Arnold v. Ben Kanowsky, Inc.

PETITIONER:Arnold
RESPONDENT:Ben Kanowsky, Inc.
LOCATION:Approximately half-way between Santa Marta, Colombia and Miami. Florida (by water)

DOCKET NO.: 60
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 361 US 388 (1960)
ARGUED: Jan 11, 1960
DECIDED: Feb 23, 1960

Facts of the case

Question

Audio Transcription for Oral Argument – January 11, 1960 in Arnold v. Ben Kanowsky, Inc.

Earl Warren:

Number 60, John W. Arnold, Petitioner, versus Ben Kanowsky.

Ms. Margolin.

Bessie Margolin:

Mr. Chief Justice and may it please the Court.

This action was brought by an employee under Section 16 (b) of the Fair Labor Standards Act to recover claimed unpaid overtime compensation against the respondent.

The Secretary of Labor was not a party in the case and entered the case only after the — the Court of Appeals had reversed a judgment in favor of the employee.

The Secretary of Labor entered as amicus curiae to support a petition for rehearing on the ground that the Fifth Circuit had misinterpreted the retail establishment exemption.

The specific issue involved in the case is whether a — an establishment that is engaged both in an interior decorating and furniture — custom furniture business, as well as in fabricating or manufacturing airplane — aircraft parts out of phenolic to the plastic —

Charles E. Whittaker:

May I ask you, going on that question, please, to us, the one question in this case for me.

Does the Government flatly say that this is one and not two boat establishments?

I understand the Court of Appeals to say that this was — that the interior decorating and custom furniture manufacturing business was a separate establishment —

Bessie Margolin:

Your —

Charles E. Whittaker:

— and so treated, rested its decision on that fact.

Bessie Margolin:

No.

I don’t think — I don’t think that is what the Court said, Your Honor.

They said that basically, the basic nature of this business was interior decorating and therefore, the exemption applied regardless of what else was carried on, what other kind of business was carried on in the establishment.

Now, as a matter of fact, this particular employee was — the evidence shows, was engaged virtually exclusively in the fabricating of the phenolic parts.

There were some dispute in the evidence, but the trial court apparently accepted his evidence and — which was that he was engaged exclusively in the fabrication of these aircraft parts.

Charles E. Whittaker:

Is it true that the term “establishment” is the crucial thing here, that one owner might have, even under one roof, several establishments, activities in one be covered and in the other not covered by the Fair Labor Standards Act?

Bessie Margolin:

It could be that if these two businesses were segregable with different employees, we would recognize them as separate establishments.

Of course, this Court has already decided that there must be a physical establishment that it’s the single physical establishment and not the enterprise as a whole that determines whether the exemption applies.

When you have the mix, as you have them here, the question depends upon whether they are segregable.

Now, if, in this case, they have been segregable, the exemption might apply to the retail part of it.

As a matter of fact, the — there was no evident here even that the custom furniture business was retail but assuming it was retail and for the purposes of this case, I think we can assume that it was, although there — there’s evidence here that might indicate it was not — even that part of the business might not have been a retail establishment.

But what the Court did here was to say that we — we look at this business and from our general feeling about it, we think this is basic — the basic nature of interior decorating as retail and the fact that more than 25% of the — of the sales are of aircraft parts is immaterial because we’re looking just at the basic nature of the establishment.

We are interested in this case, of course, for substantial reasons beyond the facts of this particular case.

We supported the petition for certiorari because it was a closely related question to the question decided in the Kentucky Finance case which was — how far did Congress intend to expand the retail establishment exemption in the 1949 amendment.

Now, the Fifth Circuit has had a whole series of cases.

I think this is about the Fifth in which it’s very broad — has been very broadly interpreting this exemption.

As a matter of fact, the Sixth Circuit in the Kentucky Finance case was relying upon what we consider erroneous decisions of the Fifth Circuit under this Act, the Taylor Fertilizer case and the Boisseau case.

And of course, this Court reversed the Sixth Circuit in the Kentucky Finance case.

Bessie Margolin:

The Fifth Circuit is — even after the Bekins case when this Court indicated that the 1949 amendment did not go so far as to expand the retail establishment exemption to include wholly new types of businesses, the Fifth Circuit has continued to rely on Taylor Fertilizer and these other decisions.

Now, of course, Kentucky Finance came down after the Fifth Circuit’s decision in this case.

But judging from its continued reliance on Taylor Fertilizer, although we think this Court didn’t explicitly reject — overrule it, we think that the Bekins decision did discredit it and the Fifth Circuit apparently has not interpreted the Bekins decision as casting any doubt on its earlier decisions interpreting the retail establishment exemption.

Now, we believe that we — it looks as if — unless this Court explicitly overrules these earlier Fifth Circuit cases, we think we’re going to continue to have trouble in that circuit with these decisions.

Certainly, the lower courts are going to continue to follow them and the indications are that the Fifth Circuit itself will, as long as this Court doesn’t say something explicitly about it.

And this —

Charles E. Whittaker:

Where do we find the better for you — couldn’t we find a better feel for a cleaner record than this one for that use?

Bessie Margolin:

Well, this is not our case.

That’s what I was reminding the Court.

We — this does, I think, present the issue and presents is — does reflect what the Fifth Circuit is doing with this exemption.

I think it well reflects it.

It is an employee suit and it’s a small case.

The judgment, I think, was only $396 and only $250 attorney’s fees.

However —

That’s more —

Bessie Margolin:

— the respondent appealed it.

He didn’t pay it.

He appealed it and he put the employee to the expense of the appeal, and the issue is important.

And this decision, as I think I can demonstrate to the Court, does reflect that the — what the Fifth Circuit is doing with this exemption and how broadly it is construing it and how erroneously we think.

He’s construing it erroneously, I think, in virtually every respect but there are four basic errors which I think are reflected in the decision in this case.

The first basic error which is clearly reflected in the decision is very closely related to the one involved in Kentucky Finance.

That is, the State, in so many words in the Taylor Fertilizer case, and they have followed it in this case, that Congress, by the 1949 amendment, intended to broadly expand this exemption to include manufacturing activity.

And that — on that score, the legislative history, and I think one of the difficulties of the Court of Appeals — this Court of Appeals is its refusal to look at the legislative history because if there is any ambiguity in this amended exemption, the legislative history clears up that ambiguity so far as the questions that are raised in this case are concerned.

They clear it up beyond doubt.

Now, the — this first idea that it covers manufacturing enterprises was not only specifically taken care of by special provision in the 1949 amendment but the legislative debates, the House — the reports — the legislative reports specifically pointed out that Section 13 (a) (2), which is the section the Court held applicable here, “does not,” and I’m quoting from the House Report — House Conference Report, “does not apply to any manufacturing activities since any such activities, when conducted by retail establishments, if exempt, are intended to be exempt under 13 (a) (4).”

Now, that was the new provision put in.

Senator Holland who was the chief sponsor of the amendment in the Senate, said the same thing that Section 13 (a) (2) has no — has no item of manufacturing involved.

And the House Conference Report then went on to — to point out that so far as the Section 13 (a) (4), which was a new section related to manufacturing, any business that when engaged in manufacturing, there were six tests to be applied.

Now, three of those tests were the same ones of the — of the 13 (a) (2) exemption but then, there were three additional tests for a business that also engaged in manufacturing.

So it’s perfectly clear from the face of the statute, Section 13 (a) (4) which specifically relates to this situation, as well as from the legislative history, that the Section 13 (a) — (a) (2) exemption hadn’t — has no application where manufacturing activities are carried on.

Charles E. Whittaker:

If it were true, Ms. Margolin, just for my enlightenment now, if it were true that the interior decorating and custom furniture manufacturing end of this work was a separate enterprise, you wouldn’t be here, would you?

Bessie Margolin:

Well, I don’t think we would be here because — maybe that is retail.

We were assuming for these purposes.

We really don’t need to get into that because there’s clear — clear evidence here that the manufacturing defeated the exemption.

It was admitted that more than 25% of the sale.

Charles E. Whittaker:

Are you able then unequivocally to tell us from this record that the — there was only one and not two “establishments”?

Bessie Margolin:

I think, so far as the physical premises are concerned, there was only one establishment here.

Charles E. Whittaker:

Well, legally, was there just one —

Bessie Margolin:

Well —

Charles E. Whittaker:

— establishment?

Bessie Margolin:

I — I don’t — I don’t think the record goes into that.It doesn’t show whether it’s separate.

Charles E. Whittaker:

Well, don’t —

Bessie Margolin:

And —

Charles E. Whittaker:

— we have to determine that?

Bessie Margolin:

No, I don’t think you need to determine that because their only question here is whether this particular employee should have been denied relief on the ground that this establishment, as a whole, was exempt, as a whole was exempt.

Charles E. Whittaker:

I don’t see how you’re going to say two establishments shall be treated as one establishment.

Bessie Margolin:

Well, I don’t — Your Honor, I don’t think you have to get into that because whether you treat this as one or two, whether you treat it separately, if you treat it separately, this employee was engaged in the manufacturing part and therefore, he’s not exempt.

At — at most, he was engaged in both.

Charles E. Whittaker:

Suppose he were to — as I understand it, if he were engaged in the manufacturing end, then under 4, as nearer through to, he would be.

Bessie Margolin:

I think —

Charles E. Whittaker:

Because all — because, under this evidence, as I understand it, and you correct me if I’m wrong, all of the interior decorating and all of the custom — furniture manufacturing, as found by the Fifth Circuit, was, number one, sold at retail and local.

Is that not right?

Bessie Margolin:

Let me — maybe I better state the facts because I think that you are not stating the facts accurately.

The — the trial court found that it didn’t need to get into the question as to whether the custom furniture and the interior decorating.

It didn’t have to get into that because more than 25% of the sales, the total sales of this establishment, more than 25% —

Charles E. Whittaker:

You can’t treat it all as one.

Bessie Margolin:

Well, if you treat it separately, 100% of it was for — for the manufacture of aircraft parts which was sold to aircraft manufacturers, put in the subassemblies and shipped out of the State.

So if you treat it as separate —

Charles E. Whittaker:

As a whole.

Bessie Margolin:

— it’s 100%, it’s 100% non-retail.

Charles E. Whittaker:

Well, now, if you treat — just tell me now, if you treat the — the interior decorating and custom furniture manufacturing as separate, then tell me how much of that was sold interstate?

Bessie Margolin:

Well, we don’t know.

The record doesn’t show anything about that.

Charles E. Whittaker:

It shows that none was, doesn’t it?

I didn’t note Fifth Circuit found.

Bessie Margolin:

I think they showed that none of it — none of the sales — the Fifth Circuit stated that.

I don’t know if the record —

Charles E. Whittaker:

So that’s my trouble.

I’d like to know whether it’s one or two establishments.

Bessie Margolin:

Well, I don’t know whether this record will tell you that.

I don’t think it’s — it’s pertinent.

I don’t think it’s relevant to this case.

Charles E. Whittaker:

I think it is.

Bessie Margolin:

Well, I believe, if Your Honor will — it might take me too much time to demonstrate it here but I believe if you read the — the record and when you get into the consideration of the exemption, you will conclude that it is not material to the determination of whether the exemption applied to this particular employee.

Now, if he had worked exclusively in a — an admittedly retail part of the business, if he had worked exclusively in that, it might become a material question.

But since he has worked almost exclusively in the manufacturing end, it is not a material question because if it was — if the manufacturing is separate, then 100% of it was non-retail.

If it’s part of the same establishment, then over 25% of it — well over 25%, it was 35% to 40% of the sales were — were manufacturing or sales for resale and therefore, the — the exemption for the whole establishment was in defeat.

So I think it’s not material.

Felix Frankfurter:

Ms. Margolin, you started out by stating or rather indicated, forgive me, that the Fifth Circuit has a course of misinterpretation of the Act.

Is that right?

Bessie Margolin:

Of this exemption, I —

Felix Frankfurter:

I — I mean on this exemption.

That’s what I’m talking about with reference to this case and not some other thing.

Will you be good enough to — it would help me, perhaps some of my brethren, I don’t know about that, but it would help me greatly if you will be good enough to generalize what you concede to be the misconception of the Fifth Circuit in regard to retail exemption and then state your generalization which you think ought to guide this Court in determining what is within and what is without the retail business when a retailer also has an adjunct wholesale or manufacturing business.Could you do that?

Bessie Margolin:

This was what I was starting to do and I was trying to do and under the basis — basis of four basic errors.

The first, I say, is they made a mistake in saying that — and not looking to — they looked to the wrong section.

They should have looked the 13 (a) (4) and they make the — the first mistake is to say that this exemption was intended, when amended, to exempt a lot of things that weren’t before exempt.

Now, a business engaged partially in manufacturing before the amendment, was well-recognized.

I think virtually all the circuits — some-seven circuits had held if they engaged in manufacturing, as well as retailing, they’re not within the exemption.

Well, that was not changed by the –by the amendment and as a matter of fact, the Fifth Circuit itself had recognized that before.

Bessie Margolin:

That was clearly not changed by the amendment, except by putting in a special section in 13 (a) (4).

Now, that was the first basic error.

I think the Fifth Circuit probably would not abide by its — since the Kentucky Finance case, because it’s just credit companies and banks and whatnot.

This Court has held are not within the exemption.

I think maybe the — the Fifth Circuit would not say that this exemption is to be construed as broadly expanding the — expanded to new businesses.

But it may still, unless it’s told otherwise, say that the manufacturing does not defeat the exemption.

And I think it needs to have gone so long that line.

Its second basic error is that —

Felix Frankfurter:

But before you move on to that, you’re going to tell us what the guidance it should have.

Bessie Margolin:

The guidance is that 13 (a) (2) does not apply.

Felix Frankfurter:

There is whenever there’s — whenever there is manufacturing —

Bessie Margolin:

You must look to 13 —

Felix Frankfurter:

— although under the same head or the — the same business enterprise or the same slogan or the same what you will, manufacturing is manufacturing, although not good as grocery store may not — may engage in it.

Is that right?

Bessie Margolin:

Well, if they’re engaging in some manufacturing, you must look to 13 (a) (4).

Felix Frankfurter:

Manufacturing, you look to that.

Bessie Margolin:

That’s right, and that’s the section.

That — that’s the way I would handle that problem.

You look to 13 (a) (4).

They didn’t deal with 13 (a) (4) at all.

They did not deal with 13 (a) (4).

Bessie Margolin:

They didn’t mention 13 (a) (4).

And it was not raised by the respondent here.

Bessie Margolin:

I think the respondent knew it could not qualify under 13 (a) (4).

All respondent is saying here is because this is a sideline, you can’t take it into account and this is apparently what the Fifth Circuit did.

Felix Frankfurter:

Now, you rule that out, don’t you?

Bessie Margolin:

I say that the fact that it —

Felix Frankfurter:

The question isn’t sideline or mainline, the question is manufacturing or retailing.

Bessie Margolin:

That’s right.

That — if — it may be a sideline but the question is do you meet the requirements of the statute for exempting that sideline.

Bessie Margolin:

And that the sideline —

Felix Frankfurter:

That is what’s involved.

Bessie Margolin:

— is exempt if it’s related to your retailing and if it doesn’t comprise more than 25% of your sales.

William J. Brennan, Jr.:

As to what the Fifth Circuit did, Ms. Margolin, was to exempt the sideline under 13 (a) (2) or (b) (2), whatever that is, and you say that if that were exempt at all, it would have to be within the standards before.

Is that it?

Bessie Margolin:

Of 13 (a) (4).

William J. Brennan, Jr.:

13 (a) (4).

Bessie Margolin:

That’s right.

William J. Brennan, Jr.:

And that’s what you want us to tell them.

Bessie Margolin:

That’s right, yes, because in the — in the Taylor Fertilizer case, I think you might also tell them this because I think the Taylor Fertilizer case is clearly wrong.

There, they held that the fertilizer plant manufacturing, well, mixing plant, that that should be tapped onto the sales office, although they were several blocks apart, and that everyone in the plant was under the retail establishment exemption because the sales office was a retail sales office.

Now, I think that is contrary to this Court’s Bekins decision which says that the physically separate place of business is established.

Hugo L. Black:

Well, how do we get that issue before us in this case?

Bessie Margolin:

Well, the court below relied on the case in this case.

They relied on the Taylor Fertilizer decision.

So they were relying on its — the general idea that if — if the business is a whole, if it generally seems to be retail, we’re not going to look into whether they meet all these tests or not.

That’s — that’s been their approach because it specifically said, well, I’m coming to the second basic error, that the 1949 amendments in setting forth this 75% test and saying 75% of the sales do not have — should not be for resale and are recognized in the industry as retail.

The Court says the Congress just put that in as a guide to guide us in determining whether retail — whether the establishment is retail and not as a specific criterion that have to be met.

And on that, the legislative history, if the statute itself isn’t clear because it says that it spells out those tests in pretty much detail, but if there’s any doubt on — on the basis of the terms of the statute, the legislative history makes it clear beyond doubt, that those were to be prerequisites to exemption.

Now, the House Conference Report specifically stated that the amended Section 13 (a) (2) states the conditions under which the exemption shall apply, and then points out that there are three specific tests.

And Representative Lucas, who was the main sponsor on the House, stated explicitly, in summary, the retail and service exemption will not apply under the proposed amendment unless three tests are met.

First, over 50% of the sales must be made in the State in which the establishment is located.

Second, 75% of such sales must be to the ultimate consumers and not for resale.

And third, 75% must be recognized as — in the industry as retail sales.

Senator Holland —

(Voice Overlap) from the Fifth Circuit, you think it might be better if we waited to — for a case where two sides are arguing?

Bessie Margolin:

I think — I think it’s about time we had some — some enlightenment on this — this 1949 amendment and the — Justice Whittaker has asked for a beta case but —

Charles E. Whittaker:

No.

Bessie Margolin:

The —

Charles E. Whittaker:

I’m — I’m 100% — let me just make this clear.

Charles E. Whittaker:

You are 100% right on the law if you’re right on the facts.

Bessie Margolin:

Well —

Charles E. Whittaker:

The trouble is, here, the Fifth Circuit would be made to appear perfectly ridiculous unless you take the view, which I understand them to announce, namely, that the interior decorating business and the custom furniture business was a separate, what’s the word, not business?

Establishment.

Charles E. Whittaker:

Establishment.

Bessie Margolin:

Well, I don’t want to use your term that they’re perfectly ridiculous, but I think that —

[Laughs] You’d —

Bessie Margolin:

— they’d —

— you wouldn’t assume —

Bessie Margolin:

— you’re —

— it [Laughter] I suppose.

Bessie Margolin:

Your — your —

Felix Frankfurter:

There may be a way out of this, Ms. Margolin, one that often confronts lawyers that they’re all right on the law but then just the facts of the law.

Bessie Margolin:

Well, I think the facts — the facts here are certainly sufficient to show that the Fifth Circuit’s interpretation of this exemption was from and its decision shows it’s from.

It’s said enough so that it’s perfectly clear what it’s doing and there are five of — this is the fifth decision in which it’s misconstrued this exemption.

And we’re having the lower courts in that circuit followed them, and even the Sixth Circuit picked it up in Kentucky Finance.

We had the same case as used in the First Circuit in Aetna.

These — these Fifth Circuit decisions are still being picked up, and we think it’s about time we had some clarification about.

Earl Warren:

Am I — am I wrong in thinking the case is this simple that if it is two establishments, then there’s no question about — about this exemption not applying because it’s manufacturing?

On the other hand, if it is one establishment, there’s no question about it applying because the 40% of the total volume for the — for the year comes from the manufacturing of this product.

Bessie Margolin:

That’s right.

Earl Warren:

And — and that doesn’t fit the percentages of the exemption.

Bessie Margolin:

That’s exactly the — so far as this particular case is concerned, that’s exactly the situation.

We, of course, feel that —

Charles E. Whittaker:

Would you still —

Bessie Margolin:

— this offers an opportunity to straighten out the Court and I would like to go on to show the other clear basic areas.

And this is —

Charles E. Whittaker:

Just a minute please, may I ask just this question.

I — do you stand or fall in this case on your answer to the Chief Justice?

Bessie Margolin:

What do you mean do I stand?

Bessie Margolin:

As I —

Charles E. Whittaker:

You said — [Laughter]

Bessie Margolin:

— see it —

Charles E. Whittaker:

You said —

Bessie Margolin:

— it — I — I stand, I stand, I don’t fall on either.

I stand — [Laughter]

Charles E. Whittaker:

I understand you to answer the Chief Justice that if it’s — if this is two establishments, then the one that — that neither could qualify for the exemption.

Bessie Margolin:

Well, I don’t know whether or not the other one could qualify.

Charles E. Whittaker:

Well, what about the one —

Bessie Margolin:

The one this man was working in —

Charles E. Whittaker:

Let’s see about — I don’t know which one that you’re going to say that is, but the one dealing with interior decorating and furniture manufacturing.

Do you say that could not apply — the exemption could not apply to that?

Bessie Margolin:

No, I don’t say that.

Charles E. Whittaker:

Well I understood —

Bessie Margolin:

This man was working —

Charles E. Whittaker:

Did you to tell the Chief Justice it could.

Bessie Margolin:

This man was working — no, I say this man was working primarily, if not exclusively, in the — in the manufacturing part of it.

William J. Brennan, Jr.:

That’s the point, isn’t it?

That —

Earl Warren:

Yes.

Bessie Margolin:

That’s —

William J. Brennan, Jr.:

— that the — he’s entitled to the —

Bessie Margolin:

Regardless of whether it’s one or two establishments, he would not be subject to the exemption.

Hugo L. Black:

Where — where do you think the establishment would cover, you say?

Bessie Margolin:

I say we’re —

Hugo L. Black:

If there are two establishments.

Bessie Margolin:

If there are two establishments, he was in the one that’s covered and not in the non-exempt.

Charles E. Whittaker:

Well, which one is that?

Bessie Margolin:

Oh, he was making aircraft parts almost exclusively.

He was working on the aircraft parts.

Charles E. Whittaker:

He worked both places at different times.

Bessie Margolin:

Well, if he — some of the evidence indicates he may have worked both places.

But if he worked both places, he still wouldn’t be exempt because he — he’s — if — he — having worked in a non-exempt, if you work in a non-exempt work at the time in exempt, you’re still not exempt.

Charles E. Whittaker:

Ms. Margolin, all candor, do you still tell me this is not a fuzzy record?

Bessie Margolin:

I think it’s not fuzzy for the purposes of the decision that’s required here and certainly, that it didn’t justify the reversal by the Court of Appeals.

Felix Frankfurter:

Your factual position is you can’t lose.

Your —

Bessie Margolin:

My factual position is I can’t lose, but I would like to try to get some enlightenment for the — from the Labor Department out of the case [Laughs] too because while we didn’t get into this case, it was a small case and competent counsel handled it, and he won it in the District Court and we thought that was the end of it.

Still, it’s — it is creating — it’s — it’s continuing a line of decisions which we think is creating a lot of trouble out of 10 years — more than 10 years after this amendment has been passed.

Felix Frankfurter:

It might be a good case to decide without giving reasons.

Bessie Margolin:

No, I hope not.

I hope not.

We’re going to have confusion enough that [Laughter] in some of our other problems.

I think that this decision is — it’s clear enough what the Fifth Circuit is doing that I think it — it invites an opportunity to — to clarify.

The third great error, and this is evident, reflected in all of the — this line of Fifth Circuit decisions, is that the burden of proof of negativing this exemption in every case is on the Administrator or the employee rather than on the employer who’s claiming the exemption.

And that’s particularly important in this exemption because the amendment never would have passed, and anyone reading this legislative history can see this amendment never would have passed, if Congress hadn’t been assured and reassured emphatically, time and again, by the sponsors that the burden of proving the — this exemption in — before the Administrator and before the courts, the burden of proving was going to be on the employer claiming it because one, the — the objection to it, and this was a — there was a great deal of debate about this amendment because the language seemed to be so susceptible to broad interpretation and Congress was afraid that it would be greatly — greatly broad in the exemption or beyond the intent, and there was considerable debate.

And one of the main objections was that the — these new tests were too vague and they would open up the way for everyone to claim the exemption.

And Senator Holland and Representative Lucas, Senator Holland, at least four times, stated the Administrator is not going to have this burden.

This is even apart from the general rule that burden of proving an exemption rests on the person claiming it.

In the Conference Report of the Senate, “It is the intent of the conference agreement to place on each employer claiming the exemption the burden of showing that 75% of the particular establishment sales are not for resale and are recognized as retail in the particular industry.”

In explanation, Senator Holland said, about four times, an employer claiming the exemption would have the burden of proving it.

I digress at this point at another place, it says I digress that this point long enough to remind the Senate that no additional burden or duty is placed on the Administrator but that to the contrary, the burden is placed on the employer claiming the exemption to show that in fact, 75% of his sales meet these requirements.

This is not a test which the Administrator has to assume.

Again, anyone claiming an exemption does it with full knowledge that the burden is upon him to establish that he meets these tests.

And Senator Lucas did the same thing.

He ended up one long statement to the House in which he said, “We’re not opening this exemption wide.”

He says “in any — in any event”.

No burden is placed on the Administrator.

Any employee claiming the exemption would have the burden of proving to the Court that 75% etcetera.

Now, the —

Hugo L. Black:

Is that point raised in the decision?

Is it on the merits?

Bessie Margolin:

I think it — I think it was.

I think all these points — yes, the burden of proof point was, specifically.

I — if I might have about one more minute.

Earl Warren:

Who made this — who made this part?

Bessie Margolin:

The extremes to which the Fifth Circuit has gone in making the employee or the Administrator assume this burden of disproving the application of the exemption, I think, is well demonstrated by this record because, here, not only was the record devoid of any proof that this establishment was recognized as a retail establishment in any industry.

And certainly, the proof didn’t show that the sales — that 75% of the sales were recognized as retail, devoid of any proof.

In addition to that, there is undisputed proof that more than 25% of it was of aircraft parts — to aircraft manufacturers.

That’s undisputed and respondent doesn’t dispute it, although he states that it wasn’t proved.

He — he vaguely gets around it in some way which I can’t figure out because even the Fifth Circuit, on amending — in — in its original opinion, said that 25% of it was of aircraft parts for sale to aircraft manufacturers.

But there’s no doubt on the facts of this case that the — that the exemption test were not met and still, the Fifth Circuit says that the — the employee failed to prove that 25 — what part of the 25% or 30% was not for resale.

Well, this brings me to the fourth basic area, and I’ll treat this very rapidly, and that is the — the Fifth Circuit’s view that sales for resale do not include sales to a manufacturer for incorporation into products which shipped interstate.

I think that our brief goes — sufficiently enter that to show that the Fifth Circuit is clearly wrong in saying that this is not a sale for resale.

I might — I promised the petitioner’s counsel that I would, at least, state to the Court that he has reserved or try to preserve his point that he should be entitled to additional attorney’s fees for the Court of Appeals’ work and the work in this Court.

He’s handled the case in forma pauperis to this Court.

And I understand that he’s gone to considerable expense.

And, as I said, the Government did not get into this case until after the Court of Appeals had reversed the District Court, so that he did not have our assistants in the — in the original Court of Appeals action.

Now, I don’t know that this Court considers a question itself of these, but we — the statute is mandatory that attorney’s fees, reasonable attorney’s fees and cost should be grated.

And we think, at least, it should be remanded with directions in the event the Court of Appeals has reversed with directions to allow additional fee, if available, attorney in the Court of Appeals and in this Court.

Thank you.

Earl Warren:

Thank you.