OTIS, District Judge.
Whether redcaps at the Kansas City, Missouri, Union Station, who have received in tips more than the equivalent of the minimum wages provided for in the Fair Labor Standards Act, Title 29, Sec. 201 et seq., U.S.C.A., may now prevail in their contention that in addition to what they have received the defendant, the Kansas City Terminal Railway Company, as their employer, should pay them in cash minimum wages (and a further like amount as liquidated damages), is the question presented. The question is not altogether novel. A similar question (but with facts differing in a material respect) was presented to the District Court for the Northern District of Texas and decided by that court May 28, 1940, Pickett et al. v. Union Terminal Co., 33 F.Supp. 244, and to the District Court for the Southern District of Florida, which handed down its decision October 21, 1940, Williams et al. v. Jacksonville Terminal Co., 35 F.Supp. 267.
Redcaps, so called from the color of the caps they wear — the designation "ushers", which also appears in the record, perhaps is more descriptive of their functions — are, and for years have been, familiar to all who patronize the great union stations of the United States. For many years their services have been available in the Union Station in Kansas City, Missouri, which is owned and operated by defendant, the Kansas City Terminal Company, the stock in which, in turn, is owned by railroads using the facilities of the station. The Terminal Company always has hired and, when it desired to do so, discharged, redcaps. It has prescribed in great detail the nature of their duties. Those duties are complex, requiring for their intelligent discharge much information and also all the arts of diplomacy and tact. The various duties intimately are connected with the obligation of the Terminal Company and the railroads holding stock in it to the traveling public.
Prior to the effective date of the Fair Labor Standards Act the Terminal Company did not directly pay to the redcaps anything in compensation for their services. What compensation they received they received in the form of tips from travelers they aided, tips gratuitously given, tips which the redcaps were forbidden to solicit. On October 24, 1938, the Fair Labor Standards Act became effective,
The answer of defendant puts in issue the constitutionality of the Fair Labor Standards Act, its applicability to the redcaps (the answer denying that they are "employees" of the defendant and that they are "engaged in interstate commerce"), and the contention of plaintiff that the redcaps have not already been paid the minimum wages required by the act.
1. I set to one side without discussion issues raised by the pleadings which were not pressed in oral argument
I shall consider the question with three different assumptions. 1. I shall assume that arrangement between the defendant and the redcaps which was in existence before the enactment of the Fair Labor Standards Act and the coming into being of the Accounting and Guaranty Arrangement. 2. I shall assume a certain hypothetical arrangement touching the disposition of tips. 3. I shall assume the Accounting and Guaranty Arrangement entered into between the redcaps and defendant.
Assumption No. 1.
It does not seem to me that any real problem is presented under Assumption No. 1. To say that, within the intention of Congress as expressed in the Fair Labor Standards Act, the defendant paid wages to redcaps when it permitted them to accept tips from travelers is to assume that Congress did not know the generally accepted meaning of simple words. But they did know the generally accepted meaning of simple words. They knew what the word "wages" means in common, present day, understanding.
Assumption No. 2.
Defendant was under no obligation to employ redcaps. In the great majority of railway stations no such service is provided. When the defendant did employ redcaps it had the right to fix the conditions of their employment (except as Congress legally may have prescribed conditions). It had the right to say what duties they should perform, how they should perform them, when they should perform them. It had the right to say whether they should take or refuse tips when offered. It had the right to require them to turn over to it all tips received.
Assumption No. 3.
The situation actually presented is not exactly that considered under Assumption No. 1 nor exactly that considered under Assumption No. 2. It must be described fully and precisely. That, however, may be done briefly.
On October 21, 1938, defendant delivered to each redcap (and each redcap acknowledged receipt thereof in writing) the following announcement:
"In view of the requirements of the Fair Labor Standards Act, effective October 24, 1938, and in consideration of your hereafter engaging in the handling of hand baggage and travelling effects of passengers or otherwise assisting them at or about stations or destinations, it will be necessary that you report daily to the undersigned the amounts received by you as tips or remuneration for such services.
"The carrier hereby guarantees to each person continuing such service after October 24, 1938, compensation which, together with and including the sums of money received as above provided, will not be less than the minimum wage provided by law.
"You are privileged to retain subject to their being credited on such guarantee all such tips or remuneration received by you except such portion thereof as may be required of you by the undersigned for taxes of any character imposed upon you by law and collectible by the undersigned.
"All the matters above referred to are subject to the right of the carrier to determine from time to time the number and identity of persons to be permitted to engage in said work and the hours to be devoted thereto, to establish rules and regulations relating to the manner, method and place of rendition of such service and the accounting required.
This announcement was delivered to the redcaps "in view of the requirements of the Fair Labor Standards Act," on about the day that act became effective. It required the redcaps to "report daily to the undersigned [i. e., to the defendant] the amounts received * * * as tips * * *." It guaranteed to the redcaps "compensation which * * * will not be less than the minimum wage provided by law," but advised
When the redcaps received this announcement and thereafter continued to work they impliedly accepted its terms. They consented and agreed to whatever clearly was stated in the announcement and to whatever clearly was implied in what was stated. None seriously would contend that the redcaps did not understand that the defendant intended that after October 21, 1938, tips should be counted in the calculation of minimum wages to be paid as required by the Fair Labor Standards Act. None seriously would contend that the redcaps did not understand that the defendant by its announcement asserted rights to and an interest in tips received. It did that when it required that such tips should be reported daily (no employer would require an employee to report gifts in which the employer had no interest). It did that when it specifically made it known that tips were to be included in compensation guaranteed. Especially did it do that when it advised the redcaps that they were "privileged to retain * * * tips." To grant a privilege is to assert the right to grant it. To grant the privilege of retaining tips is to assert the right to demand that they be paid over. The privilege of retaining tips was granted but the grant was not unconditional. The redcaps understood what the condition was. They understood and they accepted it. They were to retain the tips subject "to their being credited on such guarantee." On what guarantee? On the guarantee that the compensation of each redcap "will not be less than the minimum wage provided by law."
Here was an assertion by the defendant of a claim it had a right to assert, a claim to the tips received by the redcaps. Here was an arrangement by which the redcap, when he had received a tip, held it in his custody for the benefit of his employer until he had given his employer credit on his wage, after which it became his separate property.
So it appears that there is no essential distinction between the hypothetical situation discussed under Assumption No. 2 and that actually presented in this case. In each the defendant asserts its claim to tips and it has the right to do that. In each, when the redcap receives a tip, he knows it is the employer's property. In the hypothetical situation the redcap turns in the employer's tip to some agent of the employer to be thereafter used in paying the redcap's wages. In the actual situation the redcap, pursuant to understanding with his employer, keeps the employer's tip in his own custody, that it may be applied to or credited on his wages. The distinctions constitute no essential difference. Just as under Assumption No. 2, so here, plaintiff is not entitled to recover.
In the very able brief submitted by plaintiff's counsel, which was supplemented by their equally able oral argument, they present ten contentions. I think they are entirely right in their contentions I, II, V and X, as follows: I. "The redcaps are employees of defendant for the purposes of the Fair Labor Standards Act of 1938." II. "The redcaps were engaged in commerce within the meaning of * * * the Fair Labor Standards Act of 1938." V. "In the absence of an agreement on the part of an employee to turn over his tips to his employer, tips received by the employee are the property of the employee." IX. "Under * * * the Fair Labor Standards Act of 1938, it is mandatory that the court award liquidated damages, if it should find in favor of plaintiff for wages due." Contention X, asserting that Pickett et al. v. Terminal Co., D. C., 33 F.Supp. 244, should be followed here, really is not a separate contention, but only a citation of authority.
Plaintiff's contentions III, IV, VI, VII and VIII, have to do, directly or indirectly, with that feature which is peculiar to this case, which was not present in the two similar cases which have been reported in the books. Defendant's obvious attempt to comply with the Fair Labor Standards Act by its "Accounting and Guaranty Notice," plaintiff contends, failed of its purpose. What is the argument?
The essential steps in plaintiff's argument are these. 1. In the absence of an agreement on the part of an employee to turn over his tips to his employer, tips received are the property of the employee. (Impliedly it is conceded that if there is an agreement to turn over, the tips are the employers.) 2. The so-called Accounting and
Plaintiff's case then depends upon a very fine and technical distinction. While the redcaps involved, as a matter of fact, received, by reason of their employment, an amount equivalent to (and in the great majority of instances much more than) the minimum wages, their learned counsel would secure for them, in addition, twice the amount of minimum wages, because of the difference, not indeed between tweedledum and tweedledee, but between, on the one hand, "an agreement that tips received by the redcaps would be considered as wages for the purposes of the Fair Labor Standards Act" (i. e., for satisfying its minimum wages requirement) and, on the other hand, an agreement "that the tips received by the redcaps to the extent of the minimum wage prescribed by the Fair Labor Standards Act should be the property of the defendant." If plaintiff is right, what a disastrous (to defendant) result and what an undreamed of bonanza (for the redcaps) follows from a distinction the naked eye scarcely is able to detect!
Of course there is no distinction between the agreements here described, that is, no distinction from the standpoint of either of the parties to the agreements (whatever might be the distinction from the standpoint of the Professor of Contracts in the Law School). It is not possible that the redcap will be heard to say — "Yes, I agreed with the defendant that the tips I received because of my employment should be counted by my employer in satisfying the minimum wages requirement of the law, just as if I had first turned over and then had received back the tips, but I did not exactly agree to the turning over and the receiving back, and, so, now, I demand three times minimum wages?"
Plaintiff's learned counsel make a further most curious argument. Defendant, say they, could not have required the redcaps to have turned in their tips for that "would be tantamount to defendant making a charge to passengers for redcap service, and since there is no uniformity in the amount of tips, the arrangement would be in violation of Section 2 of the Interstate Commerce Act, 49 U.S.C.A. § 2, which provides that no common carrier shall directly or indirectly by any special rate, rebate, drawback or other device charge, demand, collect or receive from any person or persons a greater or less compensation for any service rendered or to be rendered in the transportation of passengers or property than it charges, demands, collects or receives from any other person or persons for doing for him or them a like service." The gist of this argument is the erroneous assumption that to require the redcaps to turn in their tips is "tantamount to making a charge to passengers for redcap service." But the tips are voluntarily given by the patrons. The redcaps themselves do not make a charge. How can that which was not a charge be converted into a charge by the act of turning over the tip?
I have not discussed all the contentions ably presented by counsel for plaintiff but those only I regard as most significant. All have been considered.
Rulings on Objections to Testimony Taken Under Submission.
In the course of the trial certain objections to proffered testimony and to certain parts of the agreed statement of facts were taken under submission. All such objections (all were made by counsel for defendant) now are overruled.
Findings of Fact.
I find the facts to be as stipulated by the parties in the Agreed Statement of Facts, in subdivisions I to XII, inclusive, together with all of the exhibits referred to and attached. The Agreed Statement of Facts was offered in evidence and is marked "Filed January 6, 1941, A. L. Arnold, Clerk, by Dan C. Kelliher, Deputy." By reference it is incorporated here.
Conclusion of Law.
Upon the facts found, I conclude as a matter of law that the plaintiff is entitled to recover nothing, either as minimum wages, liquidated damages, or attorneys' fee, from the defendant.
Judgment and Decree.
This cause coming on to be heard upon the second amended complaint, the answer of the defendant thereto, the intervention of the Attorney General, and the court having heard and considered the evidence
Now, therefore, it is ordered, adjudged and decreed that the plaintiff have and recover nothing from the defendant, and that the costs of this proceeding be assessed against plaintiff.