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BRENNAN v. S & M ENTERPRISES

July 16, 1973

Peter J. Brennan,* Secretary of Labor, Plaintiff,
v.
S & M Enterprises et al., Defendants


William B. Jones, District Judge


The opinion of the court was delivered by: JONES

This is an action brought by the Secretary of Labor (Secretary) to enjoin the defendants from violating the provisions of sections 7(a) (1) and 15(a) (2) of the Fair Labor Standards Act of 1938 (FLSA), as amended, 29 U.S.C. §§ 207(a) (1) and 215(a) (2) (1970), *fn1" and to restrain the withholding of the payment of overtime compensation allegedly due certain of the defendants' employees under the Act. The defendants are the owners and operators of three parking garages in the downtown business section of the District of Columbia. Jurisdiction is based on 29 U.S.C. § 217 (1970). The case is now before the Court on cross-motions for summary judgment.

 The defendants have agreed to the Secretary's statement of material facts not in issue submitted pursuant to Local Rule 9(h), except that they deny that any overtime compensation is due any of their employees. Thus the Court finds that no material facts are in issue and the case is ripe for summary disposition.

 The individual defendants, Donald E. Swagart and Willis R. Manning, Jr., apparently operate the three defendant parking garages through S & M Enterprises. Ownership of two of the three garages is vested in the estate of Harry A. Swagart, Jr., of which the individual defendants are trustees. The third garage is 50 percent owned by one of the other two garages. The defendants admit that the separate defendants constitute a single enterprise within the meaning of section 3(r) of the FLSA, 29 U.S.C. § 203(r) (1970). *fn2" Each of the garages is admitted since March 1, 1969, to have had over $250,000 annual dollar volume of sales made or business done, thus removing them from the retail exemption of 29 U.S.C. § 213(a) (2) (1970). The defendants admit that they have had at least two employees engaged in parking, moving and handling automobiles which have moved across state lines. Furthermore, the defendants admit that they have failed to pay their employees overtime compensation at one and one-half times their regular rate of pay for all hours worked over forty in a given workweek.

 The defendants seek to avoid injunctive relief from being entered against them on two grounds: (1) that their employees are not in an "enterprise engaged in commerce or in the production of goods for commerce" within section 3(s) (1) of the FLSA, 29 U.S.C. § 203(s) (1) (1970), and thus do not fall within the bounds of the overtime pay provisions of section 7(a) (1) of the FLSA, quoted in note 1, supra; and (2) that assuming that a violation exists, there is no need for injunctive relief. Finally, a reduction of any payment of overtime wages determined to be due is sought by urging that the two year statute of limitations provision of 29 U.S.C. § 255(a) (1970) should be applied rather than the three year period for willful violations contained in that same section. *fn3" The Court finds for the Secretary on each of these points.

 Engaging in Commerce

 Coverage under the overtime pay provisions of section 7(a) (1) of the FLSA is extended to any employee who is employed in "an enterprise engaged in commerce or in the production of goods for commerce." Section 3(s) (1), 29 U.S.C. § 203(s) (1), defines such an enterprise as one 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) . . . is an enterprise whose annual gross volume of sales made or business done is not less than $250,000. . . .

 As set forth above, the defendants admit that each of the garages has done over $250,000 business per year since March 1, 1969, the date from which overtime compensation is sought. Thus the defendants' argument that they are not covered by section 3(s) (1) rests on their assertion that their employees, who admittedly move, park, and handle automobiles which have moved across state lines, are not in an enterprise engaged in commerce.

 The defendants' position is that the activity of their employees cannot constitute engagement in commerce because the automobiles involved are goods already in the hands of the ultimate consumer and thus exempted by section 3(i) of the FLSA, 29 U.S.C. § 203(i) (1970). Principal reliance is placed on Shultz v. Wilson Building, Inc., 60 CCH LC P32,218 (S.D. Tex. 1969). *fn4" In Wilson Building, the Secretary of Labor asserted that the parking of automobiles which had at some time in the past moved in interstate commerce before delivery to their owners constituted an enterprise engaged in handling goods in commerce under section 3(s) (1). The Court rejected that argument, holding that the goods had come to rest upon delivery to their owners and had thus been removed from the chain of commerce.

 The Secretary, however, does not rely in this case on the handling of goods theory asserted in Wilson Building. Rather he properly points out that section 3(s) (1) covers the defendants' employees if at least two employees are engaged either in commerce or in producing goods for commerce (which includes handling goods in commerce, as in Wilson Building). Republic Pictures Corp. v. Kappler, 151 F.2d 543, 545 (8th Cir. 1945). Thus the Secretary is entitled to summary judgment if the defendants' employees are engaged in commerce, a question that is answered by determining whether interstate commerce would be impeded or abated without the services of the employees. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 86 L. Ed. 1682, 62 S. Ct. 1216 (1942). Although Congress did not exercise its full authority in the passage of the FLSA by requiring that employees be "engaged in commerce" rather than merely in activity affecting commerce, the term "engaged in commerce" is to be liberally construed. Overstreet v. North Shore Corp., 318 U.S. 125, 128, 87 L. Ed. 656, 63 S. Ct. 494 (1943).

 The only two reported decisions other than Wilson Building, supra, dealing with parking lot or garage employees have both tried to enumerate the factors to be weighed in determining whether employees are "engaged in commerce." In Jackson v. Airways Parking Co., 297 F. Supp. 1366 (N.D. Ga. 1969), the Court found that employees at the defendant's lot at the Atlanta Municipal Airport were engaged in commerce and thus covered by the FLSA. In reaching that conclusion, the Court looked to economic factors as well as common understanding. Thus the Court found the following factors most important: the economic independence of the business; the nature and extent of the work claimed to be part of interstate commerce; the degree to which admittedly interstate commerce would be impeded without the employee activity that is the subject of the complaint; the geographic relationship of the activity in a common sense understanding of interstate activity; the degree to which contractual and practical relationships brought the defendant into interstate operations; the facilitation of interstate transactions or communications; and the extent to which the activity is entwined with the continuous stream of commerce. Id. at 1373. *fn5"

 In Jackson the Court found close contractual and economic ties between the airport, an admittedly interstate facility, and the defendant's lot. Moreover, the geographic isolation of the lot made its dependence on the interstate airport clear. The lack of competing facilities further indicated that interstate travellers were dependent upon and ...


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