Thursday, November 17, 2011

11th Circuit Affirms Summary Judgment In FLSA Case & Affirms Sanction Against Lawyer

In Josendis v. Wall to Wall Residence Repairs, Inc. (09-12266), the Eleventh Circuit released a published decision affirming the district court's judgment relating to the Fair Labor Standards Act of 1938 (the “FLSA”). Judge Tjoflat wrote the opinion and Judge Cox concurred. District Court Judge Korman filed a dissenting opinion.

"Wall to Wall moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for relief. Because Wall to Wall attached an affidavit and a statement of undisputed facts to its motion, the district court converted the motion to a motion for summary judgment pursuant to Rule 12(d) and gave the parties 'a reasonable opportunity to present all the material that [was] pertinent to the motion.'” After the court ordered deadline to present material passed, Josendis served discovery requests. "Wall to Wall objected to this discovery and moved the court for a protective order under Rule 26(c). The court granted Josendis leave to engage in discovery limited to the issues presented in Wall to Wall’s motion, and sanctioned Josendis’s attorney pursuant to Rule 37(a)(5)(B) for abusing the discovery process."

Issues on Appeal: "At the close of this limited discovery, the court granted Wall to Wall summary judgment on Josendis’s FLSA claim and dismissed his state law claim without prejudice. Josendis now appeals that ruling. He contends that material issues of fact precluded summary judgment and, alternatively, that, had the district court not limited his discovery as it did, he would have uncovered evidence that would have created material issues of fact. Josendis also appeals the district court’s sanctions order against his attorney."

The court began its analysis by providing a fairly extensive overview of the FLSA. The overview began:
The FLSA mandates that an “employee[]” who is “engaged in interstate commerce” must be paid an overtime wage of one and one-half times his regular rate for all hours he works in excess of forty hours per week. 29 U.S.C. § 207(a). If a covered employee is not paid the statutory wage, the FLSA creates for that employee a private cause of action against his employer for the recovery of unpaid overtime wages and back pay. Id. § 216(b).
"In order to be eligible for FLSA overtime, however, an employee must first demonstrate that he is 'covered' by the FLSA. There are two possible types of FLSA coverage....First, an employee may claim 'individual coverage' if he regularly and 'directly participat[es] in the actual movement of persons or things in interstate commerce.' Second, an employee is subject to enterprise coverage if he is 'employed in an enterprise engaged in commerce or in the production of goods for commerce,' 29 U.S.C. § 207(a)(1), where commerce means 'trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof,' id. § 203(b), and an 'enterprise” is the activities performed by a person or persons who are (1) engaged in 'related activities,' (2) under “unified operation or common control,' and (3) have a 'common business purpose,' id. § 203(r)(1)......" After providing this overview, and much more, the court analyzed the facts of the case:
Wall to Wall, formerly a Florida corporation engaged in the home restoration and repair business,10 employed Josendis from November 8, 2006, until February 11, 2008—excepting two months in 2007 when Josendis worked for a separate construction enterprise. Jorge Acosta and Eloisa Lim, both codefendants, managed Wall to Wall and its employees and were directly involved in all of Wall to Wall’s business activities during that period. While working for Wall to Wall, Josendis was assigned to various construction projects in and around southern Florida. His duties included plumbing and tiling; window, door, floor, and kitchen installation; and stucco and granite work. He worked more than forty hours a week and earned approximately $120 per day. Wall to Wall did not, however, pay Josendis the overtime rate mandated by 29 U.S.C. § 207(a) for covered employees.
After Josendis ceased working for Wall to Wall due to a dispute over back pay, he filed suit. In response to the suit, "Wall to Wall argued 13 that the complaint should be dismissed because its allegations—coupled with the statement of undisputed facts, the affidavit, and the federal tax return—showed that Josendis was ineligible for overtime compensation under the FLSA via individual coverage and enterprise coverage. As Acosta stated in his affidavit, (1) Josendis had not engaged in interstate commerce as a Wall to Wall employee, and (2) the $249,719 of income reported in the federal tax return evidenced that Wall to Wall had not satisfied the gross receipts threshold of $500,000 in any of the years in which Wall to Wall had employed Josendis." Josendis filed a Verified Amended Complaint to which Wall to Wall filed a new motion to dismiss which asserted the same arguments as those raised in the original motion to dismiss.

"On October 24, 2008. In the memorandum, he stated that he could not adequately defend against the motion, if treated as a motion for summary judgment, without additional time to complete the discovery he thought would be necessary to establish FLSA coverage. Despite the memorandum’s statement that additional time was needed for discovery, Josendis did nothing to obtain this necessary information while Wall to Wall’s motion was pending. In fact, nothing happened in the case until January 16, 2009" when the district court entered an order allowing Josendis until noon on February 3, 2009 to propound discovery. "When the clock struck noon on February 3, Josendis had not noticed the taking of any depositions or served Wall to Wall with any interrogatories or requests for admissions or production of documents. Nonetheless, approximately two hours after the court-imposed deadline had passed, Josendis faxed to defense counsel three sets of extensive discovery requests...." With regard to the discovery requests, the district court concluded “'[i]t is obvious that the drafting of [Josendis’s] instant discovery requests was done without any effort to constrain them within the bounds set for discovery at this time: responding to [Wall to Wall’s summary judgment motion].' The court subsequently ordered Costales to pay Wall to Wall $330 in attorney’s fees." This sanction was affirmed in the Eleventh Circuit's opinion.

With regard to the merits of the actual FLSA claim, the Eleventh Circuit concluded:
Josendis has failed to make a showing sufficient to survive summary judgment. In short, he has not satisfied his burden of coming forward with any admissible evidence beyond mere speculation to rebut Wall to Wall’s evidence on the essential elements of individual and enterprise coverage....An employee is subject to individual coverage if he is directly and regularly “engaged in” interstate commerce......For Josendis to survive summary judgment, he needed to produce admissible evidence that he (1) worked directly for an instrumentality of interstate commerce, or (2) regularly used the instrumentalities of interstate commerce....Josendis was not working directly for an instrumentality of interstate commerce. Josendis would therefore have had to come forward with evidence, beyond mere speculation, that, as a part of his work duties, he repeatedly traveled to and from Wall to Wall job sites outside of Florida or used an item moving in interstate commerce.....Josendis did not make a showing that he directly engaged in interstate commerce as a part of his responsibilities and, thus, cannot survive summary judgment on this record.


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