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SHULTZ v. ARNHEIM & NEELY

October 1, 1969

George P. Shultz, Secretary of Labor, United States Department of Labor, Plaintiff
v.
Arnheim and Neely, Inc., Defendant. Institute of Real Estate Management of National Association of Real Estate Board, Intervenor


Miller, D.J.


The opinion of the court was delivered by: MILLER

By his Complaint, plaintiff, Secretary of Labor of the United States Department of Labor, seeks injunctive relief to enjoin alleged violations of Sections 15(a)(2) and 15(a)(5) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 215(a)(2), 215(a)(5).

 On January 17, 1968, the Institute of Real Estate Management of the National Association of Real Estate Boards filed a motion to intervene as a defendant under Rule 24 of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 24. On January 13, 1969, "[by] agreement of the parties," the Court granted the Motion " . . . with the understanding that litigation will not be extended beyond the facts relating to the business operations of defendant Arnheim and Neely, Inc. during the relevant period." Intervener answered the Complaint on January 17, 1968, denying salient allegations thereof.

 On December 19, 1968, the parties filed a lengthy Stipulation [hereinafter abbreviated "Stip."] 1. *fn1" On March 20, 1969, plaintiff moved for summary judgment " . . . on the ground that the stipulation of the parties filed herein and the pleadings show that no genuine issue of material fact exists . . . and that the plaintiff is entitled to judgment as a matter of law." On April 9, 1969, defendant and intervener moved for summary judgment asserting lack of a contested factual issue and demanding judgment as a matter of law. *fn2"

 According to the Stipulation, defendant, since January 1, 1963, has managed nine buildings in the Greater Pittsburgh area. *fn3" [Stip. P 204] Defendant owns none of these buildings. [Stip. P 208] *fn4" Its rentals and sales are performed by approximately fourteen employees on defendant's payroll. [Stip. P210] The case at bar concerns "persons employed in maintenance, custodial and operational activities at the buildings managed by the defendant. . . ." [Stip. P 2]

 The Stipulation sets forth issues formulated from the pleadings. [Stip. P 1-8] This Opinion will review these issues of law so tendered.

 Issue

 
"Are the various persons employed in maintenance, custodial and operational activities at the buildings managed by the defendant 'employees' of the defendant within the meaning of the Act?" [Stip. P 2]

 Paragraph 303 of the Stipulation asserts:

 "In the management and maintenance of the managed properties, Arnheim and Neely, Inc., at all times acting pursuant to their contracts with the building owners, engages in the following:

 (a) Arnheim and Neely, Inc. hires all labor and employees required for the operation and maintenance of the managed premises. The hiring and pay of the building superintendents are occasionally subject to approval of the building owners.

 (b) Arnheim and Neely, Inc. discharges all labor and employees required for the operation and maintenance of the managed premises.

 (c) Arnheim and Neely, Inc. supervises all labor and employees required for the operation and maintenance of the managed premises.

 (d) Arnheim and Neely, Inc. provides a managerial person (separate and apart from the building superintendent) in regard to most, if not all of the managed properties.

 (e) Arnheim and Neely, Inc. schedules the hours to be worked by all persons engaged at the managed properties.

 (f) Arnheim and Neely, Inc. determines the rates of pay of all employees engaged at the managed properties, subject to approval of building owners without exception. . . .

 (g) Arnheim and Neely, Inc. determines the method of payment of all persons engaged at the managed properties, subject to union agreement, if any.

 (h) Arnheim and Neely, Inc. establishes fringe benefits for all persons engaged at the managed properties, subject to owner's approval.

 (i) Arnheim and Neely, Inc. negotiates union contracts in regard to those persons engaged at the managed properties who are union members. . . .

 (j) Arnheim and Neely, Inc. prepares the payroll for all persons engaged at the managed properties.

 (k) All persons engaged at the managed properties are paid by means of Arnheim and Neely, Inc. checks, drawn on the appropriate owner's account.

 (1) Persons on Armheim and Neely, Inc's [sic] staff are assigned managerial responsibility for one or more of the particular buildings.

 (m) Arnheim and Neely, Inc., through its staff manager or through the building superintendent, assigns the persons engaged at the buildings to the various required duties and supervises the performance thereof.

 (n) Promotions or reductions in rank and increases or decreases in pay as to the persons engaged at the managed buildings are determined by Arnheim and Neely, Inc., subject to owner's approval.

 (o) Arnheim and Neely, Inc. makes legal deductions, including Income Tax, Social Security, etc., from the pay checks of all persons engaged at the managed buildings.

 (p) The 'Contract for Management' (Exhibit 1 [to the Stipulation]) provides, with respect to the managed buildings, 'that all employees shall be deemed the employees of the Owner and not the Agent.'"

 Elsewhere in the Stipulation, it is asserted that "[each] building owner has separate employer's identification numbers for federal, state, and city payroll taxes." [Stip. P 301(g)]

 Section 3 of the Fair Labor Standards Act defines the following terms:

 * * *

 "(d) 'Employer' includes any person acting directly or indirectly in the interest of an employer in relation to an ...


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