Opinion
Irving J. Levy and Bessie Margolin, both of Washington, D.C., and Frank J. Delany, Victor M. Harding, Jr., and Ira W. Hurley, all of Chicago, Ill. (tried by Mr. Harding), for plaintiff.
Kirkland, Fleming, Green, Martin & Ellis, of Chicago, Ill. (tried by Mr. Fleming), for defendant.
Findings of Fact.
The Court finds that:
1. Plaintiff, as Administrator of the Wage and Hour Division, United States Department of Labor, has sued to enjoin the defendant from alleged violations of Sections 15(a)(1), 15(a)(2), and 15(a)(5) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 215(a)(1, 2, 5).
2. The case has been limited by the plaintiff to the employees who unload coal and building material at three of the defendant's coal yards (Nos. 48, 111, and 136), and eight of its building material yards (Nos. 18, 19, 79, 96, 98, 102, 137, and 197); all eleven yards are located in the city of Chicago; by virtue of the stipulations of the parties hereto and the opening statement of counsel for plaintiff appearing of record, no other operations of the defendant are involved herein.
3. Defendant, Consumers Company, is a corporation organized and existing under the laws of the State of Illinois, having its principal office in the city of Chicago, State of Illinois, where it operates the above mentioned eleven yards; defendant buys coal and building materials in large quantities from mining companies and manufacturers located both within and without the State of Illinois; in the three coal yards the purchases of coal from out of the State range from 55% to 65% of the total purchases, and in the eight building material yards the purchases of material from out of the State range from 34% to 58% of the total purchases.
4. Since October 24, 1938, the defendant failed to pay overtime compensation in accordance with Section 7(a) of the Act, 29 U.S.C.A. § 207(a), to its employees who unload coal and building material at the eleven yards of the defendant above mentioned; no question has been raised concerning compliance by the defendant with Section 6(a) of the Act, 29 U.S.C.A. § 206(a).
5. All sales of coal and building material made by defendant from the eleven yards are made in Cook County and no sales are made outside of Cook County; no coal or building materials are ever purchased or ordered by the defendant from mines or manufacturing establishments outside the State of Illinois on special orders or for specific customers; no coal or building materials coming from outside Illinois are ever marked or identified for any particular customer or for any particular order; defendant never solicits orders for the delivery of coal from outside of Illinios to any specific customer; none of the coal or building materials is ever sent from the mine or manufacturing establishment located outside of Illinois directly to customers of the defendant served by any of these eleven yards but all of the coal and building materials sold through these yards are there unloaded from the railroad cars or trucks by the employees of the defendant before delivery to defendant's customers; the only sales that defendant makes from any of the yards where the coal has been specifically ordered for a particular customer are occasional sales of coal coming from mines in Southern Illinois; the evidence shows that in the last half of 1942 defendant had two customers for whom specific coal was ordered and for whom it was kept separately in the yard, but all such sales involved Illinois coal only and present no question involving interstate commerce.
6. In the three coal yards defendant endeavors to carry a sufficient supply of all kinds of coal to take care of its trade for a period of twenty to thirty days in advance; the stock is kept on the ground and kept in advance, and fresh coal is ordered to replace coal taken from stock so that a twenty to thirty days supply may be conveniently maintained; yard 48, for example, carries fifteen or sixteen thousand tons of coal in stock during the heating period; as the coal is taken out it is replenished each week.
7. The eight building material yards do not handle any lumber but they do handle practically everything else that goes into the construction of a building; at these building material yards defendant endeavors to keep sufficient material on hand to meet any orders that may come in for a period of two weeks to a month in advance; purchases for the replacement of stock are made from time to time in anticipation of the needs of the various yards.
8. All coal arrives at the yards by railroad; it is delivered to the coal yards on defendant's own switch tracks in its yards; after such delivery defendant unloads the coal to stock with its own men; building materials are handled in the same manner; when the materials arrive in the yard they are unloaded and put in stock piles or warehouses, and when the railroad company delivers a car, the defendant takes possession of it on its own switch track and unloads it.
9. Defendant has divided its coal sales into three classes-- domestic, commercial, and dealer sales; a domestic sale is a sale to a home or two-flat building; a commercial sale is a sale to an apartment building of three or more apartments, to stores, offices, churches and factories; a dealer sale is a sale to a person coming into the yard who purchases the coal in small quantities for the purpose of peddling it about the city in his own truck.
10. The 'dealers' are known to the trade as peddlers; each has his own truck and he buys anywhere from a quarter of a ton to two or three tons; the average amount of coal delivered at one time, or sold at one time to the ordinary householder or two-flat owner is four or five tons. 11. Defendant has classified the coals which it handles into two main groups-- domestic and commercial; the domestic coal is that kind of coal that is especially prepared for a small type of equipment; the commercial coal is the finer sizes of coal that is more adapted to large equipment; except for purchases in extra small quantities (less than a load lot) the price charged the customer depends upon the type of coal purchased and not on the amount purchased; a load lot is four tons of coal or three tons of coke; for sales in smaller amounts defendant has a one, two, and three ton price; it also has a quarter and a half ton price; these prices, however, are all uniform as to all purchasers.
12. Ordinarily the same kinds of coal are not adaptable to use in both small and large burning equipment; however, Pocahontas Mine Run coal which appears only on the domestic price list of the defendant is sold at the same price to both domestic and commercial customers; in addition, there are four kinds of coal which are occasionally sold to both domestic and commercial users and which appear on both domestic and commercial price lists of the defendant; these are Pocahontas Pea, Pocahontas Buckwheat, Pocahontas Slack and Eastern Kentucky Stoker; the amount of these four coals sold to commercial users is very small; during the latter half of 1942, the total sales of these four types of coals to commercial customers from yard 48 were one and two-tenths per cent of the total sales from that yard; from yard 111, during the same period, the total sales of these coals to commercial customers were two and six-tenths per cent of the total tons sold from the yard; and at yard 136, during that period, there were no sales at all of these four coals to commercial customers; the latter yard does not handle those four coals.
13. The price of all coal of the same size or kind sold 'on yard' is the same regardless of the quantity purchased, and the price of all coal of the same kind which is delivered to the customer is the same except in the case of sales in less than load lots; the cost of delivery in one, two or three ton lots is higher as the delivery has to be made with the truck only partly loaded; in the case of these small sales there is a fifty cent additional charge on one, two or three tons; where the customer requires the defendant to perform the service of delivering the coal into the customer's bin, then defendant makes additional charges according to a Union scale for such service depending on the manner in which the coal is delivered; the extra service charges vary according to whether the coal is wheeled in, carried in in bags, or trimmed in the bin; these extra service charges are uniform as to all purchasers.
14. Defendant occasionally makes courtesy sales from its three coal yards; a courtesy sale is a sale which is made to a competitor who may be out of a certain type of coal and who may ask the defendant to supply it for him; the price on a courtesy sale is the defendant's wholesale cost plus a loading charge and a reasonable profit; such sales are purely for the accommodation of the competitor.
15. The prices of the four types of coal which are sold to both domestic and commercial users are lower for the commercial customer than for the domestic customer; the reason for the differential in price is because when that type of coal is sold to commercial customers it is sold in full load lots and the cost of handling is much less than it is on the domestic type of sale; commercial customers have larger bins which take full loads, and defendant takes into consideration the cost of doing the work; none of the prices of any of the coal are otherwise affected by the quantity sold, or by the frequency of the deliveries.
16. All of the coal that goes into the yards of the defendant belongs to the defendant with the exception of some coal at yard 111 which belongs to the Illinois Maintenance Company; defendant rents this company storage space, and unloads the cars into storage for that company; it also delivers out on that company's orders; the amount of coal thus handled over a six-months period was approximately 12,000 tons; the Illinois Maintenance Company buys the coal, pays the freight on it, and all the defendant does is to render the service of rental of space and delivery; all of this coal is Illinois coal.
17. The coal yards make some sales on bids; the only bid sales that they have from the three coal yards in question are sales to the City of Chicago, or to the schools; ordinarily, the purchaser advertises for bids; defendant classifies that type of sale as a commercial sale.
18. Coal yard 136 is located on the Chicago river, about a mile from its mouth; during the latter half of 1942, out of a total of some 35,000 tons received by the defendant at that yard, about 3,000 tons came in by boat; the employees of the defendant do not unload the coal into the yard from the boat; the unloading is handled by the vessel itself; the coal coming into this yard by boat is unloaded into the yard and kept in storage there until a demand for a sale arises; the Smoke Ordinance of the City of Chicago requires the use of smokeless coal by boats in the harbor and in the Chicago river etc., and this yard sells such coal to boats for use within the limits of the City of Chicago; the coal is sold to boats engaged in coast-wise travel, from Chicago to South Chicago and back, to boats traveling the Chicago river, to boats dredging sand from the lake, and occasionally to freighters coming in from Michigan or Wisconsin, or Canada; all the coal sold to boats is purchased for consumption in such boats for use in their own boilers, and is not made for purposes of resale; the employees of the defendant handle the loading of the coal on to the boats.
19. At coal yard No. 48, 33% of the coal is sold to dealers, 46% to commercial customers, and 21% to domestic customers; at coal yard No. 111, 4% of the coal is sold to dealers, 73% to commercial customers, and 23% to domestic customers; at coal yard No. 136, 27% of the coal is sold to dealers, 70% to commercial customers, and 3% to domestic customers.
20. The price structure in the building material yards differs from that in the coal yards; the building material yards have a list of selling prices but the market is so highly competitive that practically all sales are individually negotiated with the purchaser; some sales are made from these yards to the City of Chicago and to the Surface Lines; these sales are usually made on the basis of competitive bidding; there is another class of sales called 'cash sales;' these are sales to individuals, such as home owners who have no credit standing with the defendant; prices of 'cash sales' fluctuate but not as much as on the other sales; the customer that comes in for a cash sale usually comes in for a small quantity and consequently does not shop and does not take bids from competitors of defendant; the prices at which building materials are sold have no relation to the quantity sold; there are several factors upon the basis of which prices of building materials are determined; the most important factor is competition; a second factor is the distance, that is, the proximity of the defendant's place of business to the place where the materials are to be delivered; if the latter place is close at hand defendant tries harder to get the business than if it were some distance away; a third factor is the credit standing of the purchaser.
21. The factors entering into the determination of bid prices are, first, the market conditions as to competition; second, the cost of furnishing the material; and third, the amount necessary to recover a reasonable profit; it does not necessarily follow that because the quantity of material sold is large, the cost of furnishing that material to the customer is therefore less per item; it sometimes happens that the cost of supplying one truckload to a small job is just as much per truckload as the cost of supplying several truckloads to a larger job; the important factor in determining the differences in prices is competition; as for 'cash sales' the price charged is usually higher than on other sales but not in all instances.
22. The building material yards, like the coal yards, occasionally make 'courtesy sales'; they are the same type of sale, that is, one purely for the accommodation of a competitor; generally these sales are insignificant in amount; in seven of the yards they range from one-half of one per cent to four per cent of the total business done by those yards; in the eighth yard courtesy sales amounted to thirty-three per cent of its total business; this high percentage was due almost entirely to one sale for the accommodation of a competitor on one large job; it was unusual and is not typical of the operation of that yard; the word 'dealers' as used in Exhibit 4, attached to the Stipulation, relating to the material yards, does not mean the same thing as the word 'dealers' as used in Exhibit 2, referring to the coal yards; the only sales to dealers from the material yards are the above described courtesy sales to competitors.
23. Exhibit No. 1, attached hereto (a [Entire Page Contains Footnote] copy of Exhibit No. 4 attached to the Stipulation of Facts), shows the gross sales of building materials by the defendant to the different classes of customers made from each of its yards listed therein during twenty representative days in the last six months of 1942, and is representative of the facts existing at such yards since October 24, 1938.
24. The words 'retail' and 'wholesale' have long had a well-established meaning in the coal trade; George I. Methe, who has been engaged in the coal business for forty-one years, who was formerly Chairman of the Board and President of the American Retail Coal Association and who is a past President of the Chicago Coal Merchants Association, testified that the words 'retail' and 'wholesale' have definite accepted meanings throughout he country in connection with the coal trade; during the NRA days, he was Chairman of the Chicago code and metropolitan code area of Chicago; the Code Authority promulgated a code in which they defined retailing to mean 'the selling, or selling and delivering of solid fuel in other than railroad cars or cargo vessels,' and in which the word wholesaling was defined to mean 'the selling and delivering of solid fuel in railroad cars or cargo vessels;' the line between wholesale and retail is similarly drawn between carload and less than carload lots in the Bituminous Coal Act of 1937, 15 U.S.C.A. § 828, et seq.; the by-laws of the American Retail Coal Association define retailing as meaning 'the selling, or selling and delivering of solid fuel in other than railroad cars or cargo vessels and the business which has been by custom served by the retail solid fuel industry;' the same definition appears in the by-laws of the Chicago Coal Merchants Association; these definitions have been accepted in the trade for a great many years.
25. Joseph D. Biety, who has been engaged in the retail coal business in Chicago for twenty-eight years, testified that the words 'retail' and 'wholesale' have a well-defined meaning in the coal industry; that retailing means the selling, or selling and delivering of solid fuel in less than carload lots or cargo vessels, and that wholesaling means the selling of coal in car lots or cargo vessels; he also testified that the fact that a sale is made for resale does not make it non-retail in character if it is in a quantity less than a carload lot.
26. All sales made by defendant from its coal yards are in less than carload or cargo vessel lots.
Conclusions of Law.
1. That the Court has jurisdiction of the parties hereto and the subject matter hereof.
2. That the employees in the eleven yards of the defendant, who are engaged during a substantial part of their working hours in unloading coal and building material shipped from outside of the State of Illinois, are engaged in interstate commerce within the meaning of the Fair Labor Standards Act of 1938.
3. That the three coal yards and eight building material yards of the defendant, involved in this suit, are each one a 'retail establishment' within the meaning of Section 13(a)(2) of the Fair Labor Standards Act and, accordingly, all of the employees in such eleven yards are exempt from the provisions of the Act.
Wherefore, it is hereby ordered, adjudged and decreed:
That the prayer of plaintiff for the issuance of an injunction against the defendant be denied, that judgment be entered for the defendant, Consumers Company, a corporation, and that the complaint be dismissed;
That all costs herein be assessed against the plaintiff, and that defendant, Consumers Company, a corporation, go hence without day.
IGOE, District Judge.
The court is of the opinion that the employees of the defendant, in all of its yards, who are engaged during part of their time in unloading merchandise coming from outside the State, are engaged in interstate commerce within the meaning of the Fair Labor Standards Act.
The court is also of the opinion that the defendant is a 'retail establishment- ' within the meaning of Section 13(a)(2) of the Act, 29 U.S.C.A. § 213(a)(2), and all of its employees are exempt from the provisions of the Act.
Counsel for defendant will present appropriate findings of fact, conclusions of law and judgment order to make effective the views hereinabove expressed, at ten o'clock A.M. January 6, 1944.
| 1 EXHIBIT NO. 1 | |||||||||||||||||
| CONSUMERS COMPANY | |||||||||||||||||
| Sales of Building Material | |||||||||||||||||
| (On representative days between July 1, 1942 and December 31, 1942) | |||||||||||||||||
| Yard No. | |||||||||||||||||
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | |||||||||||||||||
| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | |||||||||||||||||
| Type of Customer | 18 | Per Cent | 19 | Per Cent | 79 | Per Cent | 96 | Per Cent | 98 | Per Cent | 102 | Per Cent | 137 | Per Cent | 197 | Per Cent | |
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | |||||||||||||||||
| 1. Contractors | $ 9967.26 | .66 | $3385.73 | .56 | $12609.23 | .475 | $20974.14 | .54 | $11983.60 | .79 | $19854.86 | .57 | $21506.23 | .820 | $20597.94 | .68 | |
| 2. Dealers | 220.23 | .015 | 1979.10 | .33 | 627.08 | .02 | 1047.64 | .025 | 580.26 | .04 | 84.51 | . 005 | 164.61 | .01 | 295.02 | .01 | |
| 3. Municipalities and Cities | 60.98 | .004 | 5.34 | .001 | -- | 261.56 | .01 | 296.55 | .02 | 65.93 | .005 | 163.47 | .01 | 8.00 | -- | ||
| 4. Chicago Surface Lines | 1579.74 | .10 | 149.78 | .025 | 1222.84 | .05 | 1474.07 | .04 | 75.52 | .005 | 722.65 | . 02 | 930.79 | .035 | 2226.50 | .075 | |
| 5. Defense Plants | 567.00 | .05 | 99.38 | .02 | 8078.16 | .30 | 7259.77 | .185 | 259.84 | .02 | 7100.61 | .205 | 287.89 | .01 | 3154.36 | .105 | |
| 6. Other Industries | 424.65 | .03 | 145.81 | .02 | 1068.23 | .04 | 4409.59 | .11 | 851.00 | .055 | 3298.26 | .095 | 2117.77 | .08 | 1509.42 | .05 | |
| 7. Churches and Schools | 21.13 | .001 | -- | -- | 9.65 | -- | 11.78 | -- | -- | 18.77 | -- | 16.50 | -- | ||||
| 8. Cash | 1488.57 | .10 | 259.58 | .04 | 2766.46 | .105 | 2004.69 | .05 | 894.43 | .06 | 3252.26 | .09 | 764.23 | .03 | 1804.37 | .06 | |
| 9. All Others | 681.77 | .04 | 22.50 | .004 | 252.28 | .01 | 1475.51 | .04 | 173.87 | .01 | 274.95 | . 01 | 135.44 | .005 | 596.52 | .02 | |
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | |||||||||||||||||
| Totals | $15011.33 | 100 | $6047.22 | 100 | $26624.28 | 100 | $38916.62 | 100 | 15126.85 | 100 | $34654.03 | 100 | $26089.20 | 100 | $30208.63 | 100 | |
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | |||||||||||||||||