Mitchell v. Bekins Van & Storage Company

PETITIONER: James P. Mitchell, Secretary of Labor, et al.
RESPONDENT: Bekins Van & Storage Company
LOCATION: Kingsley Books, Inc.

DOCKET NO.: 122
DECIDED BY: Warren Court (1957)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 352 US 1027 (1957)
ARGUED: Feb 26, 1957 / Feb 27, 1957
DECIDED: Mar 11, 1957

Facts of the case

Question

Media for Mitchell v. Bekins Van & Storage Company

Audio Transcription for Oral Argument - February 27, 1957 in Mitchell v. Bekins Van & Storage Company

Audio Transcription for Oral Argument - February 26, 1957 in Mitchell v. Bekins Van & Storage Company

Earl Warren:

Number 122, James P. Mitchell, Secretary of Labor, versus Bekins Van & Storage Company.

Ms. Margolin.

Bessie Margolin:

May it please the Court.

This is a Fair Labor Standards Act case instituted by the Secretary of Labor to enjoin violations of the overtime and record keeping provisions of the Act.

The issue presented is a fairly simple one but highly important because upon it depends the application of three exemptions from the provisions of this Act, and exemptions which are from both the minimum wage and the overtime requirements of the Act.

I refer to the exemptions relating to the retail or service establishment, retail or service establishments of which there are three related exemptions.

The particular exemption involved here is the one in Section 13 (a) (2) which is -- has been in the Act since its original enactment.

A new -- two new exemptions were added in 1949 which also turn on the same key term which is retail or service establishment.

The establishment -- retail or service establishment exemption is for retail or service establishment whose sales of goods or services are local or intrastate and are retail in nature in certain prescribed degrees.

That is more than 50% intrastate and at least 75% retail.

The key term in these exemptions is the word establishment which, of course, must be identified before the percentage tests and the other conditions of these exemptions can be applied.

The sole issue in this case is what is the meaning of the term establishment as used in these exemptions?

This is not an -- a novel an issue.

We believe that it was settled by this Court 12 years ago in the decision of Phillips Company v. Walling.

And until the decision -- the decisions below in the instant case it was generally assumed that at least this aspect of this -- of these exemptions and of Section 13 (a) (2) which has other complicated features about it, but that at least this basic aspect that has been assumed was settled 12 years ago and assumed not merely by -- by the administrative officials but by the Court and by Congress in 1949 when it amended this Section in certain respects.

The Phillips case, if I might just remind the Court before giving the facts of this particular case -- of the facts of the Phillips case, that case involved a chain of retail grocery stores in New England.

There were 49 separate retail grocery stores and a central warehouse and office.

And this Court, after a very thorough analysis of this exemption and its intent and purpose, ruled that the term establishment refer to each physically distinct unit or place of business and not to the business enterprise or the chain system as a whole.

And it specifically said that the 49 retails stores were separate establishments as were -- as were the central warehouse and office building.

And it held -- it held this even though it expressly recognized that the separate units were functionally and organizationally completely meshed and integrated.

The Court pointed out that this was usually the case in a chain enterprise, that the very purpose of the chain enterprise was to integrate and -- and operate more economically by integrated and functional organization.

For -- for some 10 years subsequent to the Phillips decision that decision has been assumed to have settled the meaning of this Act -- of -- of this term in particular relation to multi-unit, multi-function chain organizations.

The courts below, however, decline to recognize the Phillips decision as controlling in the instant case on the ground that the ruling in the Phillips decision as to the meaning of the term establishment was merely obiter dictum.

And that other factors distinguishable from the facts in this particular case determined that decision.

Now, we submit that the decisions below in so disregarding or so treating the specific thing on the meaning of the term establishment plainly misapprehended the -- the basic ruling of that decision and misunderstood the reasoning on which that particular ruling rested.

You -- your position on Phillips, as I understand it, Ms. Margolin, is its physical separateness.

That's all it's about.

Bessie Margolin:

That the physically distinct unit is the establishment to which you then apply the other conditions of the exemption.

Functional aspect of it has no bearing, at least no adverse bearing to your position (Voice Overlap) --

Bessie Margolin:

The functional aspect of -- has no bearing.