to meet all of the requirements of this section.”” 29 C.F.R.

§541.200.

12

maintained by the employers.‘ Their primary duty was

certainly not manual labor and they were paid $75.00 or

more per week. They determined the identity of a person

who wished to cash a check. For this purpose there were

office files of signatures for many of the habitual customers.

If a persron was not listed in the file he was required to

identify himself by some other means. At the end ‘of the

day the cashed checks were made up into a list and de-

posited at the appropriate bank. The employees alone de-

termined the amount of currency needed for the day’s

business.

It would not be disputed that a certain amount of

discretion was involved in making an estimate of the cash

needs for the day and also determining the identity of the

customers who wished to have their checks cashed. But

such activity does not place the employees in the adminis-

trative group. Indeed, the discretion to be exercised is less

than that of a top mechanic employed in an automobile

service station whose judgment about diagnosing the ail-

ment of a motor car and prescribing for its cure calls for

a high degree of technical competence. The scope of the

discretion here is much too narrow to place the employees

in the administrative class.*

We turn, then, to the final question whether these

plaintiffs were engaged in a retail establishment. The

Government says that this question is determined by the

Supreme Court decision in Mitchell v. Kentucky Finance

Co., Inc., 359 U. S. 290 (1959). In this case it was held

that the business of making small personal loans and pur-

chasing conditional sales contracts from dealers did not

constitute an exemption from the coverage of the statute

following the amendment of 1949. The Supreme Court also

4On occasional busy days part-time employees were hired to

assist them.

5 The district court found that supervision of these employees

‘“‘was unnecessary because [their] duties were routine and followed

a set pattern.” See Rothman v. Publicker Industries, Inc., 20i F.

2d 618 (3rd Cir. 1953).

13

pointed out that exemptions from this statute are to be

narrowly construed. 7

In the present case more than 50°. of the business

handled by these plaintiffs was local business. They served

customers in the community. They sold no goods but they

did provide a service as a convenience to their customers

for which the latter paid. There are affidavits that the

trade considered this to be a retail enterprise.

This case is not determined by the Supreme Court

decision in Mitchell v. Kentucky Finance Co. just cited.

These employees are not bankers nor dealers in finance.

They do not make loans; they do not extend credit. Their

functions have none of the features which go along with

orderly banking or financial institution enterprises except

for the cashing of checks. But that cashing for their cus-

tomers is a purely local, personal service for the neighbor-

hood people who patronize them. They perform a retail

service." They do not fall within those statements which

“In this case the concept “retail” seems rather artificial since

but for this statute we would find difficulty in conceiving how any

question would arise whether this type of activity is “retail,” “whole-

sale” or whatever. The Secretary's regulations provide:

“It will be observed that the sponsors of the amendment. in

classifying industries on the basis of the applicability of the

retail concept to their selling or servicing, did so on the basis

‘f common knowledge as to what is recognized and what is not

recognized as retail selling or servicing in the light of the ob-

jectives and purposes of the exemption as to the type of estab-

lishment it is intended to exempt. Thus, the dividing line be-

tween sales and services to which the retail concept is applicable

and those to which it is not applicable is the general and com-

mon understanding of people of what constitutes a retail sale

or service in the traditional sense. . . .” 29 (.F.R. $779.91 ¢).

We doubt very much whether this type of activity is or is not

considered “retail” in the common understanding of the public. How-

ever, the regulations go on to describe the “characteristics” of a

retail establishment.

“Typically a retail or service establishment is one which

sells goods or services to the general public. It serves the every-

day needs of the community in which it is located. The retail

14

exclude financial agency transactions from the exeraptions

of the statute.” The issuance of money orders and pay-

ment of utility bills are clearly within the retail service

concept.

This conclusion brings us into agreement with the

result reached by the district judge but for a different

reason.

The judgment of the district court will be affirmed.

JUDGMENT

This cause came on to be heard on the record from

the United States District Court for the Eastern District

of Pennsylvania and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgment of the said Dis-

trict Court in this case be, and the same is hereby affirmed,

with costs.

Attest:

IDA O. CRESKOFF

June 2, 1961 Clerk

or service establishment performs a function in the business

organization of the nation which is at the very end of the stream

of distribution, disposing in small quantities of the products and

skills of such organization and does not take part in the manu-

facturing processes.” 29 C.F.R. §779.9(d).

In attempting to analogize to activities which clearly fall within

and without the exemption, we think this check cashing service more

nearly approximates a hotel or barber shop than it does a bank or

personal loan company. See 29 C.F.R. $§779.10(a), (b). It “serves

the everyday needs of the community in which it is located.”

7 See the administrative regulation describing the impact of

the legislative history. 29 C.F.R. 8779.9(b).

15

APPENDIX “B”

The Fair Labor Standards Act of 1938, as amended

(c. 676, 52 Stat. 1060; c. 736, 63 Stat. 910, 29 U.S. C. 201),

provides in pertinent part:

SEC. 7. [63 Stat. 912-913] :

(a) Except as otherwise provided in this section,

no employer shail employ any of his employees who is

engaged in commerce or in the production of goods for

commerce for a workweek longer than forty hours, un-

less such employee receives compensation for his em-

ployment 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 [63 Stat. 917]:

(a) The provisions of sections 6 and 7 shall not

apply with respect to... (2) any employee em-

ployed by any retail or service establishment, more

than 50 per centum of which establishment’s annual

dollar volume of sales of goods or services is made

within the State in which the establishment is located.

A “retail or service establishment” shall mean an es-

tablishment 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 serv-

ices in the particular industry; or (3) any employee

employed by any establishment engaged in Jaundering,

cleaning or repairing clothing or fabrics, more than

dU per centum of which establishment’s annual dollar

volume of sales of such services is made within the

State in which the establishment is located: Provided,

That 75 per centum of such establishment’s annual

dollar volume of sales of such services is made to

customers who are not engaged in a mining, manufac-

turing, transportation, or communications business;

or (4) any employee employed by an establishment

16

which qualifies as an exempt retail establishment un-

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

a retail establishment in the particular industry not-

withstanding that such establishment makes or proc-

esses at the retail establishment the goods that it sells:

Provided, 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 establishn.ent is located; .. .

APPENDIX “C”

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

SUR PETITION FOR REHEARING

After due consideration the petition for rehearing in

the above-entitled case is hereby denied.

By the Court

GOODRICH

Circuit Judge

Dated: June 29, 1961