The issues herein, tried without a jury, affect building service employees who sue to recover unpaid overtime compensation, together with an additional equal amount as liquidated damages, the costs of the action, and reasonable attorney’s fee alleged to be due for varying periods from October 24, 1938, to April 20, 1942, under subdivision (a) of section 7 and subdivision (b) of section 16 of the Fair Labor Standards Act of 1938 [U. S. Code, tit. 29, § 207, subd. (a), and § 216, subd. (b)].
During this period defendant owned, managed, operated and controlled a building twenty stories in height, including a basement, situated at No. 386 Fourth Avenue, Borough of Manhattan, City of New York. Defendant was engaged in the business of operating said building for hire, under written leases, to tenants occupying space, and it transacted in behalf of said tenants thereof such maintenance and operation. The gross rented area of the building during varying periods in question was as high as 180,081 square feet, and as low as 164,-171 square feet. Cn the average thirty-three tenants occupied the premises. The tenants occupied such area as book publishers, insurance companies, research laboratory, adver- ’ tisers, factors, architects, doctor’s and attorney’s offices, publishers, lithographers, a button, an underwear, an adding machine, and restaurant equipment concerns, a banking institution on the ground or street floor, cigar stand in lobby, and a trucking concern on a portion of the ground floor or street floor. Plaintiffs were employed by defendant to serve in said building as mechanics, elevator operators, porters, watchmen, painters and cleaners respectively. By reason of such, each
The defendant maintains that it carries on no business in said building except renting; that it had no interest in the businesses of its tenants, and that it is not engaged in commerce or in the production of goods for commerce, by reason of which its employees, the plaintiffs herein, do not come within the coverage of the Fair Labor Standards Act..
All of the alleged defenses contained in defendant’s answer have been withdrawn, except the alleged general denial, and the fourth and partial defense relating to the constitutionality of the Fair Labor Standards Act under the Fifth Amendment to the Constitution of the United States. Decision was reserved upon plaintiffs’ motion to strike out the latter defense. My first consideration, therefore, shall be a determination of this motion.
This question has been clearly determined by the court in the case of Emerson v. Lincoln Candies, Inc. (173 Misc. 531, 174 Misc. 353, affd. 261 App. Div. 879, affd. 287 N. Y. 577), when it held that an action of this character is not one to enforce a penalty, but one for liquidated damages, so that section 256 of the United States Judicial Code, vesting in the courts of the United States jurisdiction “ Of all suits for penalties or forfeitures incurred under the laws of the United States ” (U. S. Code, tit. 28, § 371), did not apply, and, therefore, the State courts have jurisdiction by reason of the rights given employees under subdivision (b) of section 16 of the Fair Labor Standards Act, which in substance provides that an action of this character may be instituted “ in any court of competent jurisdiction ”. Accordingly, plaintiffs’ motion to strike out this fourth and partial defense is granted. (See, also, Yunker v. Abbye Employment Agency, 32 N. Y. S. 2d 715.)
Upon the trial, the nature of the business of defendant, the duties of the various plaintiffs, the relationship of those duties to the business of the various tenants, and the amounts which the respective plaintiffs were underpaid, exclusive of liquidated damages, attorney’s fee, costs and interest, if otherwise entitled to the benefits of the Code, have .been stipulated by the parties.
The facts are thus without dispute, the only difference between the parties being whether the plaintiffs come within the meaning and intent of the Fair Labor Standards Act of 1938 and, accordingly, are entitled to the benefits of the overtime provision of section 7 of said Act (U. S. Code, tit. 29, § 207).
There is no dispute that prior to the recent decisions of the Supreme Court of the United States, the courts of this State held that employees of the owner of a building whose duties were confined to the operation and maintenance of said building did not come within the coverage of the Act, even though the tenants of the building were engaged in interstate commerce or in the production of goods for commerce. (See Killingbeck v. Garment Center Capitol, Inc., 259 App. Div. 691.) However, on June 1, 1942, the Supreme Court of the United States, in the case of Kirschbaum Co. v. Walling (316 U. S. 517), held that the employees of the owners of loft buildings, such as elevator operators, firemen, engineers, printers, carpenters and carpenters’ helpers, came within the coverage of the Act, where the tenants of the building were principally engaged in the production of goods for commerce.
With this concept of the provisions of the Act in mind, a reading of the opinion in the Kirschbaum case (supra) apparently discloses that the court based its decision on the finding that the employees in the loft building involved were included in the second class of employees referred to in said Act, namely, employees “ engaged in the production of goods for commerce ”.
Apparently the only question left unanswered by the Kirschbaum case (supra) is — what portion or percentage of an employee’s activities must be related to the production of goods for commerce in order to bring that employee within the coverage of the Act? The application of the Act does not depend upon the percentage or volume of goods moving in commerce, so long as the record is sufficient to indicate that the flow is substantial and significant, and not utterly inconsequential. This seems to be the rule. (Berry v. 34 Irving Place Corporation, 52 F. Supp. 875.) In the case of Walling v. Jacksonville Paper Co. (317 U. S. 564, 572 [1943]) the question considered was whether certain employees were “ engaged in commerce ”, upon which the court said the applicability of the Act is dependent on the character of the employee’s work, and further held that “ If a substantial part of an employee’s activities related to goods whose movement in the channels of interstate commerce was established * * * he is covered by the Act.”
The evidence indicates that some eighteen of said tenants have been regularly engaged in essential creative and co-ordinating functions of preparing books, magazines and advertising materials for publication and reproduction, and at least a half dozen of other tenants have been regularly engaged in using the building as a warehouse for the storing of vast quantities of books, underwear, buttons, lantern slides and other goods for daily shipment to customers in several States of the United States. The creative and co-ordinating functions of publishing, art work and advertising conducted by the various tenants in connection with preparing materials for publication, have in fact recently been held to come within the scope of the Act in Walling v. Sun Pub. Co. (47 F. Supp. 180, affd. 140 F. 2d 445). (See Berry v. 34 Irving Place Corporation, supra; Walling v. Allied
An analysis of the work performed by the tenants indicates that approximately half of the leased space was occupied by tenants regularly and continuously engaged in “ production of goods for commerce ” within the meaning of the Act. Thus it seems to me, that tenants editing manuscripts, preparing advertising copy, creating art work, laying out dummy formats for books, magazines and advertisements, correcting galley proofs, stenciling magazine reports, printing premium notices, carding and boxing sets of buttons, preparing consumers ’ premiums for shipment, and stocking, handling, packing, labeling, .wrapping, placing in cartons, and crating thousands of carded buttons, garments, books, lantern slides, and other goods for shipment daily from the building, were engaged in “ production ” as the Act defines the term. The fact that building service employees serving such tenants are engaged in a “ process or occupation necessary to the production ”, regardless of whether they physically handled or worked upon the goods turned out by the respective tenants, has been clearly established since the Supreme Court’s holding in the Kirschbaum case (supra). (See, also, Walton v. Southern Package Corp., 320 U. S. 540; Bowie v. Gonzalez, 117 F. 2d 11; Gonzalez v. Bowie, 123 F. 2d 387; Fleming v. A. B. Kirschbaum Co., 124 F. 2d 567; Calaf v. Gonzalez, 127 F. 2d 934; Fleming v. Arsenal Bldg. Corporation, 125 F. 2d 278; Merryfield v. Hoyt Shoe Corp., 128 F. 2d 452; Hamlet Ice Co. v. Fleming, 127 F. 2d 165; Mid-Continent Pipe Line Co. v. Hargrave, 129 F. 2d 655; Walling v. Sondock, 132 F. 2d 77.)
There must be considered finally the fact that the various tenants used the building facilities, such as the freight elevators, to acquiré goods from out of State suppliers, and to distribute such goods in substantial quantities to customers beyond the borders of the State of New York. Such would constitute the start and finish of the interstate journeys of goods going from and coming to respective tenants in said premises. (Kirschbaum v. Walling (supra); Walling v. Sondock, supra.) Nor
I am of the opinion that a significant percentage of the tenants are engaged in commerce or the production of goods for commerce within the meaning of the Fair Labor Standards Act, and since each of the plaintiffs’ activities is substantially and significantly related to said production, said employees are entitled to the benefits of the Act. I, therefore, find judgment in favor of each of the plaintiffs in the following amounts:
Jerry Schineck ........................... $525.00
Milo Robbins............................. 191.27
Francis J. Greene......................... 73.50
Joseph Coreschi .......................... 191.27
Joseph Berg.............................. 241.29
Arthur Henry Pierson..................... 255.17
Joseph Grech............................. 77.06
Robert Seale ............................. 192.30
Laurence Aguis........................... 205.34
John Joseph Leahy........ 191.27
Michael Rapinett ......................... 207.12
John Galea............................... 203.13
Robert Greer............................. 193.29
Andrew Aguis...................... 213.35
Ole Nilsen................................ 188.17
Richard Zarafa........................... 128.36
Barney L. Takayer........................ 171.64
Russel Bourne............................ 135.89
In addition to the amount awarded to each of the plaintiffs for their respective unpaid overtime compensation, there shall be added as to each plaintiff an additional equal amount as liquidated damages, under the mandatory provisions of subdivision (b) of section 16 of the Act. By reason of the fact that said unpaid overtime compensation and additional equal amount, under the interpretation of the Act, are considered in the aggre
Submit findings of fact and conclusions of law.