Source: http://supreme.nolo.com/us/359/290/case.html
Timestamp: 2019-04-24 04:44:45+00:00

Document:
The business of making small personal loans and purchasing conditional sales contracts from dealers in furniture and appliances does not constitute "sales of . . . services" by a "retail or service establishment," within the meaning of the exemption provided in § 13(a)(2) of the Fair Labor Standards Act, as amended in 1949. Pp. 359 U. S. 290-296.
Petitioner, the Secretary of Labor, brought suit to enjoin respondents from violating the overtime and recordkeeping provisions of the Fair Labor Standards Act, 52 Stat. 1060, as amended, 29 U.S.C. § 201 et seq. Respondents, two closely affiliated subsidiaries of a common corporate parent, share an office in Louisville, Kentucky. They are engaged in the business of making personal loans, in amounts up to $300, to individuals, and in purchasing conditional sales contracts from dealers in furniture and appliances. Respondents share the services of a common manager and nine full-time and two part-time employees.
". . . any employee employed by any retail or service establishment, more than 50 percentum of which establishment's annual dollar volume of sales of goods or services is made within the State in which the establishment is located. A 'retail or service establishment' shall mean an establishment 75 percentum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry; . . ."
As concededly more than 50 percent of respondents' loan and discount business is with Kentucky residents, and none of it involves "resale" transactions, the sole question involved in this litigation is whether respondents should be considered as "retail or service establishment[s]," engaged in the making of "sales of goods or services," within the meaning of § 13(a)(2). The burden is, of course, upon respondents to establish that they are entitled to the benefit of the § 13 exemption, since coverage apart from the exemption is admitted.
After trial, the District Court found that respondents had not proved that they are a "retail or service establishment" within the meaning of § 13(a)(2), and issued an injunction restraining respondents from further violating the Act. 150 F.Supp. 368. The Court of Appeals reversed. 254 F.2d 8. We granted certiorari, 358 U.S. 811, to resolve the conflict between the decision of the court below and that of the Court of Appeals for the First Circuit in Aetna Finance Co. v. Mitchell, 247 F.2d 190.
"Any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce."
The Administrator early ruled that personal loan companies and other business entities in what may broadly be called the "financial industry" were not within the scope of that exemption. [Footnote 1] When Congress amended the Act in 1949, it provided that pre-1949 rulings and interpretations by the Administrator should remain in effect unless inconsistent with the statute as amended. 63 Stat. 920, § 16(c). The narrow issue before us, then, is whether Congress, in the 1949 amendment of § 13(a)(2), broadened the scope of that section so as to embrace personal loan companies.
"75 percentum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry; . . ."
Respondents argue that they plainly come within this definition because (1) more than 75 percent of their loan and discount business is "not for resale," and (2) their activities are recognized in the financial industry as being the "retail end" of that industry. They claim that the intent of Congress in the 1949 amendment was to provide that "local" business was exempt from the overtime requirements of the statute, and that their activities are precisely the kind the § 13 exemption was designed to embrace.
This is not a case where perforce we must attempt to resolve a controversy as to the true meaning of equivocal statutory language unaided by any reliable extrinsic guide to legislative intention. On the contrary, the debates and reports in Congress with reference to this section of the statute are detailed and explicit. To those legislative materials we now turn.
The legislative history of the 1949 amendment to § 13(a)(2) demonstrates beyond doubt that Congress was acting in implementation of a specific and particularized purpose. Before 1949, the Administrator, in interpreting the term "retail or service establishment," then nowhere defined in the statute, had, in addition to excluding from the coverage of the exemption personal loan companies and other financial institutions, ruled that a business enterprise generally would not qualify as such an establishment unless 75 percent of its receipts were derived from the sale of goods or services "to private persons to satisfy their personal wants," on the theory that sales for business use were "nonretail." [Footnote 3] This administratively announced "business use" test was generally approved by this Court in Roland Electrical Co. v. Walling, 326 U. S. 657.
in the financial field, none of which had previously been considered to qualify for the exemption regardless of the class of persons with which they dealt, and regardless of whether they were thought of in the financial industry as engaged in "retail financing," remained unaffected by the amendment of § 13(a)(2).
"The amendment does not exempt banks, insurance companies, building and loan associations, credit companies, newspapers, telephone companies, gas and electric utility companies, telegraph companies, etc., because there is no concept of retail selling or servicing in these industries. Where it was intended that such businesses have an exemption one was specifically provided by the law. . . . [Footnote 6]"
Powell v. United States Cartridge Co., 339 U. S. 497, 339 U. S. 517. In the light of the abundant pointed evidence that Congress did not intend that businesses like those of respondents be exempted from the overtime and recordkeeping provisions of the statute by § 13(a)(2), we would not be justified in straining to bring respondents' activities within the literal words of the exemption.
Interpretative Bull. No. 6, 1942 WH Manual 326, 29-31. That ruling has been carried over under the amended version of § 13(a)(2). 29 CFR, 1958 Supp., § 779.10.
The term "service" is nowhere defined in the Fair Labor Standards Act.
See Interpretative Bull. No. 6, 1942 WH Manual 326, 14, 18.
The Administrator supported the so-called Lesinski bill, which would have adopted the Administrator's "business use" test in the definition of "retail or service establishment."
"[§ 13(a)(2)] . . . clarifies the existing exemption by defining the term 'retail or service establishment' and stating the conditions under which the exemption shall apply. This clarification is needed in order to obviate the sweeping ruling of the Administrator and the courts that no sale of goods or services for business use is retail. See Roland Electrical Co. v. Walling, [326 U.S. 657]; . . ."
"The only substantial difference between the Administrator and his recommendation [which would have written the 'business use' test into the statute] and the amendment which we propose is that we propose to do way with this artificial distinction between a retail sale, on the one hand, and a business sale, on the other. . . ."
95 Cong.Rec. 12498. For other authoritative expressions of the legislative intent in this regard, see 95 Cong.Rec. 11115-11116, 12492-12493, 12496, 12502, 12506, 12508.
H.R.Conf.Rep., 95 Cong.Rec. 14932. See also Report of Majority of Senate Conferees, 95 Cong.Rec. 14877; statement of Senator Holland, 95 Cong.Rec. 12505-12506.
Respondents urge that statements of this kind have no application to them, because they are not "credit companies," in that such term properly is to be restricted to commercial credit companies. We agree with the observation of the Court of Appeals in Aetna Finance Co. v. Mitchell, supra, 247 F.2d at 193, that this contention is "quite unconvincing." There is nothing which indicates that Congress was using the term "credit companies" in any specialized sense, and indeed one of respondents' own expert witnesses testified that personal loan companies are "credit institutions." We think it clear that the House and Senate Conferees used "credit companies" to mean nothing more nor less than companies which deal in credit, as respondents concededly do.

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