RESPONDENT: Kentucky Finance Company, Inc.
LOCATION: Union Station
DOCKET NO.: 161
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Sixth Circuit
CITATION: 359 US 290 (1959)
ARGUED: Mar 03, 1959
DECIDED: Apr 20, 1959
Facts of the case
Media for Mitchell v. Kentucky Finance Company, Inc.
Audio Transcription for Oral Argument - March 03, 1959 in Mitchell v. Kentucky Finance Company, Inc.
Number 161, James P. Mitchell, Secretary of Labor, Petitioner versus Kentucky Finance Company Incorporated, et al.
Mr. Chief Justice and Your Honors.
The specific question presented by this case is whether the retail or service establishment exemption from both the minimum wage and the overtime requirement for the Fair Labor Standards Act applies to the business of lending money on credit and purchasing conditional sales contracts, and taking life insurance to insure the borrowers, specifically the business of making small loans and discounting condition of sales contract.
The broader and underlying issue that's inherent in this specific issue here is whether the 1949 amendment to the original Fair Labor Standards Act, which was enacted in 1938, whether the 1949 amendment so broadened the scope of the so-called retail or service establishment exemption as to make every and any business within the general coverage of the Act eligible to claim this exemption.
The exemption and question is quoted on page 2 of the Government's brief in Section 13 (a) (10), and it provides that Section VI and VII, which are the minimum wage and overtime requirements of the Act, shall not apply with respect to any employee employed by any retail or service establishment under certain conditions.
One, being more than 50% of its annual dollar volume of sales is -- of services is made within the State in which the establishment is located.
And the second condition being that 75% of annual dollar volume of sales or services is not to resale and is recognized as retail sales or services in the particular industry.
William J. Brennan, Jr.:
Is there any issue on the 50% borrowed here, Ms. Margolin?
Well, there's no issue if we get to that.
The Government's basic position is that this exemption has no application whatsoever to the business of lending money to credit companies.
And therefore, that there is no occasion or need to determine whether or not 50 -- whether the percentage requirements are met so that -- although, the court below found that they did meet -- the Court of Appeals found that they did meet both of those conditions.
The Government's basic position is that there's no occasion to go into those conditions.
The Court of Appeals -- the business here, respondent's business is located in Louisville, Kentucky and they make loans both in Kentucky and Indiana which was stipulated.
There's no question of their engagement in interstate commerce.
It was a pretrial stipulation that they were engaged in interstate commerce and then they are in the production of goods for interstate commerce, their employees, sufficiently to be with the subject to this Act unless they came within this exemption.
So that the entire evidence was directed to the exemption point.
The rather voluminous records is explained by respondent's endeavor to prove that their lending of money and the purchasing of this discount favor thus constitute sales of services within the liberal language of the exemption.
The Court of Appeals accepted respondent's construction of this Act, of this provision stating that the literal terms of -- that the statutory language was so clear and unambiguous and so plainly applied to any business that was engaged in the broadest sense of the term “engaged in sales of goods or in performing services,” that it was unnecessary to look to the legislative history to tell -- to determine what Congress meant by this attention.
The Government's position is that this exemption does not encompass every conceivable business that might be said to be engaged in service.
That it is limited to the particular kinds of businesses that are traditionally regarded as retail, and the services of a light character, except that the establishment of sales, services, instead of goods.
This was definitely the interpretation of the original exemption which was enacted at the time of 1938 that the courts have upheld the law restricted interpretation, but it didn't.
This exemption was not intended to encompass everything that could, in the economic sense and the broadest sense constitute a service.
And it is -- it is clear that before the 1949 amendment, this exemption was given that limited construction both by the Administrator and by the Court.
The exemption at that time, read, simply, that any employee engaged in any retail or service establishment, the greater part of who's selling their services -- servicing is in intrastate commerce.
In other words, there was no spelling out except in the general terms of the 50% rule, but there was no spelling out of the 75% with respect to retail sales or sales not recognized or recognized as retail in the industry.
Congress in enacting the 1949 amendment or -- as -- did as counsel -- as opposing counsel point out was dissatisfied with some of the Administrator's interpretations of this exemption.
What counsel does not recognize, however, is that the legislative history makes it perfectly clear that Congress was dissatisfied with only a very limited aspect of those interpretations and the legislative history makes it so clear that Congress had no -- we had felt no dissatisfaction at all with the basic interpretation of the former exemption.
That is, that it was limited to certain types of establishments and did not extend to categories in the financial field and the utility field and the real estate or in the insurance field.
Legislative history makes that so clear, that we submit, that it is controlling and conclusive, and clearly shows the error of the Court of Appeals.