Case Information
*1 Before P OSNER , M ANION , T INDER , Circuit Judges . P OSNER Circuit Judge
. plaintiffs suit under Fair Labor Standards Act, U.S.C. §§ et seq ., employed currently formerly Corpo rate Cleaning Services, defendant (along couple executives company, who need discussed sepa rately). procedural hurdle our resolving ap peal, adverse judgment district court. defer consideration end *2 13 3818 our opinion understanding hurdle requires acquaintance with some facts germane substan tive issue presented by appeal.
CCS, as defendant commonly referred to, Chica go’s largest provider service high rise commercial and apartment buildings (average height stories), along with some governmental and other non commercial, nonresidential buildings, such hospitals museums; fewer than percent customers are private homeowners. See generally Corporate Cleaning Services, www.corporatecleaning.com (visited March 2015, were other websites cited in this opinion). company employs about washers.
A provision Fair Labor Standards Act requires an employer engaged interstate commerce (as CCS con ceded be) pay hourly workers least one half times normal hourly wage any hours work excess week, U.S.C. § 207(a)(1), CCS has conceded has done this case. there exception, pertinent case, requires satisfaction three conditions: worker’s regular ex ceeds one half times federal minimum wage (a condition conceded be satisfied by plaintiffs, we’ll discuss further); “more than half his compensation representative period (not less one month) represents commissions goods or services”; he must em ployed by “a retail or service establishment.” U.S.C. § 207(i). So issues presented appeal are whether mostly whether CCS establishment. district court granted summary judgment favor re *3 gard to its status a or establishment and, af ter a three day bench trial, ruled favor CCS on the requirement. And so the suit was dismissed, precipitating appeal.
When CCS receives a window order, it calcu lates the number “points” to assign to the job based the job’s complexity the estimated number the window will take to complete it; usually each worker assigned to job gets the same share the points allocated to it. CCS pays each washer number points allocated to him multiplied rate, specific to each worker, specified company’s collective bargain ing agreement with union represents employees, Service Employees International Union (SEIU). CCS also uses number points assigned to job to determine price charges to customers; naturally it uses higher ratio dollars per point setting price customers compensating employees, make profit. And regularly makes price adjustments, such adding costs permits equipment rentals, rounding price nearest $25 increment, reducing price competition desire maintain good relations customers. These adjustments cause percentage price attributable washers’ compensation vary job job. annual those employed throughout (the year suit was filed) ranged approximately
$40,000 $60,000. Although collective bargaining agreement contains provision entitling wash ers hour thus (as hourly workers) receive pay, apparently union has never tried *4 ‐ to enforce this provision, and—apparently content with company’s compensation system—has kept hands off litigation. Apart plaintiffs, washers employed by CCS appear be content challenged compensation system well. distributed written notice them they were entitled hourly ‐ ment, yet except for a six ‐ month period (December June 2008) they chose points ‐ based system compensa tion instead. company doesn’t call compensation system a
“commission” system, instead a “piece rate” (or, equiva lently, “piecework”) system, which is not subject sec tion 207(i) exemption. See U.S.C. § 207(g). nomen clature is determinative; “word [‘commission’] need used for exemption be applicable.” Yi Sterling Collision Centers, Inc ., (7th Cir. 2007). are real differences between two compensation systems (commission piecework), reality, over comes nomenclature, is system is a commis sion system. In a piece rate system a worker paid by item produced him: much per scarf, for example, if his job make scarves. In a system he paid sale—so if he works shoe store he’s paid specified amount per pair shoes he sells. Thus scarf worker paid making scarves even if haven’t been sold— is, even if he’s producing inventory—while shoe salesman paid only he makes sale. In present case, shoe store example, only if there’s been sale, namely sale building owner manager. *5 5
The parties’ briefs spill much ink over whether a com ‐ mission system requires that the compensation bear “identifiable consistent correlation” to price charged to customers that compensation just be “proportional correlated” price. The urge former, defendant latter, as latter is a more accurate de ‐ scription CCS’s compensation system. Our decision in Yi , cited earlier, involved auto repair, supports po ‐ sition. As this case, employer in Yi made adjustments price such things differences costs materials used. adjustments made percent ‐ age price attributable auto mechanics’ compensa ‐ tion vary repair repair. We held that didn’t validate compensation system commission system. Yi v. Sterling Collision Centers, Inc ., supra , F.3d at 509–10. Third Circuit agreed. Parker v. NutriSystem, Inc. , F.3d 274, (3d Cir. 2010) (“we decline adopt test re quires commission, under § [20]7(i), strictly based percentage end cost consumer”). We are una ware any contrary authority.
A more important consideration is compensated work involves irregular hours work. See Yi v. Sterling Collision Centers, Inc ., supra , F.3d at 510; Mech met v. Four Seasons Hotels, Ltd ., F.2d 1173, 1176–77 (7th Cir. 1987) ; Gieg DDR, Inc. 1045–46 (9th Cir. 2005). An employee who sale commis sion worker if his sales are made uniform rate (e.g., one sale per hour), ratio his hours worked his constant. For case his pay effectively hourly. That’s why piece rate workers within commis sion exception: they keep producing even sale imminent, relation between work *6 ‐ output tends constant. CCS’s employees can work only CCS is hired wash building’s win dows. Employment necessarily is irregular (rather than standard eight ‐ hour workday) of peculiar condi tions of window ‐ washing business. Washing outside windows of tall buildings while standing on scaffolds or dangling from harnesses is dangerous work CCS is just ly proud excellent safety record. That record necessi tates irregular work time employees. largest source danger high rise window washers weather; window washers do wash outside windows (and outside requires most frequent washing) in high winds, rain, snow, sleet, freezing temperatures. An other reason work slackens off in winter months managers residential buildings often will allow window washing before a.m., in order avoid disturbing residents; late start, coupled early darkness winter days, shrinks amount time window washers work. And obviously there production window inventory, allow smooth out these fluctuations working hours. little work during much winter than many workers take long vacations Mexico. (Oddly, most win dow washers come single small town Mexico— Villa Garcia de la Cadena. See Vicki Cox, “Window Washer Scrubs Chicago Skyline,” American Profile July 2012, http://americanprofile.com/articles/chicago w asher—a colorful account Chicago washer Mexican town.) make up slack often working more eight day during spring, sum mer, fall, though even those months there times *7 13 3818 7 can’t work eight hours a day, whether other work being done on building, manager’s fail ure notify residents washing, a slowdown demand for services building owners manag ers, or, most exotically, attacks on washers peregrine falcons. Formidable predators whose speed flight exceed 200 miles an hour, these birds build nests, for breeding taking care their fledglings, on roofs tall buildings Chicago. When a nesting falcon sees win dow high on building, near nest, may attack them, thus preventing them completing work. For a live video such an attack, see “Falcons Attack Window Washers 2,” YouTube www.youtube.com/watch?v=e2Mvg GA8Q7I. result these impediments steady work a washer can’t count working 40 hours each week
for an entire year. This reason for exempting his em ployer requirement paying worker time half for overtime. Suppose hourly wage two separate businesses identical $15. In one business work steady worker works 2000 hours a year ($15 per hour x 40 hours x 50 weeks = $30,000). no overtime, no requirement time half ($22.50) per over time hour. In other business worker also works 2000 hours year, he does work all for weeks year remaining weeks (we’re assuming both workers take two week unpaid vacation) he works hours week. Were he entitled hours each week weeks he works, his total wages year $15 per hour x hours (= $600) + $22.50 x (= $225), total $825 week, times weeks equals $33,000. In example, both workers work same *8 number hours a year, at same job, but one who works irregular is paid percent more. That doesn’t make any sense. anomaly, which said Yi is “the rationale for commission exemption FLSA’s overtime provision,” Yi Sterling Collision Centers, Inc ., su ‐ pra is avoided by recognizing that sec ‐ ond set workers, corresponding our window washers, are workers and therefore statutory en ‐ titlement pay.
But prevail CCS must show not only that employ ‐ ees are commission, also that company is a retail or service establishment, terms not defined stat ‐ ute. A “retail establishment” sounds like a store, CCS is not; “service establishment” is much broader. CCS is sell ‐ ing a service, not goods, as we’ve seen supportive exemption. Demand for services often varies, when demand drops seller cannot make up it, as a maker goods do, producing inventory rather immediate sale.
As service establishment CCS meets “retail ser vice establishment” requirement section 207(i). If weren’t enough (though is), CCS probably best de scribed establishment. It sells cleaning services building owners managers; they ultimate customers; do not resell clean ing, therefore wholesaler. No doubt building owners managers pass (so far market conditions allow) cost cleaning occu pants building. resale. It be ab surd suggest dealer motor vehicles, sells truck moving company, “wholesaling” truck *9 3818 9 cause buyer will doubtless try recover cost purchase price he charges for his moving services, utilize truck . The opinions cited us being contrary— Gray v. Swanney McDonald, Inc. , F.2d 652, 653– (9th Cir. 1971); Goldberg v. Furman Beauty Supply, Inc. , F.2d 16, 18–19 (3d Cir. 1962); Goldberg v. Warren G. Kleban Engineering Corp. , F.2d 855, 857–59 (5th Cir. 1962); Mitch ell v. Sherry Corine Corp. , 831, 834–35 (4th Cir. 1959)—involve a different statutory exemption commission exemption. See U.S.C. § 213(a)(2); Idaho Sheet Metal Works, Inc. Wirtz U.S. 190, 192–94 (1966). Section 213(a)(2) exemption intrastate businesses Fair Labor Standards Act’s wage requirements. Although two congressional reports discussing amend ment added commission exemption Act said “retail service establishment” defined section 213(a)(2), S. Rep. 145, 87th Cong., first session, p. 27; H.R. 75, 87th Cong., first session p. reports law don’t explain why a definition meant intrastate busi ness exemption should also apply exemp tion; two provisions serve different.
An additional reason classify CCS retailer sells building owners managers by building; doesn’t make new contract each each building. Judged unit sale recognized industry, then, retailer. Consider way analogy small jeweler selling pearl necklaces consumers. jeweler considered wholesaler pearls just each necklace contains more one pearl. argue sale services managers tall buildings “lacks con *10 cept,” whatever might mean. phrase found Department Labor regulation, C.F.R. § 779.317, which states types establishments industries where not readily apparent whether retail concept exists
and whether not exemption apply. It, there fore, possible give complete list types establishments retail concept. It pos sible, however, give partial list establishments concept does apply. This list follows: Accounting firms.
Adjustment and credit bureaus and collection agencies Advertising agencies including billboard advertising. Air conditioning heating systems contractors. Aircraft aeronautical equipment; establishments engaged business dealing in.
Airplane crop dusting, spraying seeding firms. Airports, airport servicing firms fixed base operators.
Ambulance companies.
Apartment houses.
Armored car companies.
Art; commercial art firms.
Auction houses
Auto wreckers ʹ junk dealers ʹ establishments Automatic vending machinery; establishments engaged business dealing in.
(Citations omitted.) The list goes on. We’ll stop with the A’s. no reference to window washing (though “loft buildings or office buildings, concerns engaged in rent ing maintenance of” included), and, more important, explanation for the choice of which firms to describe as lacking retail concept. Most them sell goods services to the actual user the service or product, rather wholesaling them to retailer who will resell them to the ac tual user. We seen that allowing to claim ex emption commission sales fits rationale ex emption.
The Department Labor, amicus curiae brief that has filed case, embraces plaintiffs’ argument that building managers who buy CCS’s cleaning services “resell” them building’s occupants, as if managers were buying mops planned resell occu pants. The Department accuses district court “declin[ing] defer Department’s list businesses lacking retail concept,” found regulation, but said list. brief states sale “general public” “a fundamental characteristic or establishment,” many retailers sell narrow segments public: think sellers hospital supplies, judges’ robes, or body bags.
Nowhere does Department engage with primary reason treating washers workers—their irregular work hours. Nowhere does sug gest will better off if over time, could induce company reduce hourly wage (for wage far above minimum wage). Department seems obsessed incomplete, arbitrary, *12 3818 essentially mindless catalog sellers lacking “a retail concept”—a catalog that, repeat, despite inordinate length does not include washing. The brief cites de partmental regulations that attempt define “retail or establishment” listing factors dubious rele vance, such as that “75 per centum [its] annual dollar vol ume sales goods or services (or both) resale recognized sales or services particular industry,” C.F.R. § 779.312, that establishment “serves everyday needs community which located.” C.F.R. § 779.318. We don’t see connection between these criteria reasons excusing certain employers from overtime provision Fair Labor Standards Act. nor does fail satisfy these criteria.
It’s no surprise, way, that there no connection. The Department’s definition comes from section 213(a)(2), we’ve noted was intrastate business exemption. This definition made sense context: if Congress’s purpose was exempt local mom pop stores from wide sweeping federal labor legislation (and just requirement), courts would want ensure most local stores’ output remain within state—in other words operating small scale community. Department Labor some courts, see Gieg v. DDR, Inc. , supra , F.3d at 1047–49; Reich Delcorp, Inc. , supra , F.3d (8th Cir. 1993); Martin v. Refrigeration School, Inc. 6–8 (9th Cir. 1992), woodenly ported definition section 213(a)(2) exemption sensitivity very different purpose exemption. *13 ‐ plaintiffs make other arguments, but what all their
arguments common is that they are decoupled from any plausible concern with welfare CCS’s washers. They point out that one purpose overtime provision FLSA to encourage employers to spread out full time work among different employees. Fair enough; but giving CCS’s washers overtime pay wouldn’t further purpose because it hasn’t been shown are on average working more 2,000 hours year (50 hour work weeks). A second purpose requiring added overtime is, discouraging employers requir ing their workers work overtime, to reduce workplace juries stemming fatigue. But has achieved ad mirable safety record without paying workers work ing overtime. Finally requirement paying extra said boon low wage workers. aren’t low wage workers; their yearly income, we said, between $40,000 and $60,000.
So are well paid. And their skills, strength, and daring, and concern with safety (not only workers’ safety, safety pass ersby sidewalks far beneath workers thus far beneath their scaffolds equipment), their dangerous jobs actually safe; their irregular work enable them enjoy warmth family Mexico win ter Chicago. It surprise most workers, union, want nothing do plaintiffs’ case.
It remains consider procedural hurdle mentioned outset opinion. Ten days after appeal was argued, parties filed joint stipulation dismiss pursuant Rule 42(b) appellate rules. *14 14 13 3818 Normally such stipulations accepted and the appeal dismissed, though we decline to do if necessary to avoid injustice, and especially to “protect rights anyone who did consent to dismissal.” Safeco Ins. Co. America v. American Int’l Group, Inc. , 710 F.3d 754, 755 (7th Cir. 2013); see also Noatex Corp. v. King Construction Hou ston, L.L.C ., F.3d 479, 487 (5th Cir. 2013); Suntharalinkam v. Keisler F.3d 822, (9th Cir. 2007) (en banc) (Kozinski, J., dissenting); American Automobile Manufacturers’ Association Massachusetts Department Environmental Pro tection, (1st Cir. 1994).
After initially accepting stipulation, we became con cerned about whether had received actual consent all plaintiffs. Remember plaintiffs consist former present employees CCS, many (maybe all, all know) come same small town in Mexico, they return there—the ones yet retired mainly in winter, business in Chica go slow (this winter Chicago was savage)—to visit with family. We wondered whether had all been consulted about, agreed to, stipulation. We therefore ordered mandate recalled parties ordered verify to us each plaintiffs had consented stipulation any settlement underlying it. parties now filed statements response our order. defendant expresses no opinion whether consented stipulation dismiss appeal. It states: “There written settlement agreement among parties. [CCS] agreed proposed stipulation dis miss conditioned upon payment certain costs incurred connection appeal, were fact paid.” *15 This, if true, means that plaintiffs only received noth ing in exchange abandoning their suit, that they defendant “certain costs.” plaintiffs’ statement in re sponse our order says that “the agreement between Parties provided that Defendants would receive payment compromised amount litigation costs that case would be dismissed. There was no written settlement agreement between Parties.” also no indication that Department Labor was consulted, despite hav ing filed an amicus curiae brief in support plaintiffs. statement goes say that plaintiffs’ lawyer “communicated obtained authority each Plaintiffs.” However, apparent statement that only communications were telephone that there no record what was said either party any telephone calls—no record either what were told what they said in reply.
Although plaintiff’s attorneys, in paying dismiss own case (for remember their agreeing some defendants’ costs), may thinking that might do better re trying issue in new case, that’s type stra tegic behavior we do encourage. As Judge Kozinski explained Suntharalinkam Keisler supra , at fact “that petitioner ʹ s counsel has filed motion do his client zero good, possibly great harm, ap parent reason other avoid an adverse ruling affect other parties other cases, militates strongly against exercising our discretion favor granting mo tion late date.”
Recently, parallel situation, denied joint motion dismiss appeal pursuant Rule 42(b), concluding *16 “it would be irresponsible dismiss th[e] case without re ‐ view.” Americana Art China Co., Inc. Foxfire Printing & Packaging, Inc., (7th Cir. 2014). And would be here, where we asked endorse most un ‐ professional way attempting end litigation. little purpose served by our instituting proceeding determine whether the gave meaningful consent the dismissal their case payment some the de fendant’s costs. True, we don’t know whether those costs were actually borne by plaintiffs. They may have been borne plaintiffs’ attorneys, who, anticipating an ad verse opinion, may concluded paying defend ant’s costs was lesser evil compared having acknowledge adverse ruling on appeal. For plain analysis opinion plaintiffs’ ap peal must fail on merits. Having recalled mandate, retain jurisdiction decide merits, suance our opinion (which was verge comple tion stipulation was filed) provides cleaner method disposing case. We remain troubled, how ever, unexplained provision regarding compensation some defendant’s costs. We therefore order stipulation dissolved, judgment district court
A FFIRMED .