Document: 414 U.S. 190 94 S.Ct. 427 38 L.Ed.2d 406 E. FALK, Individually and as partner in Drucker & Falk, et al., Petitioners,v.Peter J. BRENNAN, Secretary of Labor, United States Department Labor. No. 72—844. Argued Oct. 11, 1973. Decided Dec. 5, Syllabus Respondent brought this action to enjoin petitioners (hereafter D F), a fully integrated partnership managing apartment complexes for fixed percentage the gross rentals collected from each project, mimimum wage other violations Fair Labor Standards Act. The District Court dismissed complaint, adopting F's contentions that it does not have $500,000 'annual volume sales made or business done' thus come within term 'enterprise engaged commerce' defined § 3(s) Act, is an employer, meaning 3(d), maintenance personnel who are paid received at where they work. Appeals, reversed, holding F met statutory definition 'employer' determining whether enterprise satisfies dollar-volume limitation, (which exceed annually) collects all must be considered rather than commissions receives owners held: 1. F, whose managerial responsibilities buildings give substantial control terms conditions work employees those buildings, under expansive 3(e) P. 195. 2. sells only its professional management services, part services do represent attributable enterprise. therefore relevant measure done purposes limitation 3(s)(1). Thus, though 'enterprise' 3(r), Brennan v. Arnheim Neely, Inc., 410 512, 93 1138, 35 463, Act apply below 3(s)(1) limitation. Pp. 195—201. Herbert V. Kelly, Newport News, Va., petitioners. Andrew L. Frey, Washington, D.C., respondent. Mr. Justice STEWART delivered opinion Court. 1 initiated against petitioners, partners real estate company, injunction future various provisions 1938, 52 Stat. 1060, amended, 29 U.S.C. 201 seq., back wages allegedly due affected by past Act.1 petitioners' defense was 'employers'2 involved, their single subject Act's requirements. This latter contention together two separate arguments. First, contended combined activities constitute 'enterprise,' 203(r). Second, argue, even if amount '(e)nterprise commerce production goods commerce,' 3(s), 203(s), because $500,000.3 2 Under name Falk (D render number State Virginia. contracts with owners, agrees perform, on behalf owner his nominal supervision, virtually functions ordinarily required proper functioning complex.4 These stated less one year. Each party can terminate arrangement giving 30 days' notice intent so. Neither nor any hold property interest manages. compensation project.5 3 deposited local bank accounts.6 From these accounts pays expenses incurred operating maintaining buildings. After deducting compensation, well applicable expenses, transmits payments periodic basis. If disbursements complex rental receipts, contract reimburse F. 4 Secretary's complaint hours complexes, being violation minimum wage, overtime, recordkeeping respect workers. supervision employed. They between 'employees project owners.' 5 In Court, several 3(r) 203(r); that, 3(s)(1), 203(s)(1), coverage Act; workers, 203(d). agreed three complaint. Appeals reversed. It held performed meets appellate court also concluded considered, than, had held, owners. Since there no question annually, thereof 6 We granted certiorari review judgment Appeals.7 Two days later, we 463 (1973), company directs operations separately owned confirming issue present case. But our decision Neely did reach questions raised accordingly limited grant presented petition: 7 '(2) covered $500,000. Is figure measured agent agent's commissions? 8 '(3) Are workers employed managed petitioners?' 954, 1419, 686. 9 * As 3, 'employees' issue, clear building think unquestionably correct 3(d) which defines 'any person acting directly indirectly employer relation employee.' Section 'employee' include individual employer.' 203(e). view expansiveness extent gave employees, is, definition, turn, therefore, embraced certiorari. II 10 supra, satisfied based upon conclusion tests 'enterprise': related activities, unified operation common control, purpose. important understand, however, found consisted sale interests were Neely. Indeed, legislative history 1961 amendments' strongly suggest use agents independent entities sufficient convert what otherwise businesses.8 case, consists complexes. 11 imposes requirements, every but commerce.'9 One elements case annually.10 bone dollarvolume annual services. prescribes speaks 'an $500,000.' 203(s)(1). (Emphasis added.) language requires after turn attention does. 12 Any doubt about space 'sale' removed when Congress amended 1966 provide would henceforth done,' 80 831 (emphasis added). Senate Report amendments makes added intended dispel uncertainty revenue derived rentals, loans, perhaps literally 'sales,' nevertheless measuring 3(s). indicates amendment signify approval result Wirtz Savannah Bank Trust Co., Cir., 362 F.2d 857, so interpreted read before addition 'business language. explained: 13 'The enterprise, section will continue both dollar . makes, price purchaser sold him ., activity engages similarly include, example, such making loans renting leasing kind.' S.Rep. 1487, 89th Cong., 2d Sess., 7—8, U.S.Code Cong. Admin.News p. 3009. 14 But, determination 'sales begin dispose us. remains, business. 15 contends includes income apartments He argues fact own should preclude attribution it. contends, measured, tenants, fees pay services—i.e., commissions. 16 line seller product service always readily discernible, especially relates or, amounts same thing space. abstract proposition, undoubtedly position ownership necessarily determinative attributing statute. For consignment seller's might properly receipts product, he actually title sold. Realistically, selling consigned him, functionally different has purchased resale. practical difference may 'cost sold' element profit equation expended resale other. 17 convinced and, accordingly, (1). nearly pursuant lease agreements significant duration. Some predate premises, absolutely nothing 'sales' underlying owner.11 When expire renewed tenant, undertakes find new tenant serves negotiation execution lease. With lease, colorable argument since increases, least maintains, rents compensation. withstand most superficial analysis. 18 typical commodity remuneration function margin cost price. At first blush, seems somewhat akin seller. Upon reflection, critical appears: negotiated calculated, proceeds during tenure, period renders beyond earlier negotiating clear, (the realty) follows logically deciding 'aggregate activities' supervises. U.S., 519, S.Ct., 1142. regard, differ broker realty stock, primary undertaking negotiate principal's calculated sale. 19 On facts, inescapable vends 'gross renders.12 annually involved litigation, 20 vacated remanded further proceedings consistent opinion.13 21 ordered. 22 Judgment remanded. 23 whom DOUGLAS, WHITE, MARSHALL join, concurring dissenting part. 24 I concur Court's 'employers' 25 dissent, 'the services,' record leaves whatever resulted While acknowledges ante, 187, decides attributed because, 'when lease.' Ante, 200. 26 To sure, precise calculation time sale: monthly rent maintenance; conceivably reducing true space, performs unsurprising observations hardly supply basis that: 'It facts plain words uncommonly unambiguous support meant particular exclusion others. 27 limits enterprises 'whose ..'1 s specificity 3(k) 203(k), mean sale, exchange, sell, shipment disposition' Those simple entirely remotely imply some measured. Clearly, terms, embraces leases owners.2 28 addition, wording '(t)his perforce attempt resolve controversy equivocal unaided reliable extrinsic guide intention,' Mitchell Kentucky Finance 359 290, 293, 79 756, 758, 815 (1959). House Reports concerning show explicitly done.'3 Prior 1961, protections extended themselves 'engaged §§ 6(a), 7(a), 206(a), 207(a). substantially broadened 'employed 75 65, 67, 69. meeting coverage. prescribed test $1,000,000,' id., 66. adopted establish economic standard predicates size impact commerce. See H.R.Rep.No.75, 87th 1st 7, (1961); S.Rep.No.145, 6—7, 31 Admin. News 1620; see Staff Subcommittee offered floor Senator McNamara, 107 Cong.Rec. 5840—5842 (1961). insure given narrow technical interpretation exclude requisite business, make sales.4 1966, 831, substituting added), sales,' amendments. explains Congress' reasons changing terminology: 'This dollars (exclusive specified taxes) transactions regardless sense. 32 '. abundantly remove possible reason misapprehension. (under Amendments) (as sec. 3(k)) excise taxes retail level stated), S.Rep.No.1487, 7—8 (1966). added); Cong 33 Congressional intent, could more clear: enterprise' No excepted measurement. Nothing suggests essentially way commingled, closely constituting essence inquiry in, activities. Measurement 34 Turning stipulated distinct, related, public. connection employs staff advertise available apartments, interview prospective renew apartment-building owner. operates maintains By owner, collect rent; initiate, prosecute, settle legal eviction, possession unpaid repairs alterations; utilities necessary services; purchase supplies; bills, including mortgage payments; prepare budget owner's approval; submit reports owner; hire, discharge, supervise labor premises. brokerage article entered into states: 'Owners hereby employ appoint F) sole exclusive .' resulting quite distinct transaction i.e., 36 focuses measures must, test. transactions, hires supervises 100 persons perform efficient clearly induce flow men, money, materials across state lines. be, pales comparison caused sell special duties developing marketing strategies, placing advertisements media, interviewing leases. generate millions per year consequent impacts too numerous obvious trace here. diminished activities—not owners'—that respect, others, indistinguishable salesman goods, concedes, 199, product. 37 Ignoring contradicts expressed intention undermines effectiveness enterprise's commerce.5 Where statute indicate purpose Congress, respected,' Schwegmann Bros. Calvert Distillers Corp., 341 384, 402, 71 745, 754, 95 L.Ed. 1035 (1951) (Frankfurter, J., dissenting). Even proceeding erroneous basic premise, computed, required, specific regulations promulgated Wage Hour Division effectuate 3(s)(1).6 computations instructed 39 method calculating (for purposes) now followed law establishments, laundries exemptions provided 13(a)(2), (3), (4), (13) act. procedure set forth Department's Interpretative Bulletin (pertaining retailers services). stated, sales' types 12-month period.' (1901). 1657. 40 receipts' computation presently embodied state: establishment 12month period,' CFR 779.265. 779.259, 779.266—779.269. 41 Gross True, personal seller, receipts. And where, labor, provides, commission, integral rendered, commission still constitutes If, hand, reimburses costs men material plainly regulation reimbursement plus commission. 42 compensated cost-plus-commission contract, costs,7 commission.8 cover costs, alleged (29 206(b)), overtime 207(a)(2)), 211(c)) 203(d), states "Employer' times action. February 1, 1969, reduced $250,000. leasing, maintaining, advertising availability signing, renewing, canceling leases; collecting rents; instituting, prosecuting, settling essential purchasing paying bills; preparing budgets owners' submitting owners; hiring supervising grounds. varies 4% 6%, depending arrangements totaled over $7,700,000 1967 $8,600,000 1968. Both them twice. Initially, reversed proceedings. Shultz 439 340. sought certiorari, denied writ. Hodgson, 404 827, 92 62, 56 (1971). remand resisted imposition particularly awarding prejudgment interest. rendered awarded affirmed, again 203(r) pertinent part: '(A) shall deemed operated controlled arrangement, includes, to, agreement, (1) only, certain manufacturer, distributor, advertiser, (2) join establishments industry collective purchasing, (3) right brand advertiser area, occupies premises leased establishments.' pp. 1620, 1661, included following statements regarding portion 3(r): '(T)he mere group independently stores combine run through 'enterprise." 42. See, e.g., 6(b) 7(a) 207(a)), 11(c) 211(c)). amounted slightly $434,000 $463,000 1968, respectively, years litigation. proportion predating tenure building. total absence participation transaction, merely proceeds, belies attribute index done.' Part dissent 'must commissions.' Post, 211. dissent's rationale effect itself then reimbursed Such Secretary. payment cause decide), exist placed behalf. funds agreement with, authority of, A footnote brief insurance estate. bring insurance, sales, 'related leave consideration contention. 203(r), mean: (either control) purpose, corporate organizational units departments arrangements, contractor ..' 1967, January 31, stated) disputed requirement Courts below, Fifth Tenth Circuits 857 (CA5 1966); First National 365 641 (CA10 1966). continuance judicial practice liberal contemplated Congress: 'In keeping broad definitions phrases used, courts repeatedly adhered principle receive interpretation, consonant definitions, character remedial humanitarian legislation.' H.R.Rep.No.1366, (accompanying Act). Questions scope provision arisen suits enforce defendant 'that 'literal interpretation' securities services.' F.2d, 862—863 (footnote omitted). An receipts,' II, infra. $7,752,600.86 $8,607,086.04 That discussed infra, D. reimbursements materials. representing subtracted order accurately 602 Pub.L. 89—601, 844, provides 'authorized promulgate rules, regulations, orders regard (1966 enterprise) Act.' never sent Rather, sums deducted tenants either 6% render.

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