Peter J. Brennan, Secretary of Labor, United Statesdepartment of Labor, Plaintiff-appellee-cross Appellant, v. Greene's Propane Gas Service, Inc., a Corp. et al.,defendants-appellants-cross Appellees, 479 F.2d 1027 (5th Cir. 1973)

The Secretary of Labor sought an injunction under Sec. 17 of the Fair Labor Standards Act (29 U.S.C.A. Sec. 201 et seq.) to interdict continuing violation of the Act's minimum wage, overtime, and record keeping requirements¹  by these multicorporate employers. The District Court found (i) that the Employers, taken together, constituted an "enterprise" within the meaning of Sec. 3(r)²  of the Act, and (ii) that the enterprise was and is "engaged in commerce or in the production of goods for commerce" within the meaning of Sec. 3(s) (1)³  of the Act, and (iii) that three of the four named employers failed to qualify for the exemption to coverage under FLSA contained in Sec. 13(a) (2).⁴  With these findings, and (iv) the finding that the goods sold-propane gas-had not lost its identity as goods which have moved in interstate commerce, the District Court ordered the payment of $19,442 in back wages to named employees of the three non-exempt employers and enjoined future violations of the Act.

Accepting (i) above but challenging (ii), (iii) and (iv), all of which are essential to the District Court's decision, the Employers ask us to reverse. Finding the decision of the District Court to be without error we affirm.⁵ 

The Employers-Greene's Propane Gas Service, Inc., [the Thomaston store], Greene's Propane Gas Service, Inc., of Perry,⁶  Greene's Propane Gas Service, Inc. of Macon, and Greene's Propane Gas Service, Inc. of Albany-are retailers of propane gas and related gas appliances in the state of Georgia. Harvey R. Greene is the majority shareholder in each of these four corporate employers, the defendants here. But the Greene complex does not stop with these employers. The four employer stores buy their propane gas from Greene's Transport Company, Inc. They lease the tank trucks with which they make deliveries from Greene's Equipment Company (a corporation) and store the gas delivered by Greene's Transport in tanks leased from Greene's storage companies (four other corporations). Gas originating in Texas, Louisiana, and Mississippi is shipped to Georgia by pipeline and is purchased by Greene's Transport Company at Pipeline Terminal Facilities in Milner and Albany, Georgia. Greene's Transport receives the gas at the terminal facilities.

It is understandable that Employers do not challenge the holding below that they-together with the rest of the occupants of the veritable corporate cornucopia of legal entities which Mr. Greene controls⁷ -constitute an "enterprise". The main thrust of employers' non-coverage argument has nearly as little vitality.

Employers contend that "enterprise" coverage, added to the FLSA in 1961 by amendment, depends on individual employees being "engaged in commerce or in the production of goods for commerce". They assert that all the 1961 amendments-namely Sec. 203(s) and its subdivisions-did was to extend coverage to all the employees of an enterprise some of whose employees were "engaged in interstate commerce". Employers cite much of the legislative history in support of this proposition.⁸ 

What Requisite Interstate Involvement?

Even if we faced this argument on a question of first impression we could not ignore the apparently plain language of Sec. 203(s) which states that "enterprise engaged in commerce or in the production of goods for commerce" includes "employees' handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person". (Emphasis added). The tense is in the past. There is no requirement of continuity in the present. If the legislative history were compelling-and it is not⁹ -we might still be forced to hold that what Congress has enacted, even though something different from what it thought it enacted, would still be applicable since the language of the statute is so plain.¹⁰  But we face no such prospects, for our opinion in Schultz v. Kip's Big Boy, Inc., 5 Cir., 1970, 431 F.2d 530, 533 is dispositive. There the Court held that "the legislation was designed to regulate enterprises dealing in articles acquired intrastate after travel in interstate commerce"¹¹  (emphasis in original) and the Court said that given (as is true in this case) the stipulation of enterprise sales in excess of $1,000,000 "the only test is that 'goods amounting to $250,000 a year' must be purchased or received for resale and have moved across state lines at sometime in the flow of commerce to the retailer, 2 U.S. Code Cong. and Admin.News, 87th Cong., 1st Sess., 1961, p. 1645".¹²  (Emphasis in original). We think that further discussion on this point is unwarranted.

Which Gas?

Having lost in its frontal assault against the holding that the employees were covered by FLSA Employers attempt a flanking maneuver by asserting that the goods in which they deal are not the goods which have traveled in interstate commerce. That is, they argue that the propane gas loses its out-of-state identity because it is dehydrated and filtered free of accumulated debris at the time it leaves the pipeline to go into storage tanks at the pipeline terminal. The transformation-if removing the dirt and water that entered the pipeline during transit were not enough-is completed when a chemical odorizer called petrocapitane is-as required by law in the state of Georgia-inserted into the propane at the rate of one and one-half pounds for every ten thousand gallons of liquid propane. This odorizer allows the consumer to detect a leak in his propane system which would otherwise go unnoticed because propane is odorless.

The result is that the gas is in better condition and it can now be safely used by consumers at the burner tip, but it is still the gas that originated in the depths of Texas or Louisiana. Extraction of impurities, removal of water and odorization do not change the commodity, certainly not in a practical sense. The analogy with our holding in Placid Oil Co. v. F.P.C., 5 Cir., 1973, 483 F.2d 880 (1973) causes us to think that this "new" gas, molecularly indistinguishable from the "old" gas, must bear the financial burden of FLSA like an added atom in its carbon ring.

Further, even where out-of-state goods have been altered in form the courts have not hesitated to hold that the goods still retained their interstate identity for purposes of Section 3(c).¹³  In Schultz v. Kip's Big Boy, supra, this court citing Melos, supra, with approval specifically referred to its holding that it was immaterial that the out-of-state goods upon which coverage was based had been shipped in commerce "in another form, i. e., raw stage".¹⁴  The Court in Melos predicated coverage on the local purchase of ready-mix concrete which was prepared by the supplier from cement acquired out of the state. The Second Circuit stated that " [t]he interstate character of the cement as a product that 'has been moved' in interstate commerce is not destroyed by the fact that it is used to make a different product, ready-mix concrete, which is then purchased by Melos."¹⁵ 

The argument is a nice try, but it doesn't work either molecularly or juridically. The gas is the gas.

Who An Establishment?

Having failed to exclude themselves from inclusion Employers, by a reverse twist, attempt to include themselves in an exclusion-Sec. 13(a) (2).¹⁶  This Section exempts from coverage those "establishments" which though they are included in a covered enterprise, have an annual dollar volume of sales less than $250,000. That is, an establishment which is part of an enterprise will be exempt from coverage if that establishment does less than the quarter million dollars sales outflow figure, even though the remainder of the enterprise is covered under FLSA. Employers stipulated that the annual dollar volume of sales for each of the Thomaston, Albany, and Macon Corporations was in excess of $250,000. Nonetheless they claim the exemption on the basis that each of the separate route trucks operating from these stores is a separate establishment¹⁷  and that therefore the deliveries made by the route trucks operating out of each respective store cannot be counted in the three stores. On such a conclusion none of the three would have sales exceeding the statutory minimum requirement.

The position that the routemen are separate business establishments is untenable in the light of the facts produced at the trial.¹⁸  It cannot be factually disputed that these trucks though they may be separate physical units, constitute pieces of single businesses of which they are a functional part. These trucks are simply selling agents of the store to which the route salesmen are attached. The majority of customers were billed regularly from the sales offices, which took care of ordering all supplies and equipment. In short the routemen were simply delivery agents for the store's sales and service office which together with its delivery routes constituted the establishment. As we have said before in Wirtz v. Keystone Readers Service, Inc., 5 Cir., 1969, 418 F.2d 249, 255 and now reiterate salesmen do not themselves qualify, either individually or collectively, as an "establishment" within the meaning of the exemption.

The Trial Court's decision comported with the canonical rule that exemptions from FLSA are to be given a niggardly construction against the employer. Mitchell v. Kentucky Finance Co., 1959, 359 U.S. 290, 295, 79 S. Ct. 756, 759, 3 L. Ed. 2d 815, 819; Brennan v. Great American Discount and Credit Co., Inc., 5 Cir., 1973, 477 F.2d 292; Schultz v. Instant Handling, Inc., 5 Cir., 1969, 418 F.2d 1019. While it is true we are a peripatetic undulating people, constantly on the go, driven on the wheels or wings of energy consuming power units, we are not ready to endorse a contrary holding which might make every delivery driver, milkman, and other outside salesmen an exempt establishment on wheels under Sec. 13(a) (2).

Affirmed.