Idaho Sheet Metal Workers v. Wirtz, 383 U.S. 190 (1966)

Idaho Sheet Metal Workers v. Wirtz

No 30
Argued December 8, 1965
Decided February 4, 1966 *
383 U.S. 190

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

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 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. 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. 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. 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. 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. 207-209.

335 F. 2d 952, affirmed; 330 F. 2d 804, reversed.