In No 30, the employer, petitioner, has 12 workers who
fabricate, install and repair sheet metal products. While about 60%
of sales in number are to the general public, about 83% of gross
income comes from work done, generally on individual specifications
for sizable pieces of equipment, for five potato processing
companies which dehydrate and freeze potatoes for interstate
shipment. In reply to respondent's claim that it was violating the
overtime provisions of the Fair Labor Standards Act of 1938,
petitioner denied that its workers engaged in or produced goods for
interstate commerce, and asserted that it was a "retail or service
establishment" under §13(a)(2) of the Act, which exempts certain
establishments 75% of whose dollar volume of sales is not for
resale and is recognized as retail sales or services in the
industry. Petitioner showed that 75% of its dollar volume was not
for resale, and that its officials and salesmen who sell to it
regarded the business as retail. The District Court agreed with
petitioner, but the Court of Appeals reversed. Respondent employer
in No 31 is a franchised tire dealer with 47 employees engaged in
selling, recapping and repairing tires. More than half its gross
income comes from sales and repairs of tires furnished to
businesses using heavy industrial or construction vehicles or
fleets of trucks, operating to a sizable but unspecified extent in
interstate commerce. Respondent alleged that it came within the
§13(a)(2) exemption, and showed that 75% of its sales were not for
resale, and that the industry's use of the word "retail" applied to
all sales not for resale, despite the commercial character of the
tires and an established pattern of quantity discounts. Petitioner
showed that the word retail was used by the industry in other
senses which excluded commercial sales, and that respondent's
commercial customers did not regard
Page 383 U. S. 191
their purchases as at retail. Petitioner also introduced his
official guidelines, which class as non-retail all sales to fleets
of five or more vehicles at "wholesale prices," defined as those
charged on sales for resale or on sales to 10-vehicle fleets. The
District Court held respondent to be within the interstate commerce
coverage of the Act, but to be entitled to the exemption, and the
Court of Appeals affirmed.
Held:
1. The industry usage test is not, in itself, controlling in
determining when business transactions are retail sales under the
Act. Pp.
383 U. S.
199-202.
2. While the typical retail sale is one involving goods or
services that are frequently acquired for family or personal use,
Congress also intended that the retail exemption extend somewhat
beyond consumer goods and services to include certain nondomestic
or nonconsumer products -- for example, farm implements and certain
types of trucks. Pp.
383 U. S.
203-204.
3. Within the category of goods and services that can be sold at
retail, not every sale can be so classified. Sales for resale are
excluded by the language of the exemption, and the legislative
history and common usage indicate that the term "retail" becomes
less appropriate as the quantity and price discount increase in a
transaction. Pp.
383 U. S.
204-205.
4. The sheet metal company is disqualified as a retail
establishment, since 835 of its gross income is derived from the
fabrication and maintenance of potato processing equipment, which
appears to have no private or noncommercial utility and bears
little resemblance to those strictly commercial articles which may
be sold at retail. Pp.
383 U. S.
205-207.
5. The tire company, which, as the employer, has the burden of
proof in establishing its exemption under §13(a)(2), has not met
that burden, as it has failed to show that the transactions
qualified as retail under the Secretary's guidelines for retail
sales, which, in pertinent part, are sustained in view of the
common conception of the term retail as excluding sales made in
quantity and at significant discounts, and in view of the
legislative history in respect thereto. Pp.
383 U. S.
207-209.
335 F.2d 952, affirmed; 330 F.2d 804, reversed.
Page 383 U. S. 192
MR. JUSTICE HARLAN delivered the opinion of the Court.
The common question presented by these two cases is the meaning
of the phrase "retail or service establishment" as that language is
used in the exemptive provisions of the federal wage and hour
statute. We first set forth the statute and describe the two cases
before us, then examine the history and content of the exempting
clause, and finally apply the resulting analysis to the facts of
each case.
I
The Fair Labor Standards Act of 1938 enacted a comprehensive
scheme providing for minimum wages and overtime pay for workers
"engaged in" or "in the production of goods for" interstate and
foreign commerce. [
Footnote 1]
Among other exemptions, Congress, by § 13(a)(2) of the Act has
excluded from the statute's wage and hour protections those
employees working for certain "retail
Page 383 U. S. 193
or service" establishments. [
Footnote 2] To qualify for this exemption in its present
form, an establishment must meet three tests: first, it must make
more than 50% of its annual dollar volume of sales of goods or
services within the State; [
Footnote 3] second, it must meet one of four tests,
designated "(i)-(iv)," chiefly designed to prevent most very large
employers from enjoying the exemption; [
Footnote 4] third, it must be a "retail or service
establishment." Regarding this third requirement -- which is the
focus of this decision -- § 13(a)(2) states that
"[a] 'retail or service establishment' shall mean an
establishment 75 per centum of whose annual dollar volume of sales
of goods or services
Page 383 U. S. 194
(or of both) is not for resale and is recognized as retail sales
or services in the particular industry."
Of the cases before us, the first one, No. 30, stems from two
consolidated actions brought by the Secretary of Labor against
Idaho Sheet Metal Works, Inc. (Idaho Sheet). By one action, the
Secretary sought to enjoin future disregard of the Act's overtime
provisions, and by the other he sought to collect on behalf of one
employee unpaid overtime compensation for a period during the year
1960.
See §§ 15-17, 52 Stat. 1068-1069, as amended, 29
U.S.C. §§ 215-217 (1964 ed.). The ensuing litigation established
that Idaho Sheet operates a plant in Burley, Idaho, where it
employs about 12 workers to fabricate, install, and maintain sheet
metal products. Many articles are sold to individuals, farmers, and
local merchants, the plant has display racks to show its wares, and
about 60% of sales in number are said to be to "the general
public," as opposed to industrial customers. About 83% of the gross
income, however, is derived from metal work done on equipment used
by five potato processing companies which dehydrate and freeze the
potatoes for interstate shipment.
For its defense, Idaho Sheet denied its workers were engaged in
or producing goods for interstate commerce. It also claimed to be
an exempt retail or service establishment, adducing proof that over
75% of its dollar volume of sales was not for resale, and that its
officials and salesmen who sell to it regarded the business as
retail. The District Court held that Idaho Sheet was outside the
interstate commerce coverage of the Act, and was, in any case,
exempt. The Court of Appeals for the Ninth Circuit reversed on both
points, and held in favor of the Secretary. 335 F.2d 952. We
granted certiorari limited to the question whether Idaho Sheet was
a retail or service establishment within the meaning of the Act.
380 U.S. 905.
Page 383 U. S. 195
In the other case before us, No. 31, the Secretary of Labor sued
the Steepleton General Tire Company (Steepleton) and its president
to require compliance with the minimum wage, overtime pay, and
recordkeeping provisions of the Act. Steepleton, which is located
in Memphis, Tennessee, and employs about 47 workers, is a
franchised tire dealer engaged in the sale, recapping, and repair
of tires. Some of Steepleton's income derives from dealings with
private customers, but more than half the gross income comes from
sales and repairs of tires furnished to businesses operating heavy
industrial or construction vehicles or operating fleets of trucks;
apparently a sizable though unspecified portion of these commercial
customers operated their equipment in interstate commerce.
The District Court determined that Steepleton came within the
interstate commerce coverage of the Act, and that issue is no
longer in the case. Alleging itself to be exempt under § 13(a)(2),
Steepleton showed that 75% or more of its sales were not for
resale, and that the industry's predominant and longstanding use of
the word "retail" applied that term to all tire sales not for
resale, despite the commercial character of the tires and the
established pattern of quantity discounts. The only explanation
offered for this use was that it conformed to many state sales tax
statutes. The Secretary showed that the industry sometimes used the
word "retail" in other senses that excluded commercial sales, and
that commercial customers of Steepleton did not regard their
purchases as retail transactions. The District Court held
Steepleton to be entitled to the exemption. The Court of Appeals
for the Sixth Circuit affirmed the District Court in all respects,
330 F.2d 804, and we granted certiorari at the behest of the
Secretary to consider whether Steepleton qualified as a retail or
service establishment. 380 U.S. 904.
Page 383 U. S. 196
The approach of the Sixth Circuit, which took industry usage as
controlling, and that of the Ninth Circuit, which rejected it as
the sole test, represent irreconcilable interpretations of the
critical statutory language. While support can be mustered for both
views, we believe the Ninth Circuit is correct, and, on this point,
follow our earlier decision in
Mitchell v. Kentucky Finance
Co., 359 U. S. 290.
After rejecting the industry's usage as controlling, we face the
further difficult question of what criteria do determine when
business transactions are retail under the Act; to this question,
it is still less easy to return a clear-cut answer, but our
analysis of the matter leads us to conclude that neither Idaho
Sheet nor Steepleton qualifies as a retail or service
establishment.
II
To construe the present language of the exemption demands a
knowledge of its origins. Section 13(a)(2), as it appeared in the
1938 enactment, used the present phrase "retail or service
establishment" to delimit the exemption, but did not further define
the concept. [
Footnote 5] The
Department of Labor's Wage and Hour Administrator initially made
his interpretation of the retail exemption known through an
Interpretative Bulletin and through various official statements.
[
Footnote 6] To summarize very
generally, the Administrator viewed a retail establishment as one
selling goods or services to private individuals for personal or
family consumption; sales of these same
Page 383 U. S. 197
goods or services to businesses or state agencies remained
retail if sold at the normal price charged private consumers or in
quantities a private consumer would buy.
See
Interp.Bull.No.6, 14, in 1942 WH Manual, p. 330. However, there
were deviations from this consumer goods standard in favor of
employers, notable instances being the exemption of farm implement
dealers and linen supply firms supplying commercial customers.
See Statements of the Administrator in 1944-1945 WH
Manual, pp. 469-470.
In 1946, this Court decided
Roland Electrical Co. v.
Walling, 326 U. S. 657,
holding,
inter alia, that a business engaged in commercial
wiring, electrical contracting for industry, and repair and
replacement of electric motors and generators did not constitute a
retail or service establishment. The opinion used considerable
language suggesting that no sale of any article for business or
profit-making use, as opposed to personal consumption, could
qualify as a retail sale, a position which supported the result but
went far beyond a necessary holding.
See 326 U.S. at
326 U. S.
673-677. This case, and several others in this vein,
[
Footnote 7] prompted the
Administrator to report to Congress that certain hitherto exempt
classes of business were endangered -- notably farm equipment
dealers -- and to recommend amending legislation.
See 1948
Wage and Hour Division, Annual Report, pp. 120-121.
The Administrator proposed, so far as immediately relevant, to
define a retail establishment as one deriving 75% of its income
from retail sales, and then to define as retail sales those made to
private individuals for personal or family consumption, sales of
the same items to any other customer if not for resale and if
similar in type
Page 383 U. S. 198
and quantity, and sales to farmers of goods of the type and
quantity used on the ordinary farm. When Congress convened in 1949,
a number of bills were introduced to amend the Act in various
respects. The bill reported out by the House committee and the
substitute measure first debated by the House adopted the
Administrator's basic proposal, but a further substitute backed by
an opposing coalition and introduced as an amendment during the
debates finally prevailed, and was sent to the Senate. [
Footnote 8] This bill, as passed,
contained the definition of exempt retail and service
establishments that became law in 1949, and which remains the law
today. [
Footnote 9] The Senate,
during the debate of its own committee-reported bill, which did not
amend the retail exemption, amended the Senate bill to conform to
the House's revision of § 13(a)(2). [
Footnote 10] Thus, when the House-Senate conference
committee met to iron out other differences in the respective
versions of the legislation, uniformity in the amendment to §
13(a)(2) already existed. The debates on the retail exemption in
each House were substantial, and several legislative documents
construe the amended section. [
Footnote 11]
Page 383 U. S. 199
In light of the legislative history, the first question to be
faced is whether the 1949 amendment requires the Secretary to treat
as retail any sale of goods or services not for resale that is most
customarily described or labeled as a retail transaction by those
in the industry, acting or course in good faith. If the answer were
yes, then both Idaho Sheet and Steepleton would deserve exemptions
without more ado, since admittedly the predominant or sole usage of
those in the industry applied the term retail to the questioned
sales. It should not be said that this reading is without support.
Most importantly, it would appear to follow from the most literal
reading of the statute; the phrase "recognized as retail . . . in
the particular industry" well lends itself to an inquiry into how
the businessmen concerned term their dealings. Some statements in
the debates explicitly foster this reading -- for example, the
comment by Senator Holland, who sponsored the amendment in the
Senate, that, under his approach, "for different commodities . . .
we have to find the definition which is understood by the people
dealing in that industry." 95 Cong.Rec. 12519. [
Footnote 12] We do not agree with the
Government that this reading is necessarily infirm because the
Secretary and courts may have to seek a standard or predominant use
of the word retail among several uses extant in the industry.
Certainly we do not agree with the further suggestion that this
literal reading must give the industry self-determination as to
whether the exemption
Page 383 U. S. 200
applies; courts are not incompetent to distinguish between a
legitimized usage fixed by established practice and one recently
instituted with the aim of avoiding the law.
On balance, however, the arguments against this literal reading
are more persuasive. At the start, such a reading would attribute
to Congress a purpose going well beyond its reiterated explanation
that the amendment was designed to overturn the sweeping principle
of the
Roland case. The legislative history is replete
with evidence that the target of the amendment was
Roland's proposition that no sale to a business purchaser
could be a retail sale, which Senator Holland condemned by
comparing the different status it gave to the sale of a batch of
towels to a housewife and the same sale to a hotel-keeper. 95
Cong.Rec. 12494. [
Footnote
13] Further, for every suggestion in the debates that Congress
intended also wholly to revamp the exemption by substituting an
overriding industry usage test, there are statements that point in
the other direction. Thus, Senator Holland observed that his
amendment would not undo the commonly held view that quantity sales
at discount prices are generally nonretail. [
Footnote 14] It was said that the
"recognizing"
Page 383 U. S. 201
is done by the Administrator and the courts, as well as the
merchant, 95 Cong.Rec. 12510 (remarks of Senator Holland), and that
due weight must be given to the "actual practice" in the industry,
Senate Conf. Majority Statement, 95 Cong.Rec. 14877, and the "well
settled habits of business," 95 Cong.Rec. 12510 (remarks of Senator
Holland). The lists set forth of potentially retail businesses
include almost only those selling consumer goods and services.
See House Conf.Rep., p. 25 (quoted p.
383 U. S. 203,
infra); 95 Cong.Rec. 11003-11004 (remarks of Mr. Lucas);
95 Cong.Rec. 12502 (remarks of Senator Holland). There are denials
that the industries' own interpretations of a retail sale will be
decisive. [
Footnote 15]
The conclusive consideration for us in rejecting the industry
usage test is that it would compel results flatly inconsistent with
those Congress explicitly contemplated, and might indeed work a
major revolution in the Act's coverage not acknowledged in any
legislative statement or report before us. The prime example of
this threatened inconsistency is the problem presented to this
Court in 1959 by
Mitchell v. Kentucky Finance
Co., 359 U.S.
Page 383 U. S. 202
290, where a business making small personal loans and purchasing
conditional sale contracts from retailers claimed to be an exempt
retail or service establishment. Although the company introduced
persuasive evidence that the industry regarded its transactions as
retail, the Court denied the exemption in the face of the
legislative history indicating a limited purpose for the 1949
amendment and containing an express statement that
"[t]he 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."
House Conf.Rep., pp. 25-26.
See Senate Conf. Majority
Statement, 95 Cong.Rec. 14877. If weight is to be given to
statements about the nonretail status of quantity sales at
discounts,
see n
14,
supra, congressional intent would be similarly
frustrated by the truck tire industry's retail designation of all
sales not for resale no matter how great the quantity and discount.
In view of the use of the word "retail" in the truck tire and
credit industries, it would hardly be surprising to find that
newspaper, telephone, or gas and electric companies label their
sales to consumers as retail. Yet the legislative history is so
explicitly opposed to the extension of the retail exemption to such
businesses as to provide the final argument against adopting an
industry usage test that could dictate that result.
Since we reject the industry's usage as the single touchstone,
the question arises what meaning is to be given to the term
"retail." In approaching this question, we agree with the Secretary
that it is generally helpful to ask first whether the sale of a
particular type of goods or services can ever qualify as retail,
whatever the terms of sale; if and only if the answer is
affirmative is it then
Page 383 U. S. 203
necessary to determine the terms or circumstances that make a
sale of those goods or services a retail sale.
Plainly, the typical retail transaction is one involving goods
or services that are frequently acquired for family or personal
use. As examples of sales that could qualify as retail, the House
Conference Report lists those made
"by the grocery store, the hardware store, the coal dealer, the
automobile dealer selling passenger cars or trucks, the clothing
store, the drygoods store, the department store, the paint store,
the furniture store, the drugstore, the shoe store, the stationer,
the lumber dealer, etc. . . ."
House Conf.Rep., p. 25 (sale of farm machinery is another
example given).
See also 95 Cong.Rec. 11003-11004 (remarks
of Mr. Lucas); 95 Cong.Rec. 12502 (remarks of Senator Holland). Of
course, Congress' conceded intent to overrule the
Roland
principle means sales of such goods or services can be retail
"whether made to private householders or to business users," House
Conf.Rep., p. 25, but the goods and services listed nearly all
share the common characteristic that they are often purchased by
householders. The legislative recital of telephone, gas and
electric, and credit companies along with a number of others as
businesses outside the exemption,
see p.
383 U. S. 202,
supra, demonstrates that not everything the consumer
purchases can be a retail sale of goods or services, but the
breadth of this qualification need not here be explored.
What is important for this decision is that Congress also
intended that the retail exemption extend in some measure beyond
consumer goods and services to embrace certain products almost
never purchased for family or noncommercial use. An indisputable
example is the sale of farm implements.
See House
Conf.Rep., p. 25. Another instance is trucks, at least of some
varieties, whose "retailability" is assumed in the legislative
history
Page 383 U. S. 204
e.g., 95 Cong.Rec. 12497 (remarks of Senator Holland)
and confirmed by the presence of another exemption in the Act that
would otherwise be difficult to understand. [
Footnote 16]
See also 95 Cong.Rec.
12495 (remarks of Senator Holland) (retailability of modest office
desk). We cannot draw a precise line between such articles and
those, like industrial machinery, which can never be sold at
retail,
see House Conf.Rep., p. 26, but a few
characteristics of items like small trucks and farm implements may
offer some guidance: their employment is very widespread, as is
that of consumer goods; they are often distributed in stores or
showrooms and by means not dissimilar to those used for consumer
goods; and perhaps it can be said that they are very frequently
used in commercial activities of limited scope. While the list of
strictly commercial items whose sale can be deemed retail is
presumably very small, their existence precludes use of the
uncomplicated "consumer goods" test proposed by the Administrator
in 1949.
See pp.
383 U. S.
197-198,
supra.
Within the category of goods and services that can be sold at
retail, naturally not every sale can be so classified. The
exemption itself excludes any sale for resale, and, beyond that,
references in the legislative history,
n 14,
supra, and common parlance certainly
suggest that the term retail becomes less apt as the quantity and
the price discount increase in a particular transaction. Again, we
do not believe the word usage of the industry must
Page 383 U. S. 205
be given conclusive force. The legislative comments on
discounting just cited are to the contrary, and the statute cannot
easily be read to make usage control whether a particular sale is
retail after we have rejected that test in deciding whether sale of
a given item can ever be retail. The Secretary has, in fact, quite
properly looked carefully at usage and practice in each industry
before taking a position, 29 CFR § 779.323 (1965), but he cannot be
hamstrung by the terminology of a particular trade. In view of the
diversity of structure and marketing practices in different
industries, flexibility is certainly appropriate, and we do not
here further attempt to adduce general rules. We do note that the
considerable discretion possessed by the Secretary as the one
responsible for the actual administration of the Act should not be
understressed.
Boutell v. Walling, 327 U.
S. 463,
327 U. S. 471;
see United States v. American Trucking Assns.,
310 U. S. 534,
310 U. S.
549.
III
In light of the premises now established, resolution of the two
cases before us can be accomplished readily. Turning first to Idaho
Sheet Metal Works, we believe it is disqualified as a retail
establishment by the 80% of its gross income derived from metal
work relating to the potato processing equipment. The company has
stressed the wide public it serves, the display racks and other
retail facilities in its building, the irregular intervals at which
work on the potato equipment is performed, and the company's
lineage tracing back to the "tin shops" of yesterday. All these
factors may bear upon the classification of its other sales, and if
those were its sole business, or three-quarters of it, the company
might well deserve the exemption. But § 13(a)(2) is explicit in its
treatment of establishment whose sales are variegated: a business
is characterized by its sales, and no more than
Page 383 U. S. 206
25% of the dollar volume may derive from sales designated
nonretail without loss of the exemption.
See n 2,
supra. In this instance, 83% of
the gross income is made by sale or servicing of the potato
processing equipment, and we do not believe those transactions
before us can be labeled retail, whatever the particular terms.
This last conclusion follows naturally from the admitted facts.
The pretrial order described the potato equipment fabricated and
maintained by Idaho Sheet as vats, storage tanks, hoods, elevator
buckets, and chutes. Hoods were described at trial by one purchaser
as being "five feet square on the bottom and about four feet high
where they go to the vent stacks." He also testified that the tanks
held as much as "5,000 pounds of peeled potatoes," and that chutes
were about 12 feet long. If this testimony is not fairly
representative of the nature of the equipment under scrutiny, there
is no indication of that from Idaho Sheet, upon which lies the
burden of establishing the facts requisite to an exemption.
Arnold v. Ben Kanowsky, Inc., 361 U.
S. 388. The type of equipment described plainly appears
to have no private or noncommercial utility. Nor does it bear much
resemblance to those strictly commercial articles earlier named
that may be sold at retail. Unlike small trucks and farm equipment,
the market for these goods is highly limited, and, far from being
stock items purchased off the shelf, these articles were generally
fabricated to meet individual specifications. [
Footnote 17] In the 83% of its business relating
to the potato equipment, Idaho Sheet seems hardly distinguishable
from
"an establishment engaged
Page 383 U. S. 207
in the sale and servicing of manufacturing machinery and
manufacturing equipment used in the production of goods,"
which the House Conference Report flatly stated could not be
exempt. House Conf.Rep., p. 26. Since, in our view, this potato
equipment cannot be the subject of a retail sale, we have no
occasion to consider the company's claim that the pricing and
quantity of its particular sales of the equipment conform to retail
standards.
The second case, involving the Steepleton tire business, is in
some respects more intricate. The Government has alleged, and
Steepleton does not deny, that better than half the company's
dollar volume derives from sales to companies operating fleets of
commercial vehicles and other heavy industrial machinery such as
earth-moving equipment. The Government's first ground for
withholding the exemption is that tire transactions relating to
large trucks and industrial vehicles are intrinsically nonretail,
whatever the terms. It analogizes these vehicles to industrial
machinery, and then would treat the tires just as the trucks. And
it stresses the ties between these vehicles and interstate
commerce.
Admitting that the argument has force, we do not accept it.
Among the few strictly commercial articles that Congress pretty
plainly viewed as retailable were trucks in at least some
varieties, as we have already shown. No reason appears why the sale
of tires for those trucks should be distinguished, and not allowed
to qualify as retailable items. The strength of the Government's
position lies in its readiness to separate big trucks and tires
from little trucks and tires. The Secretary, however, seemingly has
chosen not to classify truck tires on this basis, but instead
treats all truck tires as capable of being sold at retail.
[
Footnote 18] A decision of
this
Page 383 U. S. 208
kind, no doubt turning in part on problems of administration and
facets of industry practice, clearly implicates the Secretary's
discretion, and we see no cause to disturb its exercise in this
case.
Steepleton is, nevertheless, deprived of the retail
establishment exemption because -- as the Government alternatively
contended -- it has failed to show that the tire dealings in
question were made on terms and in circumstances that qualify them
as retail within the Secretary's guidelines. The guidelines class
as nonretail all sales to fleets of five or more vehicles at
"wholesale prices," a wholesale price being defined as that charged
on sales for resale or on sales to 10-vehicle fleets.
See
n 18,
supra. These
guidelines, reportedly designed after inquiry into industry
practices, are quite evidently aimed at excluding from the retail
category sales generally made at significant discounts and in
quantity. Given the common conception of the term retail and
references in the legislative history to discount sales,
see n 14,
supra, we see no reason not to sustain these guidelines;
indeed, the company does not even appear to discuss them, save as
is implicit in its claims that the Secretary's position here does
not correspond to word usage in the industry.
In concluding that Steepleton has not proved itself exempt, a
certain indefiniteness in the record should be noted. The
Government showed at trial that many of
Page 383 U. S. 209
the sales were to large fleets, that a number of purchasers said
they received discounts, that the practice in the industry was to
grant significant discounts for fleet sales, that some sales were
for resale or pursuant to bids to public agencies, and pointed out
other facts directed at showing nonexemption under the guidelines.
Despite this evidence, there is unclarity as to the precise
percentages of dollar volume attributable to the various sales that
the guidelines label nonretail. However, the burden of proof
respecting exemptions is upon the company, as earlier indicated,
and, since, we uphold the Secretary's test, that burden has not
been met. If Steepleton had alleged on appeal that it could meet
the Secretary's standards if they prevailed, even then we would
hesitate to order a remand, since the Secretary's position has been
known from the outset. In all events, Steepleton has not even
claimed in this Court that the Secretary's standards could be
met.
The judgment of the Court of Appeals in No. 30 is affirmed; the
judgment of the Court of Appeals in No. 31 is reversed.
It is so ordered.
* Together with No 31,
Wirtz, Secretary of Labor v.
Steepleton General Tire Co., Inc., et al., on certiorari to
the United States Court of Appeals for the Sixth Circuit
[
Footnote 1]
52 Stat. 1060, as amended, 29 U.S.C. §§ 201-219 (1964 ed.).
Sections 6, 7, codified as §§ 206, 207, respectively cover minimum
wages and overtime pay. The commerce coverage of the Act, through a
special definition of "production," is drawn in generous terms.
See § 3(j), codified as § 203(j).
[
Footnote 2]
52 Stat. 1067, as amended, 29 U.S.C. § 213(a)(2) (1964 ed.). The
section provides that the minimum wage and overtime pay provisions
of the Act shall not apply to:
"(2) any employee employed by any retail or service
establishment, more than 50 per centum of which establishment's
annual dollar volume of sales of goods or services is made within
the State in which the establishment is located, if such
establishment --"
". . . [meets one of four tests, designated '(i)-(iv)' and
framed with reference to another section of the Act]."
"A 'retail or service establishment' shall mean an establishment
75 per centum 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."
[
Footnote 3]
This requirement has been met by the companies in this case.
Section 13(a)(4) of the Act, added in 1949 by 63 Stat. 917, 29
U.S.C. § 213(a)(4) (1964 ed.), provides that an establishment that
makes or processes the goods it sells may qualify as exempt if it
meets the tests of § 13(a)(2) and "is recognized as a retail
establishment in the particular industry" and makes more than 85%
of its annual dollar volume of sales of such goods within the
State. So far as the companies in this case may be deemed to make
or process the goods they sell, the Government is apparently
satisfied that the added requirements of § 13(a)(4) have been met,
or at least is unwilling to rely upon them.
[
Footnote 4]
These four tests were added to § 13(a)(2) in 1961 by 75 Stat.
71. The Government has not suggested that this amendment would
disqualify either of the companies in the present case.
[
Footnote 5]
The 1938 version read:
"(a) The provisions of sections 6 and 7 shall not apply with
respect to . . . (2) any employee engaged in any retail or service
establishment the greater part of whose selling of servicing is in
intrastate commerce."
52 Stat. 1067.
[
Footnote 6]
This Bulletin, designated No. 6, appears along with other
official statements in various editions of the BNA Wage and Hour
Manual (hereafter cited as WH Manual),
e.g., 1942 edition.
The Secretary's present views are stated in 29 CFR §§ 779-779.515
(1965).
[
Footnote 7]
See Martino v. Michigan Window Cleaning Co.,
327 U. S. 173;
Boutell v. Walling, 327 U. S. 463.
See also McComb v. Factory Stores Co., 81 F. Supp.
403;
McComb v. Diebert, 16 CCH Labor Cas. �
64,982.
[
Footnote 8]
The bill reported out of committee was H.R. 3190, 81st Cong.,
1st Sess., accompanied by H.R.Rep. No. 267. The first substitute
was H.R. 5856, brought to debate by H.Res. 183. The final,
successful version retained the number H.R. 5856, but was drawn
from H.R. 5894.
See generally 6 Lab.Rel.Rep., p. 90:459
(1961).
[
Footnote 9]
The only difference between the 1949 version of § 13(a)(2) and
current law derives from the 1961 amendment to the section, which
is not relevant in this case.
See n 4,
supra, and accompanying text.
[
Footnote 10]
The bill reported out of committee was S. 653, 81st Cong., 1st
Sess., accompanied by S.Rep. No. 640, U.S.Code Congressional and
Administrative News 1949, p. 2241. The amendment was offered at 95
Cong.Rec. 12491 and passed at 95 Cong.Rec. 12520.
[
Footnote 11]
The principal debates appear at various points in 95 Cong.Rec.
11002-11203 (House), 12490-12520 (Senate). No initial committee
reports discuss the ultimately successful version of § 13(a)(2),
but a pertinent statement of the House members of the conference
committee appears in H.R.Conf.Rep. No. 1453, 81st Cong., 1st Sess.,
pp. 24-26 (hereafter cited as House Conf.Rep.). There is also a
relevant but less authoritative statement of the majority of Senate
conferees (hereafter cited as Senate Conf. Majority Statement),
appearing at 95 Cong.Rec. 14877.
[
Footnote 12]
Other comments in some measure favoring the most literal
construction are those assuming that each industry has an
established understanding of what is a retail sale,
e.g.,
95 Cong.Rec. 12502 (remarks of Senator Holland), 12516 (remarks of
Senator Taft); those few which seem to equate "recognized as
retail" with "regarded as retail," 95 Cong.Rec. 11003 (remarks of
Mr. Lucas, sponsor of the prevailing version in the House), 12502
(remarks of Senator Holland); and one or two suggesting that a
discount sale may qualify as retail, 95 Cong.Rec. 11003 (remarks of
Mr. Lucas), 11199 (remarks of Mr. McConnell).
[
Footnote 13]
See House Conf.Rep., p. 24 ("This clarification (the
amended § 13(a)(2)) 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. . . ."); 95 Cong.Rec. 11003 (remarks of Mr.
Lucas); 95 Cong.Rec. 11203 (remarks of Mr. Celler).
[
Footnote 14]
"Of course if . . . [a sale is
made in such quantity that
discounts are allowed'], it comes in the category of wholesale
sales." 95 Cong.Rec. 12501. Perhaps more ambiguously, Senator
Holland also stated:
"If sales were made in sufficient quantity so there would be a
discount and they would be regarded not as retail sales, but as
wholesale sales, they would lose their exemption."
95 Cong.Rec. 12497.
See also 95 Cong.Rec. 12505.
But cf. 95 Cong.Rec. 11003 (remarks of Mr. Lucas).
[
Footnote 15]
"MR. DOUGLAS. I understand that the interpretation which would
be made would be that given to 'retail sale' by a trade
association."
"Mr. HOLLAND. That is one criterion, of course, but I do not
believe the Senator from Illinois, and certainly not the Senator
from Florida, would wish to delegate full authority in the matter
to a trade association or any other interested group."
95 Cong.Rec. 12501.
See also 95 Cong.Rec. 12510
(remarks of Senator Holland).
[
Footnote 16]
Section 13(a)(19), added in 1961 by 75 Stat. 73, 29 U.S.C. §
213(a)(19) (1964 ed.), exempts from the minimum wage and overtime
pay requirements
"any employee of a retail or service establishment which is
primarily engaged in the business of selling automobiles, trucks,
or farm implements,"
regardless of whether the establishment meets the further tests
of § 13(a)(2), notably those added in 1961,
see n 4,
supra, and accompanying
text. Quite evidently, this section contemplates that a business
primarily selling trucks may be a retail establishment.
[
Footnote 17]
The company relies upon
Wirtz v. Modern Trashmoval,
Inc., 323 F.2d 451, in which the Fourth Circuit, as an
alternative ground of decision, held a trash collection business to
be a retail or service establishment under the Act. We need go no
further than to say the case is quite distinguishable; trash
removal is not only a widespread need in the commercial world, but
is required by private families.
[
Footnote 18]
29 CFR § 779.373 (1965) relevantly provides that, for purposes
of § 13(a)(2), "all sales of tires, tubes, accessories and tire
repair services, including retreading and recapping" are classified
as retail, with a series of exceptions including:
"(d) Sales to fleet accounts at wholesale prices: . . . a 'fleet
account' is a customer operating five or more automobiles or trucks
for business purposes. Wholesale prices . . . are prices equivalent
to, or less than, those typically charged on sales for resale. . .
. If the establishment makes no sales of truck tires for resale,
the wholesale price . . . [is] the price charged . . . on sales of
truck tires to fleet accounts operating 10 or more commercial
vehicles, or if the establishment makes no such sales . . . , [it
is] the price typically charged in the area on [such] sales. . .
."