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SCHULTZ v. PONSETTO

February 4, 1970

George P. Schultz, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
Paul Ponsetto, et al., dba Wilmerding Bottling Works, Defendants


Gourley, D. J.


The opinion of the court was delivered by: GOURLEY

In this civil action, the Secretary of Labor, as plaintiff, seeks to enjoin the defendants from alleged violations of the minimum wage, overtime and record keeping provisions of the Fair Labor Standards Act. *fn1" The Court is requested to enjoin defendants from the withholding of wages and interest allegedly owing seventy-six individuals employed by defendants during the period from January 1, 1966 to March 6, 1968 and also from violating in the future the aforementioned provisions of the Fair Labor Standards Act. A non-jury trial has been conducted, the pleadings, briefs and record have been reviewed, and the Court is of the opinion that the relief requested by the Government should be denied.

 For forty-six years, the individual defendants, as partners, have engaged primarily, if not exclusively, in the business of bottling carbonated beverages at their plant location in Allegheny County, Pennsylvania, for purposes of selling the bottled beverages within the Allegheny County area. *fn2" For thirty years, defendants have purchased from Glenshaw Glass Company glass bottles to be used as containers for defendants' carbonated beverages. For many years, both prior to and including the 1966-1968 period in question, Glenshaw was defendants' sole supplier of glass bottles.

 Although defendants, during the course of their continuing business relationship with Glenshaw, had received some bottles in a broken condition and suffered breakage of others on their bottling line, they did, at no time prior to 1966, return broken glass, or "cullet" as it is known in the trade, to Glenshaw or receive credit for the same. However, in early 1966, Glenshaw altered the size of its bottle and, at the same time, reduced its strength, with the consequence that defendants began to receive a substantially increased number of cracked bottles upon delivery by Glenshaw and also began to experience substantially increased bottling line breakage with the new bottles.

 In an effort to accommodate an old and reliable customer, Glenshaw arranged in 1966 to remove with its own trucks from defendants' plant, broken glass or "cullet", which defendants gathered in barrels, and to afford defendants a credit upon the purchase of future bottles in the sum of ten dollars per ton of collected broken glass.

 Glenshaw manufactures its bottles in a large plant in the area of Allegheny County, Pennsylvania, as well as in a plant in Orangeburg, New York. Sixty per cent of the bottles which Glenshaw manufactures in Pennsylvania are sold interstate, the rest being sold intrastate. In any given "batch" of glass prepared by Glenshaw for making bottles, Glenshaw introduces broken glass or "cullet" comprising about fifteen per cent of the total batch. It is not necessary for Glenshaw to introduce broken glass or "cullet" into a batch of glass, but Glenshaw, nevertheless, does so.

 In Glenshaw's own manufacturing operation, Glenshaw rejects for defects and flaws ten to fifteen per cent of the bottles made by it. Glenshaw uses these rejects as "cullet". Consequently, Glenshaw generally did not seek to purchase from independent sources or collect from its customers for credit broken glass or "cullet" for introduction into its manufacturing process, as long as it had an adequate supply of its own. However, in the 1966-1968 period in question, which immediately followed Glenshaw's reduction in the strength of its bottles, Glenshaw removed broken glass or "cullet" from a number of its customers, including defendants, as a "sales promotion device".

 On the basis of the foregoing, it is the Government's contention that during the period in question defendants' employees were engaged in the "production of goods" for interstate commerce or, alternatively, employed in a "closely related process or occupation directly essential to" such production, thereby subjecting defendants to the application of the Fair Labor Standards Act. *fn4" It is the Court's conclusion that the facts of this case do not justify this characterization.

 Defendants were engaged in the enterprise of producing carbonated beverages for intrastate sale. They purchased glass containers for their product from a local supplier, Glenshaw. There is no evidence that defendants' enterprise, at any time, encompassed within its scope the collection of empty bottles, broken glass, or cullet from any sources independent of Glenshaw for disposition to Glenshaw or any others engaged in production of glass for interstate commerce. Because defendants engaged in no such activities of this nature, the instant case is factually distinguishable from the case of Wirtz v. Craig, (W.D.N. Car. 1963), 48 Lab. Cas. (CCH) Para. 31,531.

 Also, there is no indication that defendants, prior to January 1, 1966 or subsequent to March 6, 1968, integrated into their business operations any operation of collecting broken glass or "cullet" which could be regarded as a by-product of their own production, for disposition to glass manufacturers dealing in interstate commerce. See Wirtz v. F. M. Sloan, Inc., 411 F.2d 56 (3d Cir. 1969).

 The Court finds that the arrangement between defendants and Glenshaw during the period in question did not alter the character of defendants' enterprise so as to add to it any facet of production beyond the production of carbonated beverages for local sale. Nor did said arrangement result in a brief engagement of defendants' employees in the production of goods for commerce or in a "closely related process or occupation directly essential to" such production.

 The compensation provided by Glenshaw was given in the form of credit and services, the service being to remove with its own trucks its own unusable product from defendants' plant. As Mr. Robert Kay, District Sales Manager for Glenshaw, testified, Glenshaw chose to collect broken glass or "cullet" from its local bottler-customers in 1966 and 1967 as a sales promotion device, and the strong inference which the Court draws from the statement is that ...


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