James D. HODGSON, Secretary of Labor, Plaintiff-Appellant, v. N. G. KALLAS COMPANY, Defendant-Appellee.
No. 72-1941.
United States Court of Appeals, Sixth Circuit.
Decided June 14, 1973.
Having found favor with the trier of fact, the Apрellee is entitled to have the evidence viewed and considered most favorably to him and he must be accorded the benefit of reasonable inferences therefrom. Benedict v. Eppley Hotel Co., 161 Neb. 280, 73 N.W.2d 228, 230 (1956). The Trial Court concluded that the strong inference arising from the fact that an occurrence, which does not usually happen in the absence of someone‘s negligence, was caused by an instrumentality under the control of the Appellant and the inference arising from other facts proven by the evidence were so compelling and so related as to permit only one reasonable conclusion—that Appellant wаs negligent. That conclusion is supported by substantial evidence.
Affirmed.
John W. Peck, Circuit Judge, dissented and filed opinion.
Robert E. Swickle, Detroit, Mich., for defendant-appellee; Law Offices of Leonard C. Jaques, P. C., Detroit, Mich., on brief.
Before PHILLIPS, Chief Judge, PECK, Circuit Judge and LAMBROS*, District Judge.
LAMBROS, District Judge.
The questiоn presented by this case is the meaning of “retail or service establishment,” a phrase used in the exemption provisions of the Fair Labor Standards Act, as it applies to a tax reporting and bookkeеping business. The suit was brought by plaintiff-appellant for alleged violations of the wage, record-keeping and over-time provisions of the Fair Labor Standards Act,
The District Court based its ruling on appellee‘s uncontroverted affidavit, which established that the business, located in Michigan, served customers coming exclusively from Michigan by “among other things” performing bookkeeping and tax reporting services. According to the affidavit, when the business completed tax reports, it either provided the customers with pre-addressed envelopes for mailing the reports to the Regional Office of the Internal Revenue Service in Cincinnati, Ohio, or it mailed the reports itself. The affidavit further represented that the business’ annual gross income was less than $250,000.
As a preliminary matter, the District Court rulеd that, because appellee‘s business produced tax reports with the expectation that these reports would be sent to Ohio through the mails, the business came within the interstate commerce requirement of the Fair Labor Standards Act. We affirm this ruling as supported by the clear weight of authority. United States v. Darby, 312 U.S. 100, 117, 61 S.Ct. 451, 85 L.Ed. 609 (1941); Schulte v. Gangi, 328 U.S. 108, 119, 66 S.Ct. 925, 90 L.Ed. 1114 (1946); Hodgson v. Travis Edwards, Inc., 465 F.2d 1050, 1054 (5th Cir. 1972) (petition for cert. pending) (mailing of corporate reports satisfied commerce requirement); White v. Wirtz, 402 F.2d 145 (10th Cir. 1968) (producing mаps expected to be mailed satisfied commerce requirement); Wirtz v. A. S. Giometti and Associates, Inc., 399 F.2d 738 (5th Cir. 1968) (same).
The major issue in this appeal arises from the District Court‘s second ruling that appellee‘s bookkeeping and tax reporting business was exempt under
“(a) The provisions of sections 6 and 7 shall not apply with respect to . . . (2) 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 services is made within the State in which the establishment is located, if such establish-
ment . . . (iv) . . . has an annual dollar volume of sales . . . which is less than $250,000.
“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 . . . .”
29 U.S.C. § 213(a)(2) .
The District Court correctly ruled that the first two provisions of that exemption, requiring less than $250,000 gross income and requiring that more than half of the business be conducted within the state, were met on the basis of appellee‘s uncontroverted affidavits. It next proceeded to decide, on the bаsis of the affidavits, that appellee‘s business met the third requirement of the exemption that the company was a “retail or service establishment” as that term is defined in the 1949 amendment to
In two unanimous opinions written by Justice Harlan, the Supreme Court reviewed the legislative history of that provision and concluded that a business should be classified as a “retail or service establishment” for purposes of the exemption, first, if the sale of particular goods or services was retail in concept and, second (if the answer to the first was affirmative), if the terms or circumstances of the sale made it retail, rather than for resale. Idaho Sheet Metal Works v. Wirtz, 383 U.S. 190, 196-205, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966); Mitchell v. Kentucky Finance Co., 359 U.S. 290, 291-295, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959).
In applying the first prong of the test for the exemption, Justice Harlan relied primarily on analogies to those businesses listed as within the exemption in the legislative history to that provision and on the interpretation given the provision by the Secretary of Labor. Idaho Sheet Metal Works, supra, 383 U.S. at 205, 86 S.Ct. 737. In this case, both the legislative history and the administrative regulations would indicate that appellеe‘s business does not qualify as retail within the meaning of the Act.
Although the legislative history does not specifically mention bookkeeping and tax reporting services, it does relate that other businesses providing assistance with financial records, such as banks, insurance companies, building and loan associations, and credit companies, are not retail as that term is used in the exemption provision. Idaho Sheet Metal Works, supra at 202, 203, 86 S.Ct. 737; Kentucky Finance Co., supra, 359 U.S. at 292, 79 S.Ct. 756. Moreover, the Secretary of Labor has since the early 1940‘s consistently included accountants on his non-exempt list.
Although the legislative history and regulations classify financial recording services as non-exempt, appellees urge the Court to rely solely on an “everyday needs” test, such as that apрlied by the Fourth Circuit in Hodgson v. Centralized Services, Inc., 457 F.2d 824 (4th Cir. 1972). See
“The legislative recital of telephоne, gas and electric, and credit companies along with a number of others as businesses outside the exemption . . . demonstrates that not everything the consumer purchases can be a retail sale of goods or services. . . .” Idaho Sheet Metal Works, supra, 383 U.S. at 203, 86 S.Ct. at 746.
Furthermore, the District Court had no facts before it on which to conclude that the bookkeeping services provided met “everyday” needs rather than long-range planning.
Having determinеd therefore that appellee‘s business should not have been classified as retail as that term has been used in the exemption provision, it is unnecessary to reach the second prong of the test whiсh is whether appellee has shown that the services were not for resale. We note in passing that appellee has the burden of showing that bookkeeping services such as those he provides аre not resold. Arnold v. Kanowsky, 361 U.S. 388, 394, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960). See
In applying the exemption provisions of the Fair Labor Standards Act, the courts are required to give a narrow interpretation to the terms therein. Chief Justice Warren stated:
“We have held that these exemptions are to be narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within their terms and spirit. The three conditions of § 13(a)(2) are explicit prerequisites to exemption, not merely suggested guidelines for judicial determination of the employer‘s status.” Arnold v. Kanowsky, supra at 392, 80 S.Ct. at 456.
In this case, the facts regarding appellee‘s business were not sufficient to warrant a conclusion that it came within the retail concept of the exemption. On the contrary, the facts as developed would lend support to a ruling that the appellee‘s business is а financial institution such as has been consistently treated as a non-exempt business. The District Court was therefore in error in granting summary judgment for appellee.
We affirm with respect to the District Court‘s ruling that appellee‘s business came within the interstate commerce requirements of the Act but reverse and remand with instructions to vacate the entry of summary judgment with respect to the District Court‘s ruling that appellee‘s business came within the “retail and service establishment” exemption to the Act.
PECK, Circuit Judge (dissenting).
Because I do not conclude that appellee‘s business is non-exempt as a financial institution (Mitchell v. Kentucky Finance Company, 359 U.S. 290, 295, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959)), and conclude as did the District Court that it was instead a “retail or service establishment” within the meaning of