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Terms & Conditions – Time is Ltd.
1.1 The provisions of the Agreement and/or Work Order and any appendices other than these Business Terms (“Engagement Letter”) issued by Time is Ltd. s.r.o., Identification No.: 054 46 872, with seat at: Kafkova 346/14, Dejvice 160 00, Praha 6, the Czech Republic, registered in the Commercial Register kept by the Municipal Court in Prague, file No.: C 263767 (“TIL”) and addressed to the entity identified in the Agreement (“Client”), and these Business Terms (together the “Contract”) constitute the whole agreement between the Client and TIL in relation to the Services to be provided by TIL (including the Deliverable as defined below or in the Contract or its Appendix 1) and TIL’s responsibilities for them (the “Services”). The applicability of these Business Terms can only be excluded or restricted by law, regulations or explicit written mutual agreement between TIL and the Client.
1.2 For the purposes of the Contract, the term “Client Group” shall mean any entity that establishes a concern with the Client as defined in § 79 of Act No. 90/2012 Coll., on Commercial Corporations, as later amended and any other entity or individual, that is directly or indirectly controlled, controls or being under common controlled of a company that is an owner of the Client.
2.1 TIL shall perform the Services based on the information given by the Client. The TIL is not obliged to verify truthfulness, completeness and accuracy of the information from the Client and shall not be responsible therefore whatsoever.
2.2 The Client shall ensure that any information or data of the Client will be shared with TIL without any restrictions and/or that such information or data are always given in the extent the Client is entitled to do so by third parties.
2.3 If, during the fulfilment of the Contract the Client finds out that TIL performs the Services based on incorrect premises, or it does incorrect decisions, it shall inform TIL thereabout immediately.
2.4 The TIL Personnel will use, while providing the Services its own SW and HW equipment. The Client shall remain responsible for giving access to its systems in the necessary extent.
3.1 TIL shall be entitled to fees as agreed upon in the Agreement (the “Fees”) and this compensation shall not depend on the result of the Services, unless the Agreement specifies a success fee based on the specific outcome.
3.2 TIL is entitled to issue the invoices for the Services in accordance with the Contract.
3.3 In order to compensate any fee payable, TIL is entitled to offset any of its receivables from the Client against any receivables the Client may have from TIL.
3.4 For VAT purposes, the Services are supplied continuously unless the parties agree otherwise. Each supply shall be regarded as having been rendered on the date the related invoice is issued, unless applicable mandatory laws stipulate otherwise.
3.5 The Fees for the provision of the Services do not include the expenses incurred by TIL in connection with the provision of the Services. Reasonable expenses incurred by TIL, including travel and subsistence, expenses incurred by the provision of information required by law, by court judgement/order or by requirement of regulatory authorities or expenses arising from the making of any document for the disclosure to third parties on Client’s request and any other incidents leading to expenses after the Services being provided, and goods and services purchased in connection with the provision of the Services will be charged in addition to the Fees.
3.6 TIL’s invoices are due and payable by the Client within 30 days of the invoice date. The due date will be specified on each invoice. TIL reserves the right to charge interest at 1½% per month. In the event that TIL incurs any collection or legal costs with regard to overdue fees these costs shall be charged to the Client in an additional invoice. Without limiting its other rights or remedies, TIL shall have the right to suspend or terminate the Services entirely or in part if payment is not received by the due date. In case there is any dispute over the invoiced amount, the undisputed amount shall be paid by the Client. The Client shall be responsible for all taxes, such as VAT, sales and use tax, gross receipts tax, withholding tax, and any similar tax, imposed on or in connection with the Services, other than TIL’s income and property taxes.
3.7 Any estimate of the Fees will be based upon TIL’s assessment of the work, taking account of any assumptions set out in the Engagement Letter. Any estimate of the Fees may be adjusted, for example, if the Services prove more complex or time consuming than expected, whereas in such situation, TIL shall inform the Client about such expected adjustment in advance.
4.1 Each party is an independent contractor and neither party is, nor shall be considered to be, the other’s agent, distributor, employer, partner, fiduciary, joint venturer, co-owner, or representative.
4.2 The parties agreed that the provision of the Services does not require the permanent presence of the TIL Personnel and TIL reserves the right to use the TIL Personnel elsewhere.
4.3 TIL shall be entitled to replace any TIL Personnel at its discretion.
4.4 The Client is not entitled to initiate any activities, including any legal acts on behalf of TIL in relation to the TIL Personnel. The TIL Personnel shall remain TIL staff during the performance of the Services with all consequences related thereto and this Contract does not create any relation between the Client and the TIL Personnel.
5.1.1 The Client is responsible for determining the scope of Services. The Client shall cooperate with TIL in connection with the performance of the Services, including, without limitation, providing timely access to data, systems, information, premises and personnel of the Client Group or other persons whose cooperation is necessary.
5.1.2 The Client will be responsible for the management of such personnel and their performance, including timelines and quality of their input and work. Where the Client wishes TIL to access a web site or an electronic data sharing forum in relation to the Services to be provided, it will discuss and agree with TIL the specific areas and/or information which the Client requires TIL to read.
5.1.3 The Client shall be responsible for the performance of its personnel and agents, for the timeliness, accuracy and completeness of all data and information (including all financial information and statements) provided to TIL by or on behalf of the Client Group.
5.1.4 TIL may use and rely on information and data furnished by the Client or by others identified by the Client without verification. The performance of the Services is dependent upon the timely performance of the Client’s responsibilities under the Contract and timely decisions and approvals of the Client in connection with the Services.
5.1.5 Should the Client fail to provide TIL with accurate and complete information, assistance or materials as specified in this article above, and/or should the Client fail to allow the TIL Personnel access to its personnel according to the terms and conditions herein, TIL shall not be liable for any delay or fault in the Services. TIL further reserves right to extend all deadlines for a period corresponding to each and every delay caused by the Client.
5.1.6 Should TIL suffer any other costs as a result of the aforesaid reasons associated with the non-performance of Client’s obligations, TIL shall have right to have the costs fully compensated by the Client, without prejudice to other rights agreed herein, including but not limited to the right to damages or the right to the contractual penalty, if agreed.
5.2.1 TIL will only be responsible for the Services being performed in accordance with this Contract. The only duty on TIL side is to arrange for fixing such defects or delays of the Services or the Deliverable or parts thereof that are notified by the Client in writing within 5 days after the Service performance or after the delay commences.
5.2.2 In formulating any Deliverable as part of the Services, TIL may discuss ideas with the Client orally or show the Client drafts of such Deliverable. To the extent that the content of drafts or oral Deliverable are expected to be finalized and confirmed to the Client in writing (including via e-mail), such confirmed Deliverable shall supersede any previous drafts or oral Deliverable. TIL shall not be responsible if the Client or others choose to rely on, act or refrain from acting on the basis of any drafts or oral Deliverable.
5.2.3 TIL shall have no responsibility to monitor events occurring after the date of the Services nor to update any Deliverable unless the parties have agreed otherwise in writing explicitly.
6.1 Subject to when a separate license agreement shall apply, to the extent that TIL uses or develops any of its property (whether tangible or intangible) in connection with this Contract, such property, including work versions, shall remain the property of TIL.
6.2 Subject to payment of all of TIL’s Fees due in connection with the Services and this Contract, the Client shall obtain a non-exclusive, non-transferable, fully paid license to use the Deliverable in a manner and for the purpose set out in the Contract or in the Deliverable and in compliance with the other provisions of the Contract.
6.3 Any royalty (license fee) associated with the Deliverable (if any) is included in the Fees agreed herein.
6.4 TIL shall have ownership (including, without limitation, copyright and other intellectual property ownership) of the Deliverable and all rights to use and disclose its ideas, concepts, know-how, methods, techniques, processes and skills, and adaptations thereof in conducting its business. Any intellectual property and other proprietary rights in materials and data provided by the Client for performing the Services shall remain the property of the Client.
6.5 Notwithstanding anything to the contrary in the Contract, the Client acknowledges that TIL and the TIL Personnel, in connection with performing the Services, may develop or acquire general experience, skills, knowledge, and ideas that are retained in the memory of the TIL Personnel. The Client agrees that TIL may use and disclose such general experience, skills, knowledge and ideas without restriction.
6.6 The Client shall also be entitled to have access to and use of those TIL Technologies supplied solely for the purposes of receiving the Services and for no other purposes in accordance with and subject to agreement by the Client with the provisions of the licenses applicable to such TIL Technologies as notified by TIL. As between the Client and TIL, TIL will own and retain ownership of all intellectual property rights and other proprietary rights of any kind in the TIL Technologies that are used or developed in connection with this Contract.
6.7 “TIL Technologies” means all know-how and software, system interfaces, templates, methodologies, ideas, concepts, techniques, tools, processes, and technologies, including web-based technologies and algorithms owned by, licensed to or developed by any TIL entity and used by TIL and the TIL Personnel in performing the Services or other obligations.
6.8 TIL does not agree to any terms that may be construed as precluding or limiting in any way its right to develop for itself, or for others, materials that are competitive with or similar to those produced as a result of the Services, irrespective of their similarity to the Deliverable, subject to the confidentiality obligations set forth in Article 21 below.
7.1 TIL shall not be liable to the Client and/or the Client Group for any claims, liabilities, losses, damages, costs or expenses arising under or in connection with the Contract regardless of the legal basis (“Claims”) for an aggregate amount of the Fees paid under the Contract by the Client to TIL for that part of the Services giving rise to the Claim except to the extent it is finally judicially determined to have resulted primarily from the intentional misconduct or gross negligence of TIL.
7.2 To the extend allowed by law, TIL and the TIL Personnel shall not be liable for any loss of use, contracts, data, goodwill, revenues or profits (whether or not deemed to constitute direct Claims) or any consequential, special, indirect, incidental, punitive or exemplary loss, damage, or expense arising under or in connection with the Contract.
7.3 In circumstances where all or any portion of the provisions of this Article 7 are finally judicially determined to be unenforceable, the aggregate liability of TIL for any Claim shall not exceed an amount which is proportional to the relative fault that its conduct bears to all other conduct giving rise to such Claim.
7.4 TIL liability for the Services in the extent agreed in art. 7.1 exists only vis a vis the Client and the Beneficiaries that are listed in the Contract or in the Deliverable as the persons entitled to rely on the Services (the “Beneficiaries”), and not to any other members of the Client Group or third parties.
7.5 Art. 7.1 above applies in aggregate to each and all Claims and/or losses which from time to time arise under or in connection with the Contract and the Services, whether such Claims and/or losses are made at the same or different times or by one or more members of the Client Group and/or other persons. The cap in art. 7.1 also applies to any and all Claims and/or losses against any other TIL entity, if it exists and the TIL Personnel, if and only to the extent that it is judicially determined that any of them have any liability under or in connection with the Contract or the Services.
7.6 TIL shall have no liability in respect of any products and services of third parties, or in respect of any losses or damages suffered by the Client, members of the Client Group and/or Beneficiaries other than these stipulated in this Article. In case that the Services or any part thereof are rendered to the Client by any third party in addition to TIL, TIL shall be liable only in connection with damage caused by breach of its obligations stipulated herein and in the extent according to this Article and according to TIL´s participation in the rendered Services.
8.1 This is a services agreement, which regulates the Services being performed by TIL. TIL warrants that within the extent of the acceptance of its liability as in particular specified in art. 5.3.1 and 7.1 of the Contract, TIL shall perform the Services in good faith and with due professional care and skill. To the fullest extent permitted by law, TIL disclaims all warranties of merchantability and fitness for a particular purpose.
8.2 The Client may claim the removal of any defects provided that TIL is liable for such defects and that they can be removed at reasonable cost and provided that the Client has notified TIL of the defects in writing within five days or within the warranty period specified by mandatory laws, whereas the above period starts at the moment of the acceptance of the Deliverable and/or other Service deliverables. If the defect cannot be rectified, or an attempt to rectify the defect is unsuccessful, the Client may rescind the Contract or demand a reduction of the Fees.
8.3 The Services will be provided in an objective, impartial and professional manner uninfluenced by any particular business interests of TIL or any of TIL personnel without any subsequent award of a third party.
8.4 TIL will use reasonable efforts to supply the Services in accordance with any timetable referred to in the Agreement or otherwise specified by the parties in writing. All dates given by TIL or specified by the Client for the Services are intended for planning and estimating purposes only and are not contractually binding.
9.1 The Contract may be terminated by either party at any time, with or without cause, by giving written notice to the other party not less than 30 days before the effective date of termination.
9.2 Any notice of termination for cause shall not be effective if the breaching party cures the breach within the notice period where the breach is capable of remedy.
9.3 Unless prohibited by governing laws, TIL or the Client may terminate the Contract immediately by giving written notice in the event the other party (i) has filed a request for a moratorium or its own bankruptcy, (ii) has been declared bankrupt or adjudicated insolvent by the competent authority due to insolvency or over indebtedness, or (iii) against which insolvency claim is dismissed due to insufficient assets, or (iv) assets are subject to attachment of material substance, or (v) is being wound-up.
9.4 TIL may terminate this Contract, in whole or in part, with immediate effect upon written notice to the Client if TIL determines that (a) a governmental, regulatory, or professional entity, or other entity having the force of law has introduced a new, or modified an existing, law, rule, regulation, interpretation, or decision, the result of which would render TIL’s performance of any part of the Contract illegal or otherwise unlawful or in conflict with professional rules, or (b) circumstances change (including, without limitation, changes in ownership of the Client or any of the Client Group entity such that TIL’s performance of any part of the Contract would be illegal or otherwise unlawful or in conflict with independence or professional rules.
9.5 Upon termination of the Contract for any reason, the Client will compensate TIL in accordance with the terms of the Contract for the Services performed and expenses or costs (including any specific costs, such as start-up costs) incurred through the effective date of termination.
10.1 Neither party shall be liable for any delays or non-performance resulting from circumstances or causes beyond its reasonable control, including, without limitation, acts or omissions or the failure to cooperate by the other party (including, without limitation, entities or individuals under its control, or any of their respective officers, directors, employees, other personnel and agents), fire or other casualty, act of God, epidemic, riots, strike or labor dispute, war or other violence, or any law, order, or requirement of any governmental agency or authority.
10.2 If either party is prevented from meeting its obligations due to circumstances of force majeure, it shall notify the other party accordingly and the other party shall, if possible, grant a reasonable extension for the performance of the Engagement Letter. If the circumstances of force majeure last for more than 3 months, either party may terminate the Contract in accordance with art. 9 above.
11.1 No action, regardless of form, relating to the Contract or the Services, may be brought by either party more than two years after the cause of action has accrued under applicable law, unless a mandatory period applies which by the governing law of the Contract cannot be limited.
12.1 Any provisions of the Contract which either expressly or by their nature extend beyond the expiration or termination of this Contract shall survive such expiration or termination, including without limitation provisions governing Contract term and termination, ownership of TIL property, damage liability, warranties, limitation on actions, confidentiality, indemnification, governing laws and dispute resolution .
12.2 If any provision of this Contract is found by a court of competent jurisdiction or other competent authorities to be unenforceable in whole or in part, such provision or the relevant part shall not affect the other provisions, but such unenforceable provision shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the parties set forth herein. All provisions hereof shall apply to the fullest extent of the law, whether in contract, statute, tort (including without limitation negligence), or otherwise, notwithstanding the failure of the essential purpose of any remedy.
13.1 Neither party may assign or otherwise transfer this Contract without the prior express written consent (including via e-mail) of the other.
14.1 The Client shall indemnify and hold harmless TIL and the TIL Personnel from all third party Claims (as defined in Article 7 above), except to the extent finally judicially determined to have resulted primarily from the intentional misconduct of TIL or any TIL Personnel.
15.1 Nothing discussed prior to execution of the Contract induced, nor forms part of, the Contract except to the extent repeated in this Contract. This Contract supersedes any previous agreement, understanding or communication, written (including via e-mail) or oral, relating to its subject matter.
15.2 Unless expressly allowed hereby, no variation to the Contract shall be effective unless it is documented in writing (otherwise being null and void) and signed by authorized representatives of both parties, provided, however, that the scope of the Services may be changed by agreement of the parties in writing, including by e-mail or facsimile.
15.3 If TIL has already started work (e.g., by gathering information, project planning or giving initial advice) at the request of the Client then the Client agrees that this Contract is effective as of the start of such work, either by retrospective effect allowable by applicable laws or by acknowledging that this entire Contract constitutes the written confirmation of the oral agreement concluded between the parties at the start of such work.
16.1 Nothing in this Contract will prevent or restrict TIL or the TIL Personnel from providing services to other clients (including services which are the same or similar to the Services) or using or sharing for any purpose any knowledge, experience or skills used in, gained or arising from performing the Services (subject to the obligations of confidentiality set out in art. 21) even if those other clients’ interests are in competition with the Client Group or with the Client.
17.1 This Contract may be signed in any number of counterparts (whether such counterparts are original or facsimile or in the form of a .pdf attachment to an email). Each signed counterpart shall be deemed to be an original thereof, but all the counterparts shall together constitute one and the same instrument. Where there are versions of the Contract in the English language and another language, in the event of any discrepancies between versions, the English language version shall prevail.
18.1 The parties agree to attempt in good faith to resolve any dispute or claim amicably. Unless the amicable settlement is reached within 30 days, the dispute shall be resolved by a competent court having jurisdiction in accordance with the TIL registered place of business.
19.1 This Contract, and all matters relating to it (including non-contractual obligations) shall be governed by, and construed in accordance with, the laws of the Czech Republic, in particular the Czech Civil Code.
20.1 If any third party wishes to rely on the Deliverable (and/or drafts thereof) and to become the Beneficiary as defined herein, such third party shall first execute an agreement with TIL in a form acceptable to TIL under which the third party accepts the terms of this Contract (subject to any changes agreed by TIL with the third party), TIL will treat such party as a Beneficiary in accordance with this Contract and assume a duty of care to it in relation to the Deliverable (and/or drafts thereof). TIL will have no responsibility to any other party that does not execute the above agreement with TIL.
21.1 To the extent that, in connection with this Contract, either TIL, TIL Personnel or the Client or any Beneficiary, if applicable (the “receiving party”), comes into possession of any information related to the Services, trade secrets or other proprietary information, which is either designated by the disclosing party as confidential or is by its nature clearly confidential (“Confidential Information”), the receiving party shall not disclose such Confidential Information to any third party without the disclosing party’s consent except to the Client’s or TIL’s legal advisors solely for the purpose of obtaining legal advice, or as may be required by law, regulation, judicial or administrative process.
21.2 The Client and/or the Beneficiary shall use the Deliverable solely for the purposes specified in the Contract or Deliverable and, without limitation, shall not, without the prior written consent (including via e-mail) of TIL, use any Deliverable in connection with business decisions of any third party or for advertisement purposes. All Services are only intended for the benefit of the members of the Client Group identified in the Contract or Deliverable or of the Beneficiaries as being entitled to rely on the Deliverable. The mere receipt of any Deliverable by any other persons is not intended to create any duty of care, professional relationship or any present or future liability of any kind between those persons and TIL. As a consequence, if copies of any Deliverable (or any information derived therefrom) are provided to others under the exclusions referred to in the above article, it is on the basis that TIL owes no duty of care or has any liability of any kind to them, or any other persons who subsequently receive the same.
22.1 Except as instructed otherwise in writing, TIL and the TIL Personnel and the Client Group are authorized to use addressed faxes, email and voicemail communication for both sensitive and non-sensitive documents and other communications concerning this Contract, as well as other means of communication used or accepted by the other.
22.2 TIL Personnel may need access to TIL own systems and data. Client agrees that it will allow (at its discretion) TIL Personnel to use TIL Local Area Network at Client’s premises and/or provide TIL Personnel with analogue dial-up connections or an Internet connection to allow TIL hardware (typically TIL’s laptop computers used by the TIL Personnel) to connect to TIL network via Client’s or Client Group’s internet communications facilities. The Client further acknowledges that in order for TIL Personnel to operate effectively and efficiently from Client or Client Group premises they may require access to Client or Client Group electronic data and also to Client and Client Group internet communications facilities for the purpose of the Contract. TIL will only access Client’s and Client Group’s internal networks, applications, data or other systems through the terminal hardware or software the Client makes available to TIL Personnel for that purpose. Access to Client and Client Group systems by TIL Personnel will be subject to such conditions as the Client at its sole discretion consider necessary to protect the security and integrity of Client’s data and systems provided that they are notified in advance and acceptable for TIL.
22.3 It is recognized that the internet is inherently insecure and that data can become corrupted, communications are not always delivered promptly (or at all), and that other methods of communication may be appropriate. Electronic communications are also prone to contamination by viruses. Each party will be responsible for protecting its own systems and interests and, to the fullest extent permitted by law, will not be responsible to the other on any basis (contract, tort or otherwise) for any loss, damage or omission in any way arising from the use of the Internet or from access by any TIL Personnel to networks, applications, electronic data or other systems of the Client Group.
23.1 TIL may retain copies of documents and files provided by the Client Group in connection with the Services for purposes of compliance with applicable laws, professional standards and internal retention policies.
24.1 Neither TIL nor Client Group shall use the other’s trademarks, service marks, logos, and/or branding in external publicity material without such other party’s prior written (including via e-mail) consent. However, TIL may refer to the names of the Client Group and the performance of the Services and they may use Client’s logo in (i) marketing, publicity materials and proposals as an indication of its experience, and (ii) internal data systems.
25.1 TIL may collect, use, transfer, store or otherwise process (collectively, “Process”) information provided by the Client that can be linked to specific individuals (“Personal Data”) as defined under the applicable law. TIL will Process the Personal Data in accordance with applicable laws and professional regulations.
25.2 The Client warrants that the Client has the authority to provide the Personal Data to TIL in connection with the performance of the Services (as defined in the Contract) and that the Personal Data has been collected and Processed in accordance with applicable law. The Client is obliged to provide TIL with all the necessary instructions for Processing, all in accordance with the Data Processing Agreement that is attached as Appendix 3 hereto, and with accurate and up-to-date Personal Data and TIL shall take the technical, organizational and personal measures to protect the Personal Data as instructed.
26.1 The Services, or part thereof, shall be performed on the basis of an instruction containing the description of the requested Services delivered by the Client to TIL (hereinafter “Work Order”). The Work Order may be made in writing, through fax, e-mail or verbally.
26.2 The Work Order is accepted and confirmed by the earlier of the following events: (i) by TIL delivering the confirmation of the Work Order to the Client or (ii) by TIL providing the Services requested in the Work Order. TIL may decline to accept the Work Order. The declination of the Work Order may be made in writing, through fax, e-mail or verbally. TIL is, however, not allowed to do so without a reason and is obliged to state the reason in writing, through fax, e-mail or verbally to the Client.
26.3 The Client can only cancel the Work Order in writing, through fax or e-mail. The Client shall compensate TIL for the Services performed and expenses incurred through the effective date of cancellation of the Work Order.
27.1 Neither Party shall Employ or otherwise engage any Employee of the other Party, directly or indirectly through any entity where it holds a majority interest or where it controls decision making, without the prior written consent of the other party, except where an Employee responds directly to a general recruitment campaign, for the period of this Contract and for one year following its termination.
27.2 The term “Employee of the other Party” shall mean any person that either as an advisor, consultant or an employee of either party has been anyhow involved in the provision of Services pursuant to this Contract at any time.
27.2 The term “Employ” of an Employee of the other Party shall mean the entering into an employment contract or a contract of a similar nature or entering into a contract for the provision of services of the Employee of the other Party with the said Employee of the other Party or any other individual or entity owned or controlled by the said Employee of the other Party.
27.3 For every breach of this obligation, the party in breach of this Contract under this article shall pay the other party a contractual penalty in the amount of CZK 500,000 (five hundred thousand Czech Crowns) within five (5) days of being reminded to pay the contractual penalty.
27.4 Should any of the parties consider Employ any Employee of the other Party, then the parties will negotiate in good faith how to solve this situation.
28.2 No party feels as a weaker party within the meaning of the Civil Code towards another party.
28.3 The parties hereby claim and confirm that while interpreting legal relationships established by this Contract, no business custom or established practice to be considered.
28.4 Each party waives any potential rights and entitlements based on the behaviour of the other parties before the conclusion of this Contract. Each party declares that during negotiations about this Contract it received all of factual and legal information, so that the party could assess the possibility to conclude a valid agreement and that party knew the interests of the other party to sign the Contract.
28.5 None of the provisions of this Contract shall be construed so that it precludes or limits the obligation to compensate for harm to a human being’s natural rights, or caused deliberately or through gross negligence, or that a party waives any right to such compensation.
28.6 These Business Terms are valid and effective as of 1 January 2019. For the avoidance of doubt these Business Terms become effective and applicable to the Client as of the effective date of the Engagement Letter. This version supersedes any previously existing version notwithstanding any other terms or conditions contained in any proposals or similar documents. TIL reserves the right to update the Business Terms from time to time and/or to supplement them with additional terms or conditions specific to individual advisory Services. Any Work Order approved or signed by the Client to TIL following the prior and timely delivery of the updated Business Terms shall be considered as the confirmation of and the consent with the changes of the Business Terms by the Client.

matches:
§ 79
art. 7
Art. 7
art. 7
art. 5
art. 9
art. 21


The principal question is whether the plaintiff, a wholesale distributor of doughnuts and other baked goods under its federally registered trademarks 'Dawn' and 'Dawn Donut,' is entitled under the provisions of the Lanham Trade- Mark Act to enjoin the defendant from using the mark 'Dawn' in connection with the retail sale of doughnuts and baked goods entirely within a six county area of New York State surrounding the city of Rochester. The primary difficulty arises from the fact that although plaintiff licenses purchasers of its mixes to use its trademarks in connection with the retail sales of food products made from the mixes, it has not licensed or otherwise exploited the mark at the retail level in defendant's market area for some thirty years.
We hold that because no likelihood of public confusion arises from the concurrent use of the mark in connection with retail sales of doughnuts and other baked goods in separate trading areas, and because there is no present likelihood that plaintiff will expand its retail use of the mark into defendant's market area, plaintiff is not now entitled to any relief under the Lanham Act, 15 U.S.C.A. § 1114. Accordingly, we affirm the district court's dismissal of plaintiff's complaint.
This is not to say that the defendant has acquired any permanent right to use the mark in its trading area. On the contrary, we hold that because of the effect of the constructive notice provision of the Lanham Act, should the plaintiff expand its retail activities into the six county area, upon a proper application and showing to the district court, it may enjoin defendant's use of the mark.
With respect to defendant's counterclaim to cancel plaintiff's registration on the ground that its method of licensing its trademarks violates the Lanham Act, a majority of the court holds that the district court's dismissal of defendant's counterclaim should be affirmed. They conclude that the district court's finding that the plaintiff exercised the degree of control over the nature and quality of the products sold by its licensees required by the Act was not clearly erroneous, particularly in view of the fact that the defendant had the burden of proving its claim for cancellation. I dissent from this conclusion because neither the finding of the trial judge nor the undisputed evidence in the record indicates the extent of supervision and control actually exercised by the plaintiff.
We are presented here with cross-appeals from a judgment entered by the District Court for the Western District of New York dismissing both plaintiff's complaint for infringement of its federally registered trademarks and defendant's counterclaim to cancel plaintiff's federal registrations.
Plaintiff, Dawn Donut Co., Inc., of Jackson, Michigan since June 1, 1922 has continuously used the trademark 'Dawn' upon 25 to 100 pound bags of doughnut mix which it sells to bakers in various states, including New York, and since 1935 it has similarly marketed a line of sweet dough mixes for use in the baking of coffee cakes, cinnamon rolls and oven goods in general under that mark. In 1950 cake mixes were added to the company's line of products. Dawn's sales representatives call upon bakers to solicit orders for mixes and the orders obtained are filled by shipment to the purchaser either directly from plaintiff's Jackson, Michigan plant, where the mixes are manufactured, or from a local warehouse within the customer's state. For some years plaintiff maintained a warehouse in Jamestown, New York, from which shipments were made, but sometime prior to the commencement of this suit in 1954 it discontinued this warehouse and has since then shipped its mixes to its New York customers directly from Michigan.
Plaintiff furnishes certain buyers of its mixes, principally those who agree to become exclusive Dawn Donut Shops, with advertising and packaging material bearing the trademark 'Dawn' and permits these bakers to sell goods made from the mixes to the consuming public under that trademark. These display materials are supplied either as a courtesy or at a moderate price apparently to stimulate and promote the sale of plaintiff's mixes.
The district court found that with the exception of one Dawn Donut Shop operated in the city of Rochester, New York during 1926-27, plaintiff's licensing of its mark in connection with the retail sale of doughnuts in the state of New York has been confined to areas not less than 60 miles from defendant's trading area. The court also found that for the past eighteen years plaintiff's present New York state representative has, without interruption, made regular calls upon bakers in the city of Rochester, N.Y., and in neighboring towns and cities, soliciting orders for plaintiff's mixes and that throughout this period orders have been filled and shipments made of plaintiff's mixes from Jackson, Michigan into the city of Rochester. But it does not appear that any of these purchasers of plaintiff's mixes employed the plaintiff's mark in connection with retail sales.
The defendant, Hart Food Stores, Inc., owns and operates a retail grocery chain within the New York counties of Monroe, Wayne, Livingston, Genesee, Ontario and Wyoming. The products of defendant's bakery, Starhart Bakeries, Inc., a New York corporation of which it is the sole stockholder, are distributed through these stores, thus confining the distribution of defendant's product to an area within a 45 mile radius of Rochester. Its advertising of doughnuts and other baked products over television and radio and in newspapers is also limited to this area. Defendant's bakery corporation was formed on April 13, 1951 and first used the imprint 'Dawn' in packaging its products on August 30, 1951. The district court found that the defendant adopted the mark 'Dawn' without any actual knowledge of plaintiff's use or federal registration of the mark, selecting it largely because of a slogan 'Baked at midnight, delivered at Dawn' which was originated by defendant's president and used by defendant in its bakery operations from 1929 to 1935. Defendant's president testified, however, that no investigation was made prior to the adoption of the mark to see if anyone else was employing it. Plaintiff's marks were registered federally in 1927, and their registration was renewed in 1947. Therefore by virtue of the Lanham Act, 15 U.S.C.A. § 1072, the defendant had constructive notice of plaintiff's marks as of July 5, 1947, the effective date of the Act.
We reject this contention as inconsistent with the scope of protection afforded a federal registrant by the Lanham Act.
Prior to the passage of the Lanham Act courts generally held that the owner of a registered trademark could not sustain an action for infringement against another who, without knowledge of the registration, used the mark in a different trading area from that exploited by the registrant so that public confusion was unlikely. Hanover Star Milling Co. v. Metcalf, 1916, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713; cf. White Tower System, Inc. v. White Castle System of Eating Houses Corporation, 6 Cir., 1937, 90 F.2d 67, certiorari denied, 1937, 302 U.S. 720, 58 S.Ct. 41, 82 L.Ed. 556; Note, Developments in the Law of Trade-Marks and Unfair Competition, 68 Harv.L.Rev. 814, 857-858 (1955). By being the first to adopt a mark in an area without knowledge of its prior registration, a junior user of a mark could gain the right to exploit the mark exclusively in that market.
But the Lanham Act, 15 U.S.C.A. § 1072, provides that registration of a trademark on the principal register is constructive notice of the registrant's claim of ownership. Thus, by eliminating the defense of good faith and lack of knowledge, § 1072 affords nationwide protection to registered marks, regardless of the areas in which the registrant actually uses the mark. Sterling Brewing, Inc. v. Cold Spring Brewing Corp., D.C.D.Mass.1951, 100 F.Supp. 412, 418, modified on rehearing, D.C.D.Mass.1952, 92 U.S.P.Q. 37; Roberts, Commentary on the Lanham Trade-Mark Act, 15 U.S.C.A. pp. 272, 280; Amdur, Trade-Mark Law and Practice (1948) pp. 332-333; Note, Developments in the Law of Trade-Marks and Unfair Competition, 68 Harv.L.Rev. 814, 828, 859; Note, 100 U.Pa.L.Rev. 1075 (1952); Note, 21 St. John's L.Rev. 209, 220-221 (1947); Van Valkenburg, The New Trade-Mark Law, 20 Rocky Mt.L.Rev. 76, 80 (1947).
That such is the purpose of Congress is further evidenced by 15 U.S.C.A. § 1115(a) and (b) which make the certificate of registration evidence of the registrant's 'exclusive right to use the * * * mark in commerce.' [FN2] 'Commerce' is defined in 15 U.S.C.A. 1127 to include all the commerce which may lawfully be regulated by Congress. These two provisions of the Lanham Act make it plain that the fact that the defendant employed the mark 'Dawn,' without actual knowledge of plaintiff's registration, at the retail level in a limited geographical area of New York state before the plaintiff used the mark in that market, does not entitle it either to exclude the plaintiff from using the mark in that area or to use the mark concurrently once the plaintiff licenses the mark or otherwise exploits it in connection with retail sales in the area.
Plaintiff's failure to license its trademarks in defendant's trading area during the thirty odd years that have elapsed since it licensed them to a Rochester baker does not work an abandonment of the rights in that area. We hold that 15 U.S.C.A. § 1127, which provides for abandonment in certain cases of non-use, [FN3] applies only when the registrant fails to use his mark, within the meaning of § 1127, anywhere in the nation. Since the Lanham Act affords a registrant nationwide protection, a contrary holding would create an insoluble problem of measuring the geographical extent of the abandonment. Even prior to the passage of the Lanham Act, when trademark protection flowed from state law and therefore depended on use within the state, no case, as far as we have been able to ascertain, held that a trademark owner abandoned his rights within only part of a state because of his failure to use the mark in that part of the state. Cf. Jacobs v. Iodent Chemical Co., 3 Cir., 1930, 41 F.2d 637.
Accordingly, since plaintiff has used its trademark continuously at the retail level, it has not abandoned its federal registration rights even in defendant's trading area.
We reject defendant's further claim that plaintiff is prevented by laches from enjoining defendant's use of the mark 'Dawn' upon doughnuts and other baked and fried goods. Defendant argues that plaintiff's New York sales representative, one Jesse Cohn, who also represented several other companies besides plaintiff, called upon defendant on a monthly basis, and that about four years prior to the commencement of this law suit he observed boxes bearing the label 'Dawn' on the desk of one Jack Solomon, defendant's bakery manager. At the trial Cohn denied that he ever saw any packaging in defendant's bakery for baked and fried goods bearing the label Dawn, although he admitted seeing some packages for other food products in defendant's bakery bearing the mark 'Dawn.' The district court held that since Cohn's contacts with the defendant were on behalf of companies other than the plaintiff, the knowledge of Cohn would not be imputed. We agree with the district court's conclusion.
The defendant, by raising the defense of laches, asserts that plaintiff, or because the plaintiff is a corporation, those corporate officers of the plaintiff responsible for instituting legal proceedings against unauthorized users of plaintiff's trademark, forbore from initiating any proceedings against the defendant when they knew or should have known of its use of plaintiff's mark, and thus allowed the defendant to expand its efforts to develop the mark in a false atmosphere of security. But since it is not shown that plaintiff's New York sales representative Cohn at any time had any duty to investigate whether bakers, such as the defendant, who did not purchase mixes from the plaintiff and who were not authorized to use its trademark, were in fact using the mark, his knowledge of defendant's use, whatever it may actually have been, cannot be imputed to the plaintiff. In order to impute an agent's knowledge to a principal in a particular transaction, it must be shown that the agent at some time had some duties to perform on behalf of the principal with respect to the transaction, although the agent need not have acquired his knowledge in connection with those duties. Restatement of Agency 2d, § 272 and appendix to § 272 at p. 450. The plaintiff is therefore not estopped by reason of laches from enforcing its exclusive right to use its registered trademarks in defendant's trading area.
Accordingly, we turn to the question of whether on this record plaintiff has made a sufficient showing to warrant the issuance of an injunction against defendant's use of the mark 'Dawn' in a trading area in which the plaintiff has for thirty years failed to employ its registered mark.
The Lanham Act, 15 U.S.C.A. § 1114, sets out the standard for awarding a registrant relief against the unauthorized use of his mark by another. It provides that the registrant may enjoin only that concurrent use which creates a likelihood of public confusion as to the origin of the products in connection with which the marks are used. Therefore if the use of the marks by the registrant and the unauthorized user are confined to two sufficiently distinct and geographically separate markets, with no likelihood that the registrant will expand his use into defendant's market, [FN4] so that no public confusion is possible, then the registrant is not entitled to enjoin the junior user's use of the mark. See, Fairway Foods, Inc. v. Fairway Markets, Inc., 9 Cir., 1955, 227 F.2d 193; Note, Developments in the Law of Trade-Marks and Unfair Competition, 68 Harv.L.Rev. 814, 857-60 (1955); cf. Sterling Brewery, Inc. v. Cold Springs Brewing Corp., supra.
As long as plaintiff and defendant confine their use of the mark 'Dawn' in connection with the retail sale of baked goods to their present separate trading areas it is clear that no public confusion is likely.
The district court took note of what it deemed common knowledge, that 'retail purchasers of baked goods, because of the perishable nature of such goods, usually make such purchases reasonably close to their homes, say within about 25 miles, and retail purchases of such goods beyond that distance are for all practical considerations negligible.' No objection is made to this finding and nothing appears in the record which contradicts it as applied to this case.
Moreover, we note that it took plaintiff three years to learn of defendant's use of the mark and bring this suit, even though the plaintiff was doing some wholesale business in the Rochester area. This is a strong indication that no confusion arose or is likely to arise either from concurrent use of the marks at the retail level in geographically separate trading areas or from its concurrent use at different market levels, viz. retail and wholesale in the same area.
The decisive question then is whether plaintiff's use of the mark 'Dawn' at the retail level is likely to be confined to its current area of use or whether in the normal course of its business, it is likely to expand the retail use of the mark into defendant's trading area. If such expansion were probable, then the concurrent use of the marks would give rise to the conclusion that there was a likelihood of confusion.
The district court found that in view of the plaintiff's inactivity for about thirty years in exploiting its trademarks in defendant's trading area at the retail level either by advertising directed at retail purchasers or by retail sales through authorized licensed users, there was no reasonable expectation that plaintiff would extend its retail operations into defendant's trading area. There is ample evidence in the record to support this conclusion and we cannot say that it is clearly erroneous.
The normal likelihood that plaintiff's wholesale operations in the Rochester area would expand to the retail level is fully rebutted and overcome by the decisive fact that plaintiff has in fact not licensed or otherwise exploited its mark at retail in the area for some thirty years.
Accordingly, because plaintiff and defendant use the mark in connection with retail sales in distinct and separate markets and because there is no present prospect that plaintiff will expand its use of the mark at the retail level into defendant's trading area, we conclude that there is no likelihood of public confusion arising from the concurrent use of the marks and therefore the issuance of an injunction is not warranted. A fortiori plaintiff is not entitled to any accounting or damages. However, because of the effect we have attributed to the constructive notice provision of the Lanham Act, the plaintiff may later, upon a proper showing of an intent to use the mark at the retail level in defendant's market area, be entitled to enjoin defendant's use of the mark.
Since we have held that upon a proper subsequent showing the plaintiff may be entitled to injunctive relief, it is appropriate that we answer here the defendant's argument that such relief is beyond the constitutional reach of Congress because the defendant uses the mark only in intrastate commerce. Clearly Congress has the power under the commerce clause to afford protection to marks used in interstate commerce. That being so, the only relevant question is whether the intrastate activity forbidden by the Act is 'sufficiently substantial and adverse to Congress' paramount policy declared in the Act. * * *' Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 1948, 334 U.S. 219, 234, 68 S.Ct. 996, 1005, 92 L.Ed. 1328. The answer to such an inquiry seems plain in this case. If a registrant's right to employ its trademark were subject within every state's borders to preemption or concurrent use by local business, the protection afforded a registrant by the Lanham Act would be rendered virtually meaningless. Therefore we think it is within Congress' 'necessary and proper' power to preclude a local intrastate user from acquiring any right to use the same mark. See Lorain Journal Co. v. United States, 1951, 342 U.S. 143, 152, 72 S.Ct. 181, 96 L.Ed. 162; Wickard v. Filburn, 1942, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122; cf. also, Lyon v. Quality Courts United, Inc., 6 Cir., 1957, 249 F.2d 790, 795; Iowa Farmers Union v. Farmers' Educational & Coop. Union, 8 Cir., 1957, 247 F.2d 809, 815- 816; Pure Foods, Inc. v. Minute Maid Corp., 6 Cir., 1954, 214 F.2d 792, 795- 796.
Plaintiff also asserts a right to injunctive relief based upon state law. Plaintiff maintains that under the law of New York injunctive relief against trademark infringement has been granted to prevent the likelihood of dilution of the distinctive quality of the trademark, even in the absence of competition and confusion. Judge Weinfeld has said that the underlying rationale of this so-called dilution doctrine 'is that the gradual diminution or whittling away of the value of a trademark, resulting from extensive use by another of a mark identical or similar to that of the senior user, constitutes an invasion of the senior user's property right in his trademark and gives right to actionable wrong. The wrong, under this theory, is not dependent upon a showing of competitive relationship of the products or the likelihood of confusion.' G. B. Kent & Sons, Limited v. P. Lorillard Co., D.C.S.D.N.Y.1953, 114 F.Supp. 621, 630, affirmed per curiam, 2 Cir., 1954, 210 F.2d 953.
Section 368-c of New York's General Business Law may provide relief against dilution of a trademark but plaintiff has not registered its mark in New York and the first sentence of 368-c limits protection therein provided to owners of marks registered under New York law. Plaintiff is therefore remitted to his common law rights. Section 368-d of the General Business Law.
Although at common law New York courts on occasion have granted injunctive relief in the absence of direct competition, plaintiff has cited us no New York case which has awarded such relief in a situation comparable to the one presented here. We think that most of the New York decisions which may appear to afford such protection may be distinguished for the reasons advanced in G. B. Kent & Sons, Limited v. P. Lorillard Co., supra, 114 F.Supp. at pages 630-631.
But even if New York common law afforded trademarks protection from the mere fact of concurrent use by another, such relief would be provided only in the case of a mark which has a well established secondary meaning with the consuming public within the state. Cf. Tiffany & Co. v. Tiffany Productions, Inc., 147 Misc. 679, 264 N.Y.S. 459, affirmed 1 Dept., 1932, 237 App.Div. 801, 260 N.Y.S. 821, affirmed 1933, 262 N.Y. 482, 188 N.E. 30. See also Food Fair Stores, Inc. v. Food Fair, Inc., 1 Cir., 1951, 177 F.2d 177, 185. Here plaintiff has failed to introduce any evidence that the use of its mark in connection with retail sales had come to mean to retail purchasers in the Rochester area or in any part of New York State that the goods were made from its mixes. Accordingly, we find no basis for affording plaintiff injunctive relief at this time.
The final issue presented is raised by defendant's appeal from the dismissal of its counterclaim for cancellation of plaintiff's registration on the ground that the plaintiff failed to exercise the control required by the Lanham Act over the nature and quality of the goods sold by its licensees.
We are all agreed that the Lanham Act places an affirmative duty upon a licensor of a registered trademark to take reasonable measures to detect and prevent misleading uses of his mark by his licensees or suffer cancellation of his federal registration. The Act, 15 U.S.C.A. § 1064, provides that a trademark registration may be cancelled because the Trademark has been 'abandoned.' And 'abandoned' is defined in 15 U.S.C.A. § 1127 to include any act or omission by the registrant which causes the trademark to lose its significance as an indication of origin.
'A trade-mark is intended to identify the goods of the owner and to safeguard his good will. The designation if employed by a person other than the one whose business it serves to identify would be misleading. Consequently, 'a right to the use of a trade-mark or a trade-name cannot be transferred in gross." American Broadcasting Co. v. Wahl Co., supra, 121 F.2d at page 413.
Other courts were somewhat more liberal and held that a trademark could be licensed separately from the business in connection with which it had been used provided that the licensor retained control over the quality of the goods produced by the licensee. E. I. DuPont de Nemours & Co. v. Celanese Corporation of America, 1948, 167 F.2d 484, 35 CCPA 1061, 3 A.L.R.2d 1213; see also 3 A.L.R.2d 1226, 1277-1282 (1949) and cases there cited. But even in the DuPont case the court was careful to point out that naked licensing, viz. the grant of licenses without the retention of control, was invalid. E. I. DuPont de Nemours & Co. v. Celanese Corporation of America, supra, 167 F.2d at page 489.
Without the requirement of control, the right of a trademark owner to license his mark separately from the business in connection with which it has been used would create the danger that products bearing the same trademark might be of diverse qualities. See American Broadcasting Co. v. Wahl Co., supra; Everett O. Fisk & Co. v. Fisk Teachers' Agency, Inc., supra. If the licensor is not compelled to take some reasonable steps to prevent misuses of his trademark in the hands of others the public will be deprived of its most effective protection against misleading uses of a trademark. The public is hardly in a position to uncover deceptive uses of a trademark before they occur and will be at best slow to detect them after they happen. Thus, unless the licensor exercises supervision and control over the operations of its licensees the risk that the public will be unwittingly deceived will be increased and this is precisely what the Act is in part designed to prevent. See Sen. Report No. 1333, 79th Cong., 2d Sess. (1946). Clearly the only effective way to protect the public where a trademark is used by licensees is to place on the licensor the affirmative duty of policing in a reasonable manner the activities of his licensees.
The critical question on these facts therefore is whether the plaintiff sufficiently policed and inspected its licensees' operations to guarantee the quality of the products they sold under its trademarks to the public. The trial court found that: 'By reason of its contacts with its licensees, plaintiff exercised legitimate control over the nature and quality of the food products on which plaintiff's licensees used the trademark 'Dawn.' Plaintiff and its licensees are related companies within the meaning of Section 45 of the Trademark Act of 1946.' It is the position of the majority of this court that the trial judge has the same leeway in determining what constitutes a reasonable degree of supervision and control over licensees under the facts and circumstances of the particular case as he has on other questions of fact; and particularly because it is the defendant who has the burden of proof on this issue they hold the lower court's finding not clearly erroneous.
I dissent from the conclusion of the majority that the district court's findings are not clearly erroneous because while it is true that the trial judge must be given some discretion in determining what constitutes reasonable supervision of licensees under the Lanham Act, it is also true that an appellate court ought not to accept the conclusions of the district court unless they are supported by findings of sufficient facts. It seems to me that the only findings of the district judge regarding supervision are in such general and conclusory terms of to be meaningless. In the absence of supporting findings or of undisputed evidence in the record indicating the kind of supervision and inspection the plaintiff actually made of its licensees, it is impossible for us to pass upon whether there was such supervision as to satisfy the statute. There was evidence before the district court in the matter of supervision, and more detailed findings thereon should have been made.
The absence, however, of an express contract right to inspect and supervise a licensee's operations does not mean that the plaintiff's method of licensing failed to comply with the requirements of the Lanham Act. Plaintiff may in fact have exercised control in spite of the absence of any express grant by licensees of the right to inspect and supervise.
The question then, with respect to both plaintiff's contract and non-contract licensees, is whether the plaintiff in fact exercised sufficient control.
Here the only evidence in the record relating to the actual supervision of licensees by plaintiff consists of the testimony of two of plaintiff's local sales representatives that they regularly visited their particular customers and the further testimony of one of them, Jesse Cohn, the plaintiff's New York representative, that 'in many cases' he did have an opportunity to inspect and observe the operations of his customers. The record does not indicate whether plaintiff's other sales representatives made any similar efforts to observe the operations of licensees.
Moreover, Cohn's testimony fails to make clear the nature of the inspection he made or how often he made one. His testimony indicates that his opportunity to observe a licensee's operations was limited to 'those cases where I am able to get into the shop' and even casts some doubt on whether he actually had sufficient technical knowledge in the use of plaintiff's mix to make an adequate inspection of a licensee's operations.
The fact that it was Cohn who failed to report the defendant's use of the mark 'Down' to the plaintiff casts still further doubt about the extent of the supervision Cohn exercised over the operations of plaintiff's New York licensees.
Thus I do not believe that we can fairly determine on this record whether plaintiff subjected its licensees to periodic and thorough inspections by trained personnel or whether its policing consisted only of chance, cursory examinations of licensees' operations by technically untrained salesmen. The latter system of inspection hardly constitutes a sufficient program of supervision to satisfy the requirements of the Act.
Therefore it is appropriate to remand the counterclaim for more extensive findings on the relevant issues rather than hazard a determination on this incomplete and uncertain record. I would direct the district court to order the cancellation of plaintiff's registrations if it should find that the plaintiff did not adequately police the operations of its licensees.
The district court's denial of an injunction restraining defendant's use of the mark 'Dawn' on baked and fried goods and its dismissal of defendant's counterclaim are affirmed.
FN1. Although the district court did not decide whether the marks as used by the parties were confusingly similar, the defendant argues that we should hold as a matter of law that they are not, but, as our opinion discloses, our view is to the contrary.
FN2. 15 U.S.C.A. § 1115(a) provides that the certificate of a registered mark shall be 'prima facie' evidence of the right of exclusive use and 15 U.S.C.A. § 1115(b) provides that if the mark has become incontestable, see 15 U.S.C.A. § 1065, the certificate shall be 'conclusive' evidence of the right.
'(a) When its use has been discontinued with intent not to resume. Intent not to resume may be inferred from circumstances. Nonuse for two consecutive years shall be prima facie abandonment.
FN4. To sustain a claim for injunctive relief, the plaintiff need not show that the marks are actually being used concurrently in the same trading area. Since the statutory standard for the invocation of injunctive relief is the likelihood of confusion, it is enough that expansion by the registrant into the defendant's market is likely in the normal course of its business. Even prior to the passage of the Lanham Act the courts held that the second user of a mark was not entitled to exclude the registered owner of the mark from using it in a territory which the latter would probably reach in the normal expansion of his business. See Hanover Star Milling Co. v. Metcalf, 1916, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713; White Tower System, Inc. v. White Castle System of Eating Houses Corporation, 6 Cir., 1937, 90 F.2d 67, certiorari denied, 1937, 302 U.S. 720, 58 S.Ct. 41, 82 L.Ed. 556; Note, 68 Harv.L.Rev. 814, 857 (1955). Certainly, under the Lanham Act, evincing a congressional purpose to afford a registrant nationwide protection, the subsequent user is not entitled to any greater immunity.
FN5. One bakery shop, located in Potsdam, N.Y., which is approximately 200 miles from Rochester, applied for a license franchise after the commencement of this litigation.
FN6. On cross-examination plaintiff's president conceded that during 1949 and 1950 the company in some instances, the number of which is not made clear by his testimony, distributed its advertising and packaging material to bakers with whom it had not reached any agreement relating to the quality of the goods sold in packages bearing the name 'Dawn.' It also appears from plaintiff's list of the 16 bakers who were operating as exclusive Dawn shops at the time of the trial that plaintiff's contract with 3 of these shops had expired and had not been renewed and that in the case of 2 other such shops the contract had been renewed only after a substantial period of time had elapsed since the expiration of the original agreement. The record indicates that these latter 2 bakers continued to operate under the name 'Dawn' and purchase 'Dawn' mixes during the period following the expiration of their respective franchise agreements with the plaintiff. Particularly damaging to plaintiff is the fact that one of the 2 bakers whose franchise contracts plaintiff allowed to lapse for a substantial period of time has also been permitted by plaintiff to sell doughnuts made from a mix other than plaintiff's in packaging labeled with plaintiff's trademark.


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Appeal from the United States District Court For the Southern District of Texas. H-98-CV-2800. Nancy F Atlas, US District Judge.
Randy A Schaffer, Schaffer & Henley, Houston, TX, for Petitioner-Appellant.
Edwin Sullivan, Austin, TX, for Respondent-Appellee.
The district court dismissed Orin Lee Molo's habeas petition as time-barred. Molo appeals that dismissal, offering a variety of arguments to invoke equitable tolling. Finding none of these adequate, we AFFIRM the dismissal of Molo's habeas petition.
Molo was convicted of robbery by assault on October 2, 1968. His punishment was enhanced for a previous felony conviction, and he was sentenced to life imprisonment. He claims that he is actually innocent of the offense because he was insane at the time he committed it. He demanded money and food from people while waiting in a parking lot for his mother and doctor to discuss his psychiatric condition. He raised an insanity defense, and there was competing psychiatric testimony on the sanity issue. Two jurors testified at Molo's motion for a new trial that they believed he was insane but voted to convict because they thought he should be confined to receive treatment for mental illness.
Molo claims that no appellate court has ever reviewed his claim on the merits. The Texas Court of Criminal Appeals affirmed Molo's conviction on January 7, 1970 because his attorney failed to file a timely appellate brief. His subsequent attorney raised a jury misconduct claim in a second application for writ of habeas corpus February 5, 1975, which was denied without written order. Molo filed a pro se application for writ of habeas corpus on November 17, 1975, asserting an ineffective assistance of counsel claim and a claim that he was denied the presumption of innocence because he was dressed in prisoner's clothing at his trial. That application too was denied without written order. Molo filed another state habeas application through his present counsel on December 10, 1997, which was dismissed as a successive writ.
Molo filed a federal habeas petition on August 25, 1998. The district court dismissed the petition as barred by the AEDPA's statute of limitations set forth in 28 U.S.C. 2244(d). Recognizing that he had missed the filing deadline, Molo urged that the exceptional circumstances of the case justified equitable tolling. The districtcourt held that equitable tolling was available only when the petitioner had been prevented from filing on time, and that Molo made no such claim. The district court granted Molo a certificate of appealability on the question whether his were rare and exceptional circumstances that would justify equitable tolling. Molo timely appealed.
The one-year limitations period of the AEDPA is a statute of limitations that is not jurisdictional and is subject to equitable tolling.2 Equitable tolling, however, is permissible only under "rare and exceptional" circumstances.3 Petitioners whose convictions became final before the effective date of the AEDPA were given a grace period of one year to file their federal habeas petitions, rendering them timely if filed by April 27, 1997.4 None of the reasons Molo offers justifies tolling.
Molo argues that the limitations period should be tolled because he is innocent.5 Without deciding whether proof of factual innocence would toll the limitations period, we find that Molo does not show that he is factually innocent. Three physicians testified at Molo's trial. Molo's family doctor, who had treated him for mental illness, testified that Molo was mentally ill and should receive treatment. Two Harris County, Texas, psychiatrists testified that Molo was sane at the time of the offense. Molo argues that because the psychiatrists finding him sane examined him one and seven weeks after the offense, respectively, and his family physician examined him immediately prior to the offense, the evidence was insufficient for the jury to find him sane. We disagree. Molo has not shown that he was factually innocent.
Molo argues that failing to toll the AEDPA's statute of limitations in his case will violate the Suspension Clause of Art. I, 9. The 1-year limitations period of the AEDPA does not violate the Suspension Clause unless it "renders the habeas remedy 'inadequate or ineffective' to test the legality of detention."6 Molo has not shown how the limitations period made the habeas remedy inadequate or ineffective for him, since nothing prevented him from filing a petition before the limitations period expired.
Neither does Molo's jury misconduct claim toll the AEDPA's limitations period. At a hearing on his motion for a new trial, two jurors testified that they believed Molo was insane but voted to convict so he would be confined to receive treatment for mental illness. The facts underlying this claim did not prevent Molo from filing a federal habeas petition until the limitations period expired.
None of the reasons Molo advances are sufficient to justify tolling of the AEDPA's limitations period. We affirm the district court's dismissal of his petition as time-barred.
See Fisher v. Johnson, 174 F.3d 710, 713 (5th Cir. 1999) (noting that de novo review applies where district court denies equitable tolling as a matter of law). In the instant case, the district court declined equitable tolling as an exercise of discretion, finding that Molo's circumstances were not "rare and exceptional."
Davis v. Johnson, 158 F.3d 806, 807 (5th Cir. 1998).
See Davis, 158 F.3d at 811.
Flanagan v. Johnson, 154 F.3d 196, 201 (5th Cir. 1998).
See Felder v. Johnson, 204 F.3d 168, 170-71 (5th Cir. 2000).
See Miller v. Marr, 141 F.3d 976, 977 (10th Cir. 1998) (quoting Swain v. Pressley, 430 U.S. 372, 381, 51 L. Ed. 2d 411, 97 S. Ct. 1224 (1977)).
See Evitts v. Lucey, 469 U.S. 387, 395, 83 L. Ed. 2d 821, 105 S. Ct. 830 (1985).
Molo argues that the evidence was insufficient to convict him, and that his conviction likely would have been reversed on direct appeal. Even if that is so, his ineffective assistance of counsel claim does not toll the AEDPA's statute of limitations.
Molo argues that the Texas Court of Criminal Appeals erred when it denied his 1975 pro se application for writ of habeas corpus under Ex parte Raley, 528 S.W.2d 257 (Tex. Crim. App. 1975, no pet.), overruled on other grounds, Hurley v. State, 606 S.W.2d 887, 889 (Tex. Crim. App. 1980, pet. ref'd). Federal habeas review does not extend to state court conclusions of state law. See Fairman v. Anderson, 188 F.3d 635, 641 (5th Cir. 1999).

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ELEANOR G. RYAN vs. SUPERINTENDENT OF SCHOOLS OF QUINCY & another.
Present: TAURO, C.J., REARDON, QUIRICO, BRAUCHER, HENNESSEY, KAPLAN, & WILKINS, JJ.
PETITION for a writ of mandamus filed in the Superior Court on March 17, 1969.
The case was heard by Robert Sullivan, J.
Harry Pavan, City Solicitor, for the respondents, submitted a brief.
John A. Sullivan (Richard K. Sullivan with him) for the petitioner.
appeal from an order for judgment in favor of the petitioner.
The principal issue presented by the petition is whether the petitioner, at the time the respondents purported to terminate her employment, had acquired tenure under G. L. c. 71, Section 41, as amended through St. 1956, c. 132, Section 1. If she had, she could be dismissed only by compliance with the provisions of G. L. c. 71, Section 42, as amended through St. 1966, c. 185, Section 2. The respondents did not proceed under or comply with Section 42.
The case was originally referred to an auditor whose findings of fact, by agreement of the parties, were to be final. After holding hearings he filed a report of his findings which were in favor of the respondents. For reasons not apparent in the record before us, the report was ordered struck. The respondents' exception to that order has not been argued in their brief and it is therefore considered waived. S.J.C. Rule 1:13, 351 Mass. 738 .
no approval by the trial judge of the stipulation or the filing of the transcript. See Gordon v. Guernsey, 316 Mass. 106, 107-108.
On whatever evidence the trial judge had before him, he made the following findings of fact: "I find that the petitioner had served as a teacher (within the meaning of the definition set out in G. L. c. 32, Section 1) for a period of four years next prior to her dismissal in the public school system of the City of Quincy. I further find that the petitioner should have been deemed to have served at the discretion of the school committee and should have been considered to have been on tenure within the meaning of G. L. c. 71, Section 41. She was discharged at the commencement of the school year in 1968." On the basis of those findings the trial judge ruled "that the dismissal of the petitioner as aforesaid was contrary to the provisions of G. L. c. 71, Section 42." He then ordered that a writ of mandamus issue directing the respondents "to restore and reinstate the petitioner and to assign to her the duties consistent with her position and to consider her a teacher at discretion," and to comply with the provisions of G. L. c. 71, Section 42, in any proceedings to dismiss the petitioner from her position. It is the respondents' appeal from this order which is now before us.
1. We first consider the nature and scope of this appeal. By virtue of G. L. c. 213, Section 1D, inserted by St. 1943, c. 374, Section 4, as amended, this appeal is subject to the provisions of G. L. c. 214, Sections 19 and 22 to 28, inclusive, relative to appeals in equity suits. For the purpose of this decision we need concern ourselves only with G. L. c. 214, Sections 23 and 24.
judgment], and there is nothing in their form to indicate that he intended them as such. . . . The entry of the decree [or order] imported a finding of every fact essential to sustain it and within the scope of the pleadings. . . . This is true even though the [trial] judge made specific findings of certain facts, as long as he did not purport to state all of the material facts." Birnbaum v. Pamoukis, 301 Mass. 559, 561, and cases cited. Although we have occasionally said "that a report of facts voluntarily made by the trial judge has the same effect as a report of `the material facts' under the statute . . . [t]his statement cannot be understood to mean that a voluntary finding of certain facts only which may not amount to a full report of all the facts upon which the decree [or order] rests is for all purposes equivalent to the complete report of `the material facts' contemplated by the statute." Birnbaum v. Pamoukis, supra, 562.
Under Section 24 the parties were entitled to request that the trial judge order that the testimony of witnesses examined orally at the trial be reported to this court. Neither the record before us nor the copy of the docket entries filed with us (Styrnbrough v. Cambridge Sav. Bank, 299 Mass. 22, 24) indicates that any such request was made for a report of the evidence. Despite that, the stipulation filed by the parties on December 31, 1971, relating to the transcript of testimony before the auditor, concludes with the statement "that both parties renew their request that said evidence be reported to the Supreme Judicial Court." Section 24 requires that a party desiring that the evidence be reported to this court make a request therefor in the Superior Court. While it is arguable that the stipulation which contained the language quoted above can be construed as such a request, the statute requires more. The evidence cannot be reported under the statute unless the trial judge acts favorably on such a request by ordering that the evidence be reported. Silke v. Silke, 325 Mass. 487, 490. Thayer Co. v. Binnall, 326 Mass. 467, 482. Teal v. Jagielo, 327 Mass. 156, 157.
Delorafano v. Delafano, 333 Mass. 684, 685. Rule 76 of the Superior Court (1954). This aspect of the case is therefore governed by our decision in Price v. Price, 348 Mass. 663, cert. den. 382 U.S. 820 (1965), where we said, at 665: "It is settled that where there is nothing outside of a stenographer's recital to indicate that any person was designated to take the testimony and where no record indicates any action of the judge or notation by the clerk with reference to any appointment, a transcript cannot be considered part of the record. . . . [Citation omitted.] An examination of the docket . . . [citation omitted] indicates no order by the trial judge that the transcript be included in the record. . . . [Citations omitted.] We thus have not considered the evidence."
There is a second and equally compelling reason why we should not treat the transcript placed before us by stipulation but without sanction of the trial judge as a report of the evidence. It is obvious that the transcript is but a part of the evidence originally introduced at the hearing before the auditor. It indicates that at least three letters sent by the respondents to the petitioner and referring to the relationship of the parties were introduced as exhibits. Two of the letters appear to have referred to the terms of the hiring of the petitioner, and the third, dated May 28, 1968, appears to have purported to terminate her employment. These exhibits have not been furnished to this court. In Thayer Co. v. Binnall, 326 Mass. 467, where we were offered an unofficial transcript not authorized by the trial judge, and numerous exhibits introduced in evidence at the trial were not before us, we said, at 483: "Some of them [exhibits] might have been of considerable materiality in influencing the judge in making his findings of fact. We cannot say that they did not form an important branch of the evidence. It would not be safe for us to consider the so called transcript without also considering these exhibits. . . . Obviously, these cases cannot be heard on appeal `upon the same evidence as on the original hearing.' . . .
Summarizing what is before us, we have an appeal based on a voluntary report of some facts but not appearing to be all of the material facts, and no report of the evidence within the meaning of G. L. c. 214, Section 24. In that situation the entry of the order for judgment implied a finding by the trial judge of every fact essential to sustain such an order if it is otherwise within the scope of the pleadings and not inconsistent with the specific findings. Birnbaum v. Pamoukis, 301 Mass. 559, 561-562. The order for judgment was clearly within the scope of the pleadings in this case, and it was not inconsistent with any of the meager specific findings made by the trial judge. Although we might be warranted in affirming the order on this basis alone, we do not so limit our decision.
2. Since the unofficial transcript is before us by agreement of all parties, we have examined it. In doing so we intend to establish no precedent requiring us to do so in other cases. Bowles v. Comstock, 286 Mass. 159, 162. Gearin v. Walsh, 299 Mass. 145, 146. Cohen v. Santoianni, 330 Mass. 187, 190. Having looked at the transcript, we conclude that if it were a proper report of the evidence, the result would be the same.
respondents gave the petitioner a written notice terminating her services at the end of the school year. This procedure was repeated for the next ten consecutive years, through the school year ending in June, 1968, with certain changes in the number of days involved in each contract. She was hired for two days a week for the first, second, fifth, sixth and seventh years, for two and one-half days a week for the fourth and eighth years, and for three days a week for the third, ninth, tenth and eleventh years. Her compensation in each of those years was computed on the basis of the pay of a regular teacher, but prorated to the number of days for which she was hired. Despite her title as a "permanent substitute" the petitioner was not filling in for any absent teacher.
The petitioner received no contract for the school year starting in September, 1968. Nevertheless, she reported to her former school at the opening of school in September but the respondents did not permit her to work. The respondents contend that the petitioner had not attained tenure under G. L. c. 71, Section 41, and therefore they did not comply with the provisions of G. L. c. 71, Section 42, governing the dismissal of tenured school teachers. They raise no question about the petitioner's qualifications or about the adequacy of her performance as a teacher.
if the teacher so requested, (e) a recommendation of the superintendent to the committee thereon, and (f) the substantiation of the charges.
In Paquette v. Fall River, 278 Mass. 172, 173-174, we said that the various sections of G. L. c. 71, relating to the employment of public school teachers "indicate the purpose of the General Court to cover the field of relations between teachers and school committees and not to leave operative general rules arising from implication which would govern the rights between independent parties," and we further said that the provisions of Section 41 giving tenure to a teacher elected by the school committee after having served for three consecutive school years "are mandatory." In Frye v. School Comm. of Leicester, 300 Mass. 537, 538-539, we said that "[t]he clear purpose of G. L. (Ter. Ed.) c. 71, Section 41, is to provide some degree of protection for the tenure of teachers who have served a probationary term of three consecutive school years and who are continued in employment thereafter."
There is no disagreement on any of the pertinent facts of this case. It is clear that the petitioner was hired to teach a specified number of days in each week of the entire school year for eleven consecutive school years ending in June, 1968, the number of days being two days a week for five of those years, two and one-half days a week for two of those years, and three days a week four of those years. The petitioner contends that she attained tenure under G. L. c. 71, Section 41, because the school committee continued to employ her as a teacher after she had "served in its public schools for the three previous consecutive school years." She bases her contention on our decision in Frye v. School Comm. of Leicester, 300 Mass. 537. The respondents contend that the petitioner could not and did not attain tenure because she was only a part time teacher. They base their contention on our decision in Nester v. School Comm. of Fall River, 318 Mass. 538.
In the Frye case we said, at p. 540, that "the statute [G. L. c. 71, Section 41] recognizes no separate classification of `part time' teachers. The sole test mentioned in the statute is service `for the three previous consecutive school years.'" In that case the teacher had been hired annually to teach for three-sevenths of each day of the several school years which formed the basis for tenure. In the present case the petitioner was hired annually to teach a specified portion of every week of each of eleven consecutive school years. Having held in the Frye case that regular and continuous part time teaching can constitute the basis for attaining tenure, there is no difference, for that purpose, between teaching a part of every school day and teaching at least the same or a greater part of the total time but concentrated in several days of each week for the entire school year.
If this case were before us on the broad review afforded by a report of the evidence, we would hold that it is controlled by our decision in the Frye case and that the petitioner attained tenure before the time the respondents sought to terminate her services, the exact year she attained tenure being immaterial for the purpose of this opinion. In doing so we would look to the substance of the relationship between the petitioner and the respondents and give to the petitioner the benefit of tenure intended by the statute, notwithstanding the respondents' use of the device of annual contracts and annual terminations of those contracts.
The record before us is not sufficient to permit a decision on the right of the petitioner to compensation for the period since the expiration of her last annual contract, and no decision thereon is intended by the conclusions reached above.
The order for judgment entered by the trial judge is affirmed.
[Note 1] This is not a case like Sulmonetti v. Hayes, 347 Mass. 390, where the trial judge allowed a motion to record and report the evidence and the parties thereafter, pursuant to then Rule 2 of the Rules for the Regulation of Practice before the Full Court (1952), 328 Mass. 693 (now Rule 1:02 of this court, 351 Mass. 732 , as amended, 353 Mass. 804 ), designated less than the complete transcript for presentation to this court on appeal. See Everett v. Capitol Motor Transp. Co. Inc. 330 Mass. 417, 420, and Burlingham v. Worcester, 351 Mass. 198, 199.
[Note 2] The Nester case involved a fourth teacher who had served as a substitute for absent teachers for 182 days in one school year, 178 days in the next school year, and full time in the next school year until she resigned about one month before the end of the year. While we said at pp. 542-543, that since "one hundred eighty days constitute a normal school year, her service for these [first two] years can be said to be regular and continuous," her resignation deprived her of the protection of the statutory tenure provisions.

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Home Mortgage Disclosure Act/Regulation C.
Finance charge, per §1026.4 - The finance charge is a critical component in the calculation of the APR. Regulation Z provides a list of fees that are included in the finance charge and a list of fees that may be excluded, if certain conditions are met. Violations often occur when a fee is excluded from the finance charge but all of the conditions for the exclusion have not been met.
Annual Percentage Rate (APR), per §1026.22 - The APR is based on the finance charge. Violations frequently occur when the finance charge is not properly calculated.
Total Points and Fees, per §1026.32 - Jack has declared this number as "the most important number in the world of compliance." It is used to determine coverage for Section 32 rules, it is disclosed in a Section 32 disclosure and on the HMDA LAR, and it is used to determine QM status under Section 43. A single miscalculation can result in multiple violations.
Military Annual Percentage Rate (MAPR), per the Department of Defense’s §232 - Disclosure of the MAPR has been required since October 2007, but as a result of the limited scope of the rule most lenders have not needed to disclose the number. As a result of revisions to Part 232, effective October 3, 2016, the scope of the rule is dramatically expanded and most lenders will need to disclose the number. Although the calculation of the MAPR is similar to the calculation of an APR, differences generally result in a much higher number.
The proper disclosure of fees on the Loan Estimate and Closing Disclosure, per §1026.37 and .38.
Failure to follow TRID rules contained in §1026.38 may result in the incorrect disclosure of the total of all itemized amounts that are designated borrower-paid at or before closing on HMDA LAR.
This 2 hour event was recorded on Monday, July 30th, 2018.


Summer’s not over yet! On August 28, 2018, the U.S. Department of Labor issued four new letters in response to requests for opinions under the Fair Labor Standards Act. In this most recent slate of letters, the DOL offers guidance on compensable time, the retail sales exemption, volunteers, and the motion picture theater exemption.
In FLSA2018-20, the DOL concluded that an employer need not pay an employee for time spent voluntarily participating in certain wellness activities, biometric screenings, and benefits fairs, whether during or outside of regular working hours.
Citing Supreme Court and Second Circuit precedent, the DOL explained that compensability of an employee’s time depends on whether the time is spent predominantly for the employer’s benefit or for the employee’s benefit. Because the activities at issue in the opinion letter predominantly benefit the employee, they do not constitute compensable worktime under the FLSA.
Interesting… The DOL also viewed the time spent in such activities as non-compensable “off duty” time under the FLSA regulations (29 C.F.R. § 785.16)—periods during which employees are completely relieved from duty and which are long enough to enable them to use the time effectively for their own purposes. This is notable, because under other rules governing the compensability of certain time, the mere fact that the activity occurs during regular working hours—as opposed to outside of regular working hours—is by itself sufficient to obligate the employer to pay for the time, even if attendance is purely voluntary and the activity is not job-related. See 29 C.F.R. § 785.27 (regarding attendance at lectures, meetings, training programs, and “similar activities”). By contrast, time spent in the wellness activities, biometric screenings, and benefits fairs described in FLSA2018-20 is not compensable regardless of whether the activities occur during regular working hours.
In FLSA2018-21, the DOL concluded that a company that “sells a technology platform to merchants that enables online and retail merchants to accept credit card payments from their customers from a mobile device, online, or in-person” is a “retail or service establishment” for purposes of the “retail sales” exemption in Section 7(i) of the FLSA.
The second and third prongs of the exemption are fairly straightforward (although there is sometimes ambiguity over what “representative period” should apply to the analysis). Analyzing the first prong—whether or not the employee works at a “retail or service establishment”—has become increasingly more complicated as the retail sales industry has evolved from a landscape of “brick and mortar” businesses to a platform driven by technology and e-commerce.
Under federal regulations, to qualify as a “retail or service establishment,” (1) a company must “engage in the making of sales of goods or services”; (2) “75 percent of its sales of goods or services, or of both, must be recognized as retail in the particular industry”; and (3) “not [more than] 25 percent of its sales of goods or services, or of both, may be sales for resale.” See 29 C.F.R. § 779.313.
On these facts, the DOL concluded that the company satisfied the definition of “retail or service establishment” under 29 U.S.C. § 207(i).
In FLSA2018-22, the DOL concluded that members of a nonprofit organization who serve as “examination graders” for a one-to-two week period can be classified as volunteers instead of employees if they do not receive a fee for their services.
Applying these principles to the somewhat unique facts in FLSA 2018-22, the DOL concluded that the NPO could properly classify the graders as volunteers under the FLSA—provided they were not receiving a fee for their services.
Interesting… The DOL also concluded that the NPO could continue to pay for the graders’ travel, lodging, meals, and other expenses incidental to volunteering without undermining their volunteer status.
In FLSA2018-23, the DOL concluded that the “motion picture theater exemption” in Section 13(b)(27) of the FLSA applies to the food service operations of motion picture theaters.
At issue are motion picture theaters that provide in-theater dining, including through on-site, full-service restaurants. Patrons must purchase a movie ticket to eat at the on-site restaurants. The food service operations are not separately incorporated and do not operate in any way as separate entities. They do not have separate entrances, operate under different names, file separate taxes, maintain separate bank accounts, place orders separately, pay invoices separately, or use separate bank accounts. At each location, the primary revenue source is the sale of movie tickets.
Theater staff use a single kitchen to prepare food for both the in-theater and full-service dining. The same servers and food runners serve both the in-theater and full-service dining areas. Food service staff also work as theater ushers and vice versa, and all employees are cross-trained to work in any position at each location. Each location uses the same payroll for both its theater staff and food service staff, and it does not separately keep their time and payroll records. The same general manager supervises all employees, although different locations might have assistant managers or team supervisors.
The FLSA exempts from its overtime requirements “any employee employed by an establishment which is a motion picture theater.” 29 U.S.C. § 213(b)(27). To qualify as a “motion picture theater,” the establishment must be “a commercially operated theater primarily engaged in the exhibition of motion pictures.” 29 C.F.R. § 779.384. The DOL has historically taken the position that theaters will meet the “primarily engaged” requirement when devote at least 50% of their available presentation time to presenting motion pictures. It is the “nature of the employer’s business, not the work performed by a particular employee,” that determines whether establishment-based exemptions apply.
As the DOL explains, business units on the same premises may constitute separate establishments—provided they are (1) physically separated, (2) “functionally operated as separate units having separate records, and separate bookkeeping,” and (3) have “no interchange of employees between the units.” Unless each of these three conditions is satisfied, the business units will be treated as a single establishment for purposes of the FLSA exemptions. Applying these principles, the DOL concluded that the theater and food service operations at issue operate as a single establishment for purposes of the motion picture theater exemption.
Opinion Letters Provide Safe Harbors!
DOL opinion letters don’t just make for interesting reading. Thanks to FLSA amendments in the Portal-to-Portal Act of 1947, opinion letters provide important defenses to employers facing wage and hour claims or investigations.
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