Irizarry v. Catsimatidis, No. 11-4035 (2d Cir. 2013)
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Plaintiffs, employees of Gristede's supermarkets, moved for partial summary judgment on the issue of whether John Catsimatidis, the chairman and CEO, could be held personally liable for damages. The court affirmed the district court's decision so far as it established that Catsimatidis was an "employer" under the Fair Labor Standards Act (FLSA), 29 U.S.C. 203(d), based on his actions and responsibilities. The court vacated and remanded, however, the grant of partial summary judgment on plaintiffs' New York Labor Law (NYLL), N.Y. Lab. Law 190(3), 651(6), claims in light of the possible disagreement between the parties regarding the need for the court to decide an issue of state law and in light of the absence of discussion of the issue in the district court's decision.
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11-4035-cv Irizarry v. Catsimatidis 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2012 (Argued: December 13, 2012 Decided: July 9, 2013) Docket No. 11-4035-cv BOBBY IRIZARRY, RUBEN MORA, JOSELITO AROCHO, JOSEPH CREMA, ALFRED CROKER, FRANK DELEON, MARIO DIPRETA, WILLIAM HELWIG, ROBERT MISURACA, ROBERT PASTORINO, VICTOR PHELPS, DANIEL SALEGNA, GILBERTO SANTIAGO, Plaintiffs-Appellees, CARLOS TORRES, on behalf of himself and all others similarly situated, LEWIS CHEWNING, Plaintiffs-Counter-Defendants-Appellees, RAYMOND ALLEN, LLANOS BLAS, NABIL ELFIKY, MOHAMMED DABASH, CARLOS MARTINEZ, LUIS MORALES, STEVE GROSSMAN, FRANKLYN COLLADO, DAVID ADLER, DINO A. ZAINO, PATRICK LABELLA, ROBERT MASTRONICOLA, ANTHONY BROOKS, VICTOR BENNETT, CANDIDO MOREL, JOSE MARTINEZ, WAYNE HENDRICKS, HAROLD HORN, TROY MILLER, OUSMANE DIATTA, ELLIOT STONE, TINA RODRIGUEZ, GABRIEL KARAMANIAN, BRIAN HOMOLA, ANNA GARRETT, NELSON BETANCOURT, JOSE DELACRUZ, YURI LAMARCHE, MICHAEL GROSECLOSE, RODOLFO DELEMOS, PIO MOREL, ABIGAIL CLAUDIO, MALICK DIOUF, DAVID OTTO, ALEJANDRO MORALES, VICTOR DIAZ, PAUL PETROSINO, EDUARDO GONZALEZ, JR., JOSE BONILLA-REYES, VINCENT PEREZ, MARTIN GONZALEZ, CALVIN ADAMS, WILLIAM FRITZ, KATHERINE HALPERN, CHRISTIAN TEJADA, EDWARD STOKES, PLINIO MEDINA, TOWANA STARKS, LAWSON HOPKINS, RUBEN M. ALEMAN, EUGENE RYBACKI, EARL CROSS, MANOLO HIRALDO, ROBERT HAIRSTON, Plaintiffs, 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 -v.JOHN CATSIMATIDIS, Defendant-Appellant. GRISTEDE S OPERATING CORP., GRISTEDE S FOODS NY, INC., NAMDOR, INC., GRISTEDE S FOODS, INC., CITY PRODUCE OPERATING CORP., Defendants-Counter-Claimants, GALLO BALSECA, JAMES MONOS, Defendants.* Before: WESLEY AND HALL, Circuit Judges, GOLDBERG, Judge.** A class of current and former employees of Gristede s supermarkets sued several corporate and individual defendants for alleged violations of the Fair Labor Standards Act and the New York Labor Law. The United States District Court for the Southern District of New York (Crotty, J.) granted partial summary judgment for the plaintiffs, concluding that John Catsimatidis, the owner, president, and CEO of Gristede s, was the plaintiffs employer under both laws. Catsimatidis appeals, and we AFFIRM IN PART, VACATE IN PART, AND REMAND. * The Clerk of Court is directed to amend the caption as listed above. ** The Honorable Richard W. Goldberg, of the United States Court of International Trade, sitting by designation. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 JONATHAN D. HACKER (Walter Dellinger, Brianne J. Gorod, Joanna Nairn, on the brief), O Melveny & Myers LLP, Washington, D.C. for Appellant. DEEPAK GUPTA, Gupta Beck PLLC, Washington, D.C. (Gregory A. Beck, Jonathan E. Taylor, Gupta Beck PLLC, Washington, D.C.; Adam T. Klein, Justin M. Swartz, Molly A. Brooks, Outten & Golden LLP, New York, NY, on the brief) for Appellees. RACHEL GOLDBERG, Attorney, Office of the Solicitor (M. Patricia Smith, Solicitor of Labor, Jennifer S. Brand, Associate Solicitor, Paul L. Frieden, Counsel for Appellate Litigation, on the brief), for Amicus Curiae Secretary of Labor. Tsedeye Gebreselassie, Catherine K. Ruckelshaus, National Employment Law Project, New York, NY, for Amicus Curiae Make The Road New York, Brandworkers International, Restaurant Opportunities Center New York, Chinese Staff and Workers Association, National Mobilization Against Sweatshops, National Employment Law Project, Legal Aid Society of New York, Urban Justice Center, Asian American Legal Defense and Education Fund. WESLEY, Circuit Judge. After the failure of a settlement in a wage-and-hour 37 case brought by a group of employees of Gristede s 38 supermarkets, the plaintiff employees moved for partial 39 summary judgment on the issue of whether John Catsimatidis, 40 the chairman and CEO of Gristede s Foods, Inc., could be 3 1 held personally liable for damages. The case turns on 2 whether Catsimatidis is an employer under the Fair Labor 3 Standards Act ( FLSA ), 29 U.S.C. § 203(d), and the New York 4 Labor Law ( NYLL ), N.Y. Lab. Law §§ 190(3), 651(6). 5 United States District Court for the Southern District of 6 New York (Crotty, J.) granted partial summary judgment for 7 the plaintiffs on the issue, establishing that Catsimatidis 8 would be held jointly and severally liable for damages along 9 with the corporate defendants. The See Torres v. Gristede s 10 Operating Corp., No. 04 Civ. 3316(PAC), 2011 WL 4571792 11 (S.D.N.Y. Sept. 9, 2011) ( Torres III ). 12 appeals. 13 it established that Catsimatidis was an employer under the 14 FLSA; we vacate and remand the grant of partial summary 15 judgment on plaintiffs NYLL claims. Catsimatidis We affirm the district court s decision so far as 16 Background 17 Catsimatidis is the chairman, president, and CEO of 18 Gristede s Foods, Inc., which operates between 30 and 35 19 stores in the New York City metro area and has approximately 20 1700 employees. 21 acquisitions has complicated the question of which companies 22 are responsible for the Gristede s business and Although a series of mergers and 4 1 supermarkets, the parties have not made corporate structure 2 the focus of this case. 3 Catsimatidis is the owner and corporate head of all 4 implicated companies, but they dispute the manner and degree 5 of his control over the stores and employees. They essentially agree that 6 In 2004, a group of then-current and former employees 7 of Gristede s supermarkets sued several companies involved 8 in operating the stores. 9 individual defendants: Catsimatidis, Gristede s District 10 Manager James Monos, and Gristede s Vice President Gallo 11 Balseca. 12 [a]ll persons employed by defendants as Department Managers 13 or Co-Managers who were not paid proper overtime premium 14 compensation for all hours that they worked in excess of 15 forty in a workweek any time between April 30, 1998 and the 16 date of final judgment in this matter (the class period ). 17 Torres v. Gristede's Operating Corp., No. 04 Civ. 3316(PAC), 18 2006 WL 2819730, at *11 (S.D.N.Y. Sept. 29, 2006) ( Torres 19 I ) (quotation marks omitted). 20 noted that the parties disputed the duties of co-managers 21 and department managers, though the scope of plaintiffs 22 duties are not at issue in this appeal. The employees also sued three The district court certified a class composed of 5 In this decision, the court 1 After two-and-a-half years of litigation, the district 2 court granted summary judgment for the plaintiffs on their 3 FLSA and NYLL claims, which concerned reduction of hours, 4 withholding of overtime, misclassification as exempt 5 employees, and retaliation. 6 Operating Corp., 628 F. Supp. 2d 447, 461-63, 475 (S.D.N.Y. 7 2008) ( Torres II ). 8 entitled to liquidated damages, the amount of which would be 9 determined in future proceedings. See Torres v. Gristede's The court held that plaintiffs were Id. at 462 n.14, 465. 10 Plaintiffs reserved the right to move separately for a 11 determination that the individual defendants were 12 individually liable as joint employers. 13 Id. at 453 n.2. Following the summary judgment order, the parties 14 reached a settlement agreement, which the district court 15 approved. 16 payment obligations under the agreement. 17 to modify the settlement, but the district court denied 18 their request. 19 judgment on Catsimatidis s personal liability as an 20 employer. 21 22 The corporate defendants later defaulted on their Defendants sought Plaintiffs then moved for partial summary The district court granted the motion for reasons both stated on the record at the conclusion of oral argument on 6 1 the motion, see Special App x at 43-46, and memorialized in 2 a written decision, see Torres III. 3 the fact that Catsimatidis hired managerial employees, 4 signed all paychecks to the class members, had the power 5 to close or sell Gristede s stores, and routinely 6 review[ed] financial reports, work[ed] at his office in 7 Gristede s corporate office and generally preside[d] over 8 the day to day operations of the company. 9 WL 4571792, at *2. The reasons included Torres III, 2011 According to the district court, [f]or 10 the purposes of applying the total circumstances test, it 11 does not matter that Mr. Catsimatidis has delegated powers 12 to others[; w]hat is critical is that Mr. Catsimatidis has 13 those powers to delegate. 14 court concluded that [t]here is no area of Gristede s which 15 is not subject to [Catsimatidis s] control, whether [or not] 16 he chooses to exercise it, and that, therefore, 17 Catsimatidis had operational control and, as such, [] may 18 be held to be an employer. Id. (citation omitted). The Id. at *3.1 1 In its oral ruling and accompanying order, the district court granted summary judgment finding Catsimatidis individually liable as an employer under the NYLL, but the court did not explain its reasons beyond what might be inferred from its discussion setting forth its reasoning in the FLSA context. See Torres III, 2011 WL 4571792, at *1; Special App x at 46-47. 7 Discussion2 1 2 3 I. Definition of employer under the FLSA The Supreme Court has recognized that broad coverage 4 [under the FLSA] is essential to accomplish the [statute s] 5 goal of outlawing from interstate commerce goods produced 6 under conditions that fall below minimum standards of 7 decency. 8 U.S. 290, 296 (1985). 9 consistently construed the Act liberally to apply to the Tony & Susan Alamo Found. v. Sec'y of Labor, 471 Accordingly, the Court has 10 furthest reaches consistent with congressional direction. 11 Id. (quotation marks omitted). 12 was found too restrictive to encompass the broader 13 definition of the employment relationship contained in the 14 [FLSA]. 15 1993). The common law agency test Frankel v. Bally, Inc., 987 F.2d 86, 89 (2d Cir. Instead, the statute defines the verb employ 2 We review an award of summary judgment de novo, and we will uphold the judgment only if the evidence, viewed in the light most favorable to the party against whom it is entered, demonstrates that there are no genuine issues of material fact and that the judgment was warranted as a matter of law. Barfield v. NYC Health & Hosps. Corp., 537 F.3d 132, 140 (2d Cir. 2008) (citing Fed R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). The nonmoving party must set forth specific facts showing that there is a genuine issue for trial, and this Court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Rubens v. Mason, 527 F.3d 252, 254 (2d Cir. 2008) (internal quotation marks and citation omitted). 8 1 expansively to mean suffer or permit to work. 2 Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (quoting 3 29 U.S.C. § 203(g)). 4 definition of employer relies on the very word it seeks to 5 define: Employer includes any person acting directly or 6 indirectly in the interest of an employer in relation to an 7 employee. 8 employer in the first instance. 9 Nationwide Unfortunately, however, the statute s 29 U.S.C. § 203(d). The statute nowhere defines The Supreme Court noted early on that the FLSA contains 10 no definition that solves problems as to the limits of the 11 employer-employee relationship under the Act. Rutherford 12 Food Corp. v. McComb, 331 U.S. 722, 728 (1947). The Court 13 has also observed that the striking breadth of the FLSA s 14 definition of employ stretches the meaning of employee 15 to cover some parties who might not qualify as such under a 16 strict application of traditional agency law principles in 17 order to effectuate the remedial purposes of the act. 18 Barfield, 537 F.3d at 141 (quoting Darden, 503 U.S. at 326) 19 (internal citation omitted). 20 Accordingly, the Court has instructed that the 21 determination of whether an employer-employee relationship 22 exists for purposes of the FLSA should be grounded in 9 1 economic reality rather than technical concepts. Id. 2 (quoting Goldberg v. Whitaker House Coop., Inc., 366 U.S. 3 28, 33 (1961)). 4 to whether workers are employees and to whether managers or 5 owners are employers. 6 172 F.3d 132, 139 (2d Cir. 1999). The economic reality test applies equally See Herman v. RSR Sec. Servs. Ltd., 7 [T]he determination of the [employment] relationship 8 does not depend on such isolated factors as where work is 9 done or how compensation is divided but rather upon the 10 circumstances of the whole activity. Rutherford, 331 U.S. 11 at 730. 12 distance themselves from workers in an apparent effort to 13 escape the FLSA s coverage. 14 Supreme Court considered whether a manufacturing cooperative 15 was an employer of homeworker members who created 16 knitted and embroidered goods in their homes and were paid 17 by the month on a rate-per-dozen basis. 18 The Court concluded that this constituted an employer- 19 employee relationship because management s authority made 20 the device of the cooperative too transparent to survive 21 the statutory definition of employ and the Regulations 22 governing homework. Some early cases concerned managerial efforts to For example, in Goldberg, the Id. at 33. 10 366 U.S. at 28-29. In short, if the 1 economic reality rather than technical concepts is to be 2 the test of employment, these homeworkers are employees. 3 Id. (internal citations omitted). 4 noted in Rutherford that [w]here the work done, in its 5 essence, follows the usual path of an employee, putting on 6 an independent contractor label does not take the worker 7 from the protection of the Act. 8 9 Similarly, the Court 331 U.S. at 729. The Second Circuit has treated employment for FLSA purposes as a flexible concept to be determined on a case- 10 by-case basis by review of the totality of the 11 circumstances ; we have identified different sets of 12 relevant factors based on the factual challenges posed by 13 particular cases. 14 Barfield, 537 F.3d at 141-42. In Carter v. Dutchess Community College, 735 F.2d 8 (2d 15 Cir. 1984), we identified factors that are likely to be 16 relevant to the question of whether a defendant is an 17 employer. 18 in a program that was managed by a college claimed the 19 college was their employer. 20 this assertion because the college had only qualified 21 control over the inmate instructors; the Department of 22 Correctional Services always maintained ultimate control. In that case, prison inmates teaching classes The district court rejected 11 1 Barfield, 537 F.3d at 142 (describing Carter) (quotation 2 marks omitted). 3 ultimate control rule would not comport with the 4 remedial purpose of the FLSA, which Congress intended to 5 have the widest possible impact in the national economy. 6 Id. (quoting Carter, 735 F.2d at 12). 7 established four factors to determine the economic reality 8 of an employment relationship: whether the alleged employer 9 (1) had the power to hire and fire the employees, (2) 10 supervised and controlled employee work schedules or 11 conditions of employment, (3) determined the rate and method 12 of payment, and (4) maintained employment records. 13 (quoting Carter, 735 F.2d at 12).3 14 This Court, however, concluded that the Instead, we Id. Barfield also discusses the factors this court has used 15 to distinguish between independent contractors and 16 employees, 537 F.3d at 143 (citing Brock v. Superior Care, 3 Although the Carter court did not ultimately conclude that the prisoners were employees of the college, it noted that the following facts about the college may be sufficient to warrant FLSA coverage and certainly presented issues of material fact on the subject: the college made the initial proposal to employ workers; suggested a wage as to which there was no legal impediment ; developed eligibility criteria; recommended several inmates for the tutoring positions; was not required to take any inmate it did not want; decided how many sessions, and for how long, an inmate would be permitted to tutor; and sent the compensation directly to the inmate s prison account. 735 F.2d at 15. 12 1 Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988)), and to assess 2 whether an entity that lacked formal control nevertheless 3 exercised functional control over a worker, id. (citing 4 Zheng v. Liberty Apparel Co., 355 F.3d 61, 72 (2d Cir. 5 2003)).3 6 however, comprise a rigid rule for the identification of an 7 FLSA employer. 8 a nonexclusive and overlapping set of factors to ensure 9 that the economic realities test mandated by the Supreme 10 Court is sufficiently comprehensive and flexible to give None of the factors used in any of these cases, Id. To the contrary, . . . they provide 3 In Zheng, the court considered whether a manufacturer that contracted out the last phase process to workers including the plaintiffs was under the FLSA. It concluded that the relevant an instance were garment of its production an employer factors in such (1) whether [the manufacturer] s premises and equipment were used for the plaintiffs work; (2) whether the Contractor Corporations had a business that could or did shift as a unit from one putative joint employer to another; (3) the extent to which plaintiffs performed a discrete line-job that was integral to [the manufacturer] s process of production; (4) whether responsibility under the contracts could pass from one subcontractor to another without material changes; (5) the degree to which the [manufacturer] or [its] agents supervised plaintiffs work; and (6) whether plaintiffs worked exclusively or predominantly for [the manufacturer]. Zheng, 355 F.3d at 72. These factors highlight the flexible and comprehensive nature of the economic realities test in determining when an entity is an employer (in this case, whether the manufacturer was a joint employer along with another corporation) but are not directly implicated here. 13 1 proper effect to the broad language of the FLSA. 2 Id. (quoting Zheng, 355 F.3d at 75-76). 3 a. Individual liability 4 None of the cases above dealt specifically with the 5 question we confront here: whether an individual within a 6 company that undisputedly employs a worker is personally 7 liable for damages as that worker s employer. 8 case from our Circuit to confront the question squarely is 9 RSR, 172 F.3d 132. The only RSR provided guards, pre-employment 10 screening, and other security services. 11 FLSA violations with regard to its security guards. 12 chairman of the board, Portnoy, was found by the district 13 court after a bench trial to be an employer under the 14 statute. 15 four-factor test from Carter and noted other factors bearing 16 upon the overarching concern [of] whether the alleged 17 employer possessed the power to control the workers in 18 question. 19 It was sued for Its We affirmed, in a decision that both applied the Id. at 139. As background, we noted that [a]lthough Portnoy 20 exercised broad authority over RSR operations . . . , he was 21 not directly involved in the daily supervision of the 22 security guards. Id. at 136. 14 Nonetheless, because he was 1 the only principal who had bank credit, he exercised 2 financial control over the company. 3 authority over the operations manager, who directly 4 supervised the guards. 5 of RSR operations by receiving periodic reports [including] 6 work orders, memos, investigation reports, and invoices 7 concerning the business operations, as well as weekly 8 timesheets of [a manager s] duties. 9 referred a few individuals to RSR as potential security Id. Id. Thus, he had Portnoy kept himself apprised Id. at 137. He also 10 guard employees, assigned guards to cover specific 11 clients, sometimes set the rates clients were charged for 12 those services, gave [a manager] instructions about guard 13 operations, and forwarded complaints about guards to a 14 manager. 15 Id. Portnoy also signed payroll checks on at least three 16 occasions and established a payment system by which 17 clients who wanted undercover operatives would pay 18 Portnoy s separate labor-relations firm. 19 Portnoy represented himself to outside parties as being 20 the boss of RSR by allowing his name to be used in 21 sales literature, by representing to potential clients that 22 he was a principal with control over company operations . . 15 Id. Additionally, 1 . and by giving [a manager] instructions with respect to [] 2 clients security needs. Id. We determined that at least three of the four Carter 3 4 factors applied. First, Portnoy had hired employees, and 5 although this involved mainly managerial staff, the fact 6 that he hired individuals who were in charge of the guards 7 [was] a strong indication of control. 8 Portnoy had, on occasion, supervised and controlled 9 employee work schedules and the conditions of employment. Id. at 140. Second, 10 Id. Third, he had participate[d] in the method of 11 pay[ing] the guards, even though he was not involved in 12 determining their salaries, because he had previously 13 ordered a stop to the illegal pay practice of including 14 security guards on 1099 forms as independent contractors, 15 and he had the authority to sign paychecks throughout the 16 relevant period. 17 Portnoy had been involved in maintaining employment records, 18 we confirmed that the fact that this fourth factor is not 19 met is not dispositive. 20 encompasses the totality of circumstances, no one of which 21 is exclusive. 22 Portnoy was not only a 50 percent stockowner; he had direct Id. Although there was no evidence that Id. Id. at 139. The economic reality test In sum, we determined that 16 1 involvement with the security guard operations from time to 2 time and was generally involved with all of RSR s 3 operations. Id. at 141. 4 RSR also highlighted two legal questions relevant here. 5 The first concerns the scope of an individual s authority or 6 operational control over a company at what level of a 7 corporate hierarchy, and in what relationship with plaintiff 8 employees, must an individual possess power in order to be 9 covered by the FLSA? The second inquiry, related but 10 distinct, concerns hypothetical versus actual power: to what 11 extent and with what frequency must an individual actually 12 use the power he or she possesses over employees to be 13 considered an employer? 14 15 i. Operational control In addition to applying the Carter test, RSR noted the 16 district court s recognition that Portnoy exercised direct 17 authority over the two persons most responsible for managing 18 the security guards, as well as the fact that [b]ecause 19 [Portnoy] controlled the company financially, it was no idle 20 threat when he testified that he could have dissolved the 21 company if [one of the managers] had not followed his 22 directions. Id. at 140 (emphasis added). 17 Accordingly, we 1 emphasized that we rejected Portnoy s argument that 2 evidence showing his authority over management, supervision, 3 and oversight of RSR s affairs in general is irrelevant, and 4 that only evidence indicating his direct control over the 5 guards should be considered. 6 formulation ignores the relevance of the totality of the 7 circumstances in determining Portnoy s operational control 8 of RSR s employment of the guards. 9 operational control had been cited as relevant by other 10 circuits considering the question of individual liability 11 under the FLSA. Id. We concluded that this Id. We also noted that See id. 12 Operational control is at the heart of this case. 13 Catsimatidis s core argument is that he was a high-level 14 employee who made symbolic or, at most, general corporate 15 decisions that only affected the lives of the plaintiffs 16 through an attenuated chain of but-for causation. 17 Catsimatidis undisputedly possessed broad control over 18 Gristede s corporate strategy, including the power to decide 19 to take the company public, to open stores, and to carry 20 certain types of merchandise, he contends that a FLSA 21 employer must exercise decision-making in a day-to-day 22 capacity. Appellant s Br. at 3. 18 Although By this, he appears to 1 mean decisions about individual store-level operations, 2 close to, if not actually including, the particular working 3 conditions and compensation practices of the employees 4 themselves. 5 individuals with operational control on a more general 6 level to be employers. 7 Plaintiffs counter that many cases have found Appellees Br. at 28-31. Most circuits to confront this issue have acknowledged 8 and plaintiffs do not dispute that a company owner, 9 president, or stockholder must have at least some degree of 10 involvement in the way the company interacts with employees 11 to be a FLSA employer. 12 Ice Co., 322 F.2d 259, 262 (8th Cir. 1963), for this 13 proposition. 14 individual defendant was not an employer even though he was 15 the controlling stockholder and dominating figure because 16 although he could have taken over and supervised the 17 relationship between the corporation and its employees had 18 he decided to do so, he did not. 19 omitted). 20 times per year but had nothing to do with the hiring of the 21 employees or fixing their wages or hours, and he left the 22 matter of compliance with the Fair Labor Standards Act up to Many cases rely on Wirtz v. Pure In Wirtz, the court concluded that the Id. (quotation marks The defendant visited the facility at issue a few 19 1 the various managers of the businesses in which he had an 2 interest. 3 if it were to consider a combination of stock ownership, 4 management, direction and the right to hire and fire 5 employees, then a contrary conclusion would be well 6 supported. 7 Id. at 262-63. The court noted, however, that Id. at 263. In RSR, we cited three cases with holdings in 8 accordance with Wirtz in resolving the operational control 9 issue. First, in Donovan v. Sabine Irrigation Co., 695 F.2d 10 190, 194-95 (5th Cir. 1983), the Fifth Circuit determined 11 that an individual without an interest in the employer 12 corporation could be held liable if he effectively 13 dominates its administration or otherwise acts, or has the 14 power to act, on behalf of the corporation vis-a-vis its 15 employees or if he lacked that power but independently 16 exercised control over the work situation. 17 court found the individual defendant liable because he 18 indirectly controlled many matters traditionally handled by 19 an employer in relation to an employee (such as payroll, 20 insurance, and income tax matters), noting also that the 21 defendant s financial gymnastics directly affected Sabine s 22 employees by making it possible for Sabine to meet its 20 The Sabine 1 payroll and keep its employees supplied with the equipment 2 and materials necessary to perform their jobs. 3 (quotation marks omitted). 4 Id. at 195. Second, in Dole v. Elliott Travel & Tours, Inc., 942 5 F.2d 962, 966 (6th Cir. 1991), the Sixth Circuit was unmoved 6 by the protestations of an individual defendant who 7 testified that he made major corporate decisions but did 8 not have day-to-day control of specific operations. 9 court found that the defendant s responsibilities, which 10 included determining employee salaries, constituted 11 operational control of significant aspects of the 12 corporation s day to day functions. 13 The omitted) (emphasis in original). 14 Id. (quotation marks Finally, in Donovan v. Agnew, 712 F.2d 1509, 1511 (1st 15 Cir. 1983), the First Circuit imposed liability on 16 individual defendants who together were President, 17 Treasurer, Secretary and sole members of the Board of the 18 defendant company. 19 personally involved in decisions about layoffs and employee 20 overtime hours, id., and the defendants together had 21 operational control of significant aspects of the 22 corporation's day to day functions, including compensation One of the defendants had been 21 1 of employees, and [] personally made decisions to continue 2 operations despite financial adversity during the period of 3 nonpayment, id. at 1514. 4 Plaintiffs in our case place particular emphasis on the 5 statement by the Agnew court that [t]he overwhelming weight 6 of authority is that a corporate officer with operational 7 control of a corporation s covered enterprise is an employer 8 along with the corporation, jointly and severally liable 9 under the FLSA for unpaid wages. 4 Id. at 1511. Although 10 this appears to suggest that any amount of corporate control 11 is sufficient to establish FLSA liability, the First Circuit 12 warned against taking the FLSA s coverage too far, noting 13 that the Act s broadly inclusive definition of employer 14 could, if [t]aken literally and applied in this context[,] 15 . . . make any supervisory employee, even those without any 4 This language was cited by our Circuit in a case concerning the meaning of the word employer in the context of the Employee Retirement Income Security Act ( ERISA ), in which we noted that [i]n FLSA cases, courts have consistently held that a corporate officer with operational control who is directly responsible for a failure to pay statutorily required wages is an employer along with the corporation, jointly and severally liable for the shortfall. Leddy v. Standard Drywall, Inc., 875 F.2d 383, 387 (2d Cir. 1989) (citing Agnew, 712 F.2d at 1511). Because Leddy did not require or contain any actual analysis of the FLSA, however, this statement does not constitute a holding that liability on the basis of operational control requires an individual to have been directly responsible for FLSA violations. 22 1 control over the corporation s payroll, personally liable 2 for the unpaid or deficient wages of other employees. 3 at 1513. 4 Id. Drawing on this language, the First Circuit later 5 concluded that individuals who had exercised some degree of 6 supervisory control over the workers and been responsible 7 for overseeing various administrative aspects of the 8 business but had not demonstrated other important 9 characteristics in particular, the personal 10 responsibility for making decisions about the conduct of the 11 business that contributed to the violations of the Act 12 were not personally liable under the FLSA. 13 Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 678 (1st 14 Cir. 1998). 15 the definition of an employer that would find that the 16 significant factor in the personal liability determination 17 is simply the exercise of control by a corporate officer or 18 corporate employee over the work situation. 19 No other decision has gone as far as Baystate; most courts 20 have endeavored to strike a balance between upholding the 21 broad remedial goals of the statute and ensuring that a 22 liable individual has some relationship with plaintiff 23 employees work situation. Baystate The court rejected an expansive application of 23 Id. at 679. 1 For example, in Gray v. Powers, 673 F.3d 352, 354-57 2 (5th Cir. 2012), the court found that the co-owner of a 3 company that owned a nightclub was not a bartender s 4 employer despite being a signatory on the corporate 5 account and occasionally sign[ing] several pages of pre- 6 printed checks. 7 control over the bar and its employees except to direct a 8 bartender to serve certain customers on several occasions 9 when he was at the bar. The individual defendant had little Id. at 354. Similarly, in Patel v. 10 Wargo, 803 F.2d 632, 638 (11th Cir. 1986), the Eleventh 11 Circuit held that an individual who was both president and 12 vice president of a corporation, as well as a director and 13 principal stockholder, was not an employer because he did 14 not have operational control of significant aspects of [the 15 company s] day-to-day functions, including compensation of 16 employees or other matters in relation to an employee. 17 By contrast, in Reich v. Circle C. Investments, Inc., 18 998 F.2d 324, 329 (5th Cir. 1993), the court found that a 19 non-owner of a company that had invested in a nightclub had 20 exercised sufficient control over the work situation as 21 the driving force behind the company. 22 evidence that the individual hired employees, gave them 24 The court cited 1 instructions (including specific songs for dancers 2 routines), and signed their payroll checks. 3 also removed money from corporate safes, ordered one 4 employee to refrain from keeping records of the tip-outs, 5 and spoke[n] for [the company] during the Secretary s 6 investigation of possible FLSA violations. 7 Id. He had Id. These cases reaffirm the logic behind our holding in 8 RSR, which focused on defendant Portnoy s operational 9 control of RSR s employment of the guards, see RSR, 172 10 F.3d at 140 (emphasis added), rather than simply operational 11 control of the company. 12 owner or officer of a company, or otherwise makes corporate 13 decisions that have nothing to do with an employee s 14 function, is insufficient to demonstrate employer status. 15 Instead, to be an employer, an individual defendant must 16 possess control over a company s actual operations in a 17 manner that relates to a plaintiff s employment. 18 appropriate, as we implicitly recognized in RSR, to require 19 some degree of individual involvement in a company in a 20 manner that affects employment-related factors such as 21 workplace conditions and operations, personnel, or 22 compensation even if this appears to establish a higher Evidence that an individual is an 25 It is 1 threshold for individual liability than for corporate 2 employer status. 3 The fundamental concern in the initial cases construing 4 the FLSA was preventing a business entity from causing 5 workers to engage in work without the protections of the 6 statute. 7 cooperative in Goldberg functioned as the workers employer 8 because it paid them to create clothing, even if the 9 compensation structure technically circumvented agency-law It was an economic reality that the homework 10 concepts of formal employment. 11 (stating that the Court would be remiss . . . if we 12 construed the Act loosely so as to permit this homework to 13 be done in ways not permissible under the Regulations ); see 14 also United States v. Rosenwasser, 323 U.S. 360, 363 (1945) 15 ( A worker is as much an employee when paid by the piece as 16 he is when paid by the hour. ). 17 pressing when considering the liability for damages of an 18 individual within a company that itself is undisputedly the 19 plaintiffs employer. 20 See Goldberg, 366 U.S. at 31 This concern is not as Even in the individual-liability context, however, the 21 remedial nature of the [FLSA] . . . warrants an expansive 22 interpretation of its provisions so that they will have the 26 1 widest possible impact in the national economy. RSR, 172 2 F.3d at 139 (quoting Carter, 735 F.2d at 12). 3 RSR, or in the FLSA itself, requires an individual to have 4 been personally complicit in FLSA violations; the broad 5 remedial purposes behind the statute counsel against such a 6 requirement. 7 a financial incentive for individuals with control, even in 8 the form of delegated authority, to comply with the law, and 9 courts have continually emphasized the extraordinarily Nothing in The statute provides an empty guarantee absent 10 generous interpretation the statute is to be given. 11 only evidence indicating [an individual s] direct control 12 over the [plaintiff employees] [to] be considered. 13 172 F.3d at 140. 14 individual s] authority over management, supervision, and 15 oversight of [a company s] affairs in general is relevant 16 to the totality of the circumstances in determining [the 17 individual s] operational control of [the company s] 18 employment of [the plaintiff employees]. 19 Nor is RSR, Instead, evidence showing [an Id. A person exercises operational control over employees 20 if his or her role within the company, and the decisions it 21 entails, directly affect the nature or conditions of the 22 employees employment. Although this does not mean that the 27 1 individual employer must be responsible for managing 2 plaintiff employees or, indeed, that he or she must have 3 directly come into contact with the plaintiffs, their 4 workplaces, or their schedules the relationship between 5 the individual s operational function and the plaintiffs 6 employment must be closer in degree than simple but-for 7 causation. 8 depend, of course, on the totality of the circumstances, the 9 analyses in the cases discussed above, as well as the Although the answer in any particular case will 10 responsibilities enumerated in the Carter factors, provide 11 guidance for courts determining when an individual s actions 12 rise to this level. ii. 13 14 Potential power In RSR, we noted that operational control need not be 15 exercised constantly for an individual to be liable under 16 the FLSA: 17 18 19 20 21 22 23 24 25 26 27 [Employer] status does not require continuous monitoring of employees, looking over their shoulders at all times, or any sort of absolute control of one s employees. Control may be restricted, or exercised only occasionally, without removing the employment relationship from the protections of the FLSA, since such limitations on control do not diminish the significance of its existence. 172 F.3d at 139 (quotation marks and alteration omitted). 28 1 The district court in this case appears to have relied on 2 this language in stating that [w]hat is critical is that 3 Mr. Catsimatidis has [certain] powers to delegate and that 4 [t]here is no area of Gristede s which is not subject to 5 his control, whether [or not] he chooses to exercise it. 6 Torres III, 2011 WL 4571792 7 dispute the importance of evidence indicating that 8 Catsimatidis only rarely exercised much of the power he 9 possessed. 10 at *2-3. The parties also Employer power that is restricted or exercised only 11 occasionally does not mean never exercised. 12 v. Janitorial Services, Inc., 672 F.2d 528, 531 (5th Cir. 13 1982), the Fifth Circuit noted that the company owner s 14 considerable investment in the company gives him ultimate, 15 if latent, authority over its affairs, and the fact that he 16 had exercised that authority only occasionally, through 17 firing one employee, reprimanding others, and engaging in 18 some direct supervision of Johnson Disposal drivers, does 19 not diminish the significance of its existence. 20 Superior Care, this court noted that although 21 representatives of the defendant business, a nurse-staffing 22 company, visited job sites only infrequently, the company 29 In Donovan In 1 had unequivocally expressed the right to supervise the 2 nurses work, and the nurses were well aware that they were 3 subject to such checks as well as to regular review of their 4 nursing notes. 5 need to look over his workers shoulders every day in order 6 to exercise control. 7 rejected the proposition that the community college was not 8 employing prison inmates solely because the prison had 9 ultimate control over the prisoners, reasoning that the 840 F.2d at 1060. Id. An employer does not Similarly, in Carter, we 10 community college also made decisions that affected the 11 prisoners work. 12 735 F.2d at 13-14. The Eleventh Circuit has squarely held that even when a 13 defendant could have played a greater role in the day-to- 14 day operations of the [] facility if he had desired, . . . 15 unexercised authority is insufficient to establish liability 16 as an employer. 17 Club, Inc., 515 F.3d 1150, 1161 (11th Cir. 2008). 18 Alvarez court found that an officer in a company that owned 19 a kennel club was not an employer, in part because even 20 though he might have had the authority to do so, he had not 21 taken part in the day-to-day operations of the facility, had 22 not been involved in the supervision or hiring and firing of 23 employees, and had not determined their compensation. Alvarez Perez v. Sanford-Orlando Kennel 30 The Id. Unlike Alvarez, RSR does not state unambiguously that 1 2 unexercised authority is insufficient to establish FLSA 3 liability, and we see no need to do so here in light of the 4 evidence of the authority that Catsimatidis did exercise. 5 Nonetheless, all of the cases discussed indicate that the 6 manifestation of, or, at the least, a clear delineation of 7 an individual s power over employees is an important and 8 telling factor in the economic reality test. 9 or a stake in a company, is insufficient to establish that 10 an individual is an employer without some involvement in 11 the company s employment of the employees. 12 II. 13 Ownership, Catsimatidis as employer Using this economic reality test, we must decide 14 whether [Catsimatidis] is an employer under the FLSA. See 15 RSR, 172 F.3d at 140. 16 authority over management, supervision, and oversight of 17 [Gristede s] affairs in general, see id., as well as 18 evidence under the Carter framework or any other factors 19 that reflect Catsimatidis s exercise of direct control over 20 the plaintiff employees? Is there evidence showing his 21 22 31 1 a. Catsimatidis s overall authority 2 Catsimatidis is the chairman, president, and CEO of Joint App x 1016.5 3 Gristede s Foods, Inc. 4 report to anyone else at Gristede s. 5 Catsimatidis personally owns the building in which 6 Gristede s headquarters is located. 7 office is in that building, shared with Charles Criscuolo, 8 Gristede s COO. 9 there for part of the day, at least [four] days a week. Id. at 1793-94. He does not Id. at 1794. Id. at 1789-90. His Catisimatidis was usually 10 Id. at 1334. The human resources and payroll department is 11 located in the same building. 12 duties, Catsimatidis testified: I do the banking. 13 real estate. 14 concepts for merchandising. . . . I m there every day if 15 there is a problem, including problems with buildings, 16 problems with the Department of Consumer Affairs, 17 governmental relations, and [p]roblems with vendors, 18 relationships with vendors, it takes up most of the time. 19 Id. at 1800-01. Id. at 1794-5. Regarding his I do the I do the financial. . . . I come up with 20 5 Although Catsimatidis s and other employees functions within Gristede s appear to have shifted during the lengthy pendency of this lawsuit, all references are to the period relevant to the case. 32 A series of subordinate managers reported to 1 2 Catsimatidis but did not appear to have an extensive amount 3 of interaction with him. 4 every day because they shared an office. 5 Catsimatidis testifed that Vice President Gallo Balseca 6 runs operations and was in the stores every day, and 7 that the district managers reported to Balseca. 8 1796. 9 rarely spoke directly to Balseca. Catsimatidis spoke to Criscuolo Id. at 1797. Id. at Balseca reported to Criscuolo, but Catsimatidis Id. at 1794, 1797. 10 Catsimatidis testified that the company s director of 11 security reports to the chief operating officer on a day- 12 to-day basis, but if there is something he thinks I should 13 know about, he would call and tell me. 14 Catsimatidis occasionally sat in on merchandising and 15 operations meetings. 16 Id. at 1809. Id. at 1799. Catsimatidis stayed apprised of how Gristede s was 17 doing, reviewing the overall profit and loss statements as 18 well as the sales to purchases statements of particular 19 stores. 20 the perishable departments and a comprehensive P[rofit] 21 and L[oss] report on a quarterly basis that he studied in 22 depth and sometimes used to make general recommendations. He received weekly gross margin reports from all 33 1 Id. at 1849. As Executive Director of Human Resources and 2 Asset Protection Renee Flores stated, if there is a store 3 that buys more than they sell, and it s a consistent thing, 4 he may say, You know what, you might want to take a look at 5 that, because they re buying more than they re selling. 6 Id. at 1450-51. 7 Catsimatidis testified that he made big picture 8 merchandising decisions, like do we, for the next six 9 months, push Coca-Cola or push Pepsi-Cola? and the 10 decisions on having pharmacies in the stores. 11 He testified that after making this sort of decision, he 12 would tell Criscuolo or yell it out when they have the 13 [merchandising meeting] in their shared office. 14 1816. 15 Id. at 1817. 16 Id. at 1815. Id. at He might also yell out to go out and do more sales. In general, employees agreed, as Executive Vice 17 President Robert Zorn testified, that Catsimatidis has 18 whatever privileges an owner of a company has to make 19 ultimate decisions as to how the company is run, and that 20 there was no reason to believe that if he chose to make a 21 decision anybody there has the power to override him. 22 Id. at 1329. They also agreed that Catsimatidis has the 34 1 power to shut down a store or sell a store if he felt 2 that was the appropriate thing to do. Id. at 1370.6 3 b. Involvement with stores 4 Although Catsimatidis did not exercise managerial 5 control in stores on the day-to-day level of a manager, the 6 evidence demonstrates that he exercised influence in 7 specific stores on multiple occasions. 8 suggestions regarding how products are displayed in stores. 9 In general, he testified that he focused on driv[ing] For example, he made 10 sales, driv[ing] product, get[ting] more sales out of the 11 stores through techniques such as buying a Coca-Cola at 12 [the] right price, and [] put[ting] it on a front end 13 display at the right price. Id. at 1819. 6 At oral argument and in its written decision, the district court placed substantial reliance on an affidavit that Catsimatidis submitted in a separate lawsuit, a trademark action brought by Trader Joe s Company after it found out about a Gristede s plan to re-open a former Gristede s store under the name Gristede s Trader John s. The district court emphasized that the affidavit, which discussed the process by which Catsimatidis had come up with the idea, indicated that Catsimatidis has the power to set prices for goods offered for sale, select the decor for the stores, and control any store s signage and advertising. Torres III, 2011 WL 4571792, at *1. Although the parties dispute the significance and admissibility of the affidavit, it is not necessary to our decision. The affidavit indicates that Catsimatidis had the power to open a new store that was generally intended to offer items at prices materially lower than comparable items in our other Gristede[ ]s stores. Joint App x 3752. This only underscores the implication of the evidence we have already discussed: that Catsimatidis possessed the ability to control Gristede s operations at a high level. 35 1 Catsimatidis testified specifically that when [he] 2 used to go around the stores, [he] used to make comments to 3 the store managers about displays, telling them, for 4 example, if you put up this product, you might sell $100 a 5 week. 6 stores on Saturday mornings, staying about ten minutes in 7 each one. 8 visit[s], merchandising, sales, what are we doing right, 9 what are we doing wrong, what can we do better. Id. at 1828. 10 1831-32. 11 Id. He would make visits to five or ten He referred to these as just [] goodwill Id. at exchange: 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 His deposition also contained the following Q: Why did you want to visit every store? A: To check the merchandising. Q: Can t the store managers take care of that themselves? A: If the store managers did it perfectly, then I wouldn t have to visit the stores. Q: But you have a level of trust in the store managers, right? A: You hope so, yes. Q: Why do you think it was necessary for the president of the company to go around to all these stores? A: For the same reason Sam Walton went and visited his stores. Q: What reason is that? 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 A: You just get a better feeling for merchandising. Sam Walton was a great merchandiser. Q: On the Saturday morning visits to the stores, what did you do? A: I walked in, introduced myself to the manager, most of them I knew, and just we would talk about merchandising. I would say is this selling, is this not selling, are you missing any products that you think you should have? And I would I felt I would get input from store managers on merchandising problems. Id. at 1829-30. Catsimatidis would also address problems that occurred 18 in individual stores. For example, he testified that if a 19 vendor called him and said there was a problem, [m]aybe 20 that he was supposed to have a display and not have a 21 display, he would not get involved personally but would 22 refer the issue to Criscuolo. 23 testified that if a store didn t look clean, or if it was 24 very cluttered, [he] would make the comment about it . . . 25 to the store manager, and then follow up and say it to 26 [Criscuolo]. 27 store and was annoyed that a type of fish he tried to buy 28 was not in stock, so he sent an e-mail to the meat 29 director, copy to his boss, . . . sent one to the store 30 manager, and sent one to the district manager. Id. at 1831. Id. at 1827. Catsimatidis On one occasion, he went to a 37 Id. at 1 1882. Catsimatidis commented that the emails were his 2 attempt to bring[] it to their attention that the 3 department looked bad and that he would hope the 4 supervisor or the merchandisers would fix it. Id. at 1883. Additionally, Catsimatidis testified that the company s 5 6 system automatically forwards him copies of any consumer 7 complaints, which he then forwards by email to the 8 responsible parties . . . with a comment of What the hell 9 is happening? Id. at 1821. For example, he might forward 10 a complaint about a store being dirty, and he sent a 11 complaint about lids not fitting coffee cups to the deli 12 director. 13 know about the problem, they ll work harder towards fixing 14 it. 15 guess they want to keep the boss happy, and I want to keep 16 the consumers happy, and that one of my jobs is how to get 17 the consumers in our stores, and how to keep them in our 18 stores. 19 to store managers. 20 Id. He testified, I figured if they think I Id. at 1822. When asked why this was, he said, I Id. at 1823. He has directed similar complaints Id. at 1825. Mitchell Moore, a former store manager, testified that 21 Catsimatidis asked him to get involved with a reset at a 22 particular store, meaning an effort to change the store 38 1 around, move items around the store, allocation, bring in 2 new items. 3 Catsimatidis, while walking through a store, might want me 4 to change a display around or to make it fuller or to put a 5 different variety in there, or to put signs on certain 6 items, give them a good deal on it if he wanted Moore to 7 push a particular item. 8 he had seen Catsimatidis go to stores for grand openings or 9 reopenings, walk up and down the aisles . . . ask[] Id. at 1418. Moore also testified that Id. at 1421-22. Zorn said that 10 questions about you know, he sees a product that is new 11 and asks, you know you know, who we buy that from and, you 12 know, comments on the store decor, although Zorn noted that 13 Catsimatidis was there more in a PR capacity than a 14 management type capacity. Id. at 1352-53. 15 c. The Carter factors 16 The first element of the Carter test considers whether 17 the individual defendant had the power to hire and fire 18 employees. 19 omitted). 20 possesses, but rarely exercises, the power to hire or fire 21 anyone he chooses. 22 people that directly report to me, which he said would Barfield, 537 F.3d at 142 (quotation marks The evidence demonstrates that Catsimatidis He testified, I guess I can fire the 39 1 include only maybe four or five employees such as the COO 2 and CFO. 3 could not remember having fired anyone in five or six years. 4 Id. at 1862. 5 firing of individuals who were in charge of [the plaintiff 6 employees] is a strong indication of control. 7 F.3d at 140. 8 9 Joint App x 1863. He testified in 2005 that he In RSR, we emphasized that the hiring and RSR, 172 Zorn testified that Catsimatidis had hired him and obviously would have the authority to hire and fire 10 others, but he doesn t get involved in that. Joint App x 11 1338. 12 long-time employees for various reasons, he let 13 Catsimatidis know as a courtesy and fired the employees 14 even if Catsimatidis wasn t happy about it. 15 On one occasion when both Zorn and Catsimatidis interviewed 16 a potential manager, Catsimatidis was in favor of it but he 17 left the decision to Zorn. 18 promoted Deborah Clusan from director of payroll to director 19 of payroll and human resources. 20 Moore to store manager from night manager. 21 that Catsimatidis came to speak with me, asked me what my 22 background was, . . . and then the next day the vice For example, when Zorn was involved in letting go Id. at 1342. 40 Id. at 1343. Catsimatidis Id. at 476. He promoted Moore testified 1 president called me, and told me that I would be starting in 2 the Store 504 the next day. 3 like other employees, indicated that he view[ed] Mr. 4 Catsimatidis as [his] boss and that Catsimatidis would have 5 the power to fire a store employee. 6 Id. at 1412, 1415. Moore, Id. at 1425-26. The second Carter factor asks whether the individual 7 defendant supervised and controlled employee work schedules 8 or conditions of employment. 9 (quotation marks omitted). Barfield, 537 F.3d at 142 Plaintiffs overstate the 10 importance of the two pieces of evidence on which they rely 11 for this factor. 12 Catsimatidis said he has handled complaints from Gristede s 13 workers union representatives every week for as long as I 14 could remember, Appellees Br. at 39, this 15 mischaracterizes Catsimatidis s testimony; he stated that he 16 had not been personally involved in union negotiations or 17 discussions of problems, see Joint App x 1802-03, 1812, 18 1876. 19 an application for wage subsidies and tax credits on behalf 20 of Gristede s employees. 21 evidence reflects only that Catsimatidis signed the 22 application for tax credits to which Gristede s was entitled Although they state in their brief that Plaintiffs also assert that Catsimatidis authorized Appellees Br. at 39. 41 The 1 for employing people coming off of Social Services, off of 2 welfare. 3 not indicate how this affected their work schedules or 4 conditions of employment. 5 involvement in the company and the stores as discussed above 6 demonstrates some exercise of operational control, it does 7 not appear to relate closely to this factor of the 8 Carter test. 9 Joint App x at 482-83. Moreover, plaintiffs do Although Catsimatidis s The third factor asks whether the individual defendant 10 determined the rate and method of payment. 11 F.3d at 142 (quotation marks omitted). 12 and plaintiffs emphasize the fact that Catsimatidis s 13 electronic signature appears on paychecks. 14 factors is not dispositive. 15 Nonetheless, we held in RSR that [t]he key question is 16 whether [the defendant] had the authority to sign paychecks 17 throughout the relevant period, and he did. 18 at 140. 19 Barfield, 537 The district court This like all See Gray, 673 F.3d at 354. RSR, 172 F.3d RSR also focused on the fact that the defendant 20 controlled the company financially. 21 Catsimatidis possessed a similar degree of control. 22 testified that he keeps track of payroll as a line item 42 Id. It is clear that He 1 on accounting and a part of profit and loss, to know what 2 percentage of Gristede s sales and expenses payroll 3 comprises, but he does not get involved with individual 4 salaries or schedules. 5 did not speak to his managers about people getting paid, 6 id. at 1834, he knew that employees were paid on time 7 [b]ecause the unions would have come down on us real hard 8 if there was a problem. 9 explained that he might also learn about a problem [i]f I 10 walked down the aisle, and the employee saw me, they might 11 complain, although the official procedure for such 12 complaints involved the employees union and store manager. 13 Id. at 1866-67. 14 lower-level managers and an outside payroll company, id. at 15 1452-53, and although he did not know specifically if 16 George Santiago in the store got a paycheck that week, his 17 rules are if somebody works, they get paid, id. at 469. 18 The district court also noted that Catsimatidis stated in 19 open Court in this proceeding that he could shut down the 20 business, declare bankruptcy, as well as provide the 21 personal signature necessary for a bank letter of credit to 22 be issued in favor of Gristede s, Torres III, 2011 WL Joint App x at 1834-35. Id. at 1852. Although he Catsimatidis Catsimatidis set up a meeting between 43 1 4571792, at *1, which further demonstrates the kind of 2 financial control emphasized in RSR. 3 The fourth Carter factor asks whether the individual 4 defendant maintained employment records. Barfield, 537 5 F.3d at 142 (quotation marks omitted). 6 only that Catsimatidis works in the same office where 7 employment records are kept and promoted the payroll 8 director, Appellees Br. at 41, essentially admitting that 9 Catsimatidis did not meet this factor. Plaintiffs offer In sum, the evidence 10 much of it Catsimatidis s own testimony indicates that 11 Catsimatidis meets the first and third Carter factors. 12 d. Totality of the circumstances 13 There is no question that Gristede s was the 14 plaintiffs employer, and no question that Catsimatidis had 15 functional control over the enterprise as a whole. 16 involvement in the company s daily operations merits far 17 more than the symbolic or ceremonial characterization he 18 urges us to apply. 19 visited his company s facilities only a few times a year, 20 Catsimatidis was active in running Gristede s, including 21 contact with individual stores, employees, vendors, and 22 customers. His Unlike the defendant in Wirtz, who Catsimatidis dealt with customer complaints, in- 44 1 store displays and merchandising, and the promotion of store 2 personnel. 3 does not mean that these actions are irrelevant, see RSR, 4 172 F.3d at 139, especially when considered in the context 5 of his overall control of the company. That he may have done so only occasionally 6 Although there is no evidence that he was responsible 7 for the FLSA violations or that he ever directly managed 8 or otherwise interacted with the plaintiffs in this case 9 Catsimatidis satisfied two of the Carter factors in ways 10 that we particularly emphasized in RSR: the hiring of 11 managerial employees, and overall financial control of the 12 company. 13 individual defendant exercised financial control over the 14 company and frequently gave instructions to subordinate 15 managers); see also Donovan v. Grim Hotel Co., 747 F.2d 966, 16 972 (5th Cir. 1984) (noting that the individual defendant 17 was the top man in a hotel company who held [the 18 hotels ] purse-strings and guided their policies and that 19 the hotels speaking pragmatically, . . . functioned for the 20 profit of his family ). 21 Catsimatidis possessed, and exercised, operational control 22 over the plaintiffs employment in much more than a but- See id. at 136-37, 140 (finding that the This involvement meant that 45 1 for sense. 2 bottom line but individual stores, and the personnel and 3 products therein. 4 His decisions affected not only Gristede s We recognize that the facts here make for a close case, 5 but we are guided by the principles behind the liquidated 6 damages provision of the FLSA in resolving the impact of the 7 totality of the circumstances described herein. 8 Court has noted that liquidated damages as authorized by 9 the FLSA are not penalties but rather compensatory damages 10 for the retention of a workman s pay which might result in 11 damages too obscure and difficult of proof for estimate 12 other than by liquidated damages. 13 Co. v. Albemarle County Sch. Bd., 670 F.3d 563, 568 (4th 14 Cir. 2012) (quoting Brooklyn Sav. Bank v. O Neil, 324 U.S. 15 697, 707 (1945)); see also Marshall v. Brunner, 668 F.2d 16 748, 753 (3d Cir. 1982) (noting that liquidated damages are 17 compensatory, not punitive in nature ). 18 The Supreme Republic Franklin Ins. As counsel for amicus curiae the Secretary of Labor 19 explained at oral argument, the purpose of the FLSA is not 20 to punish an employer but to remunerate aggrieved employees. 21 Considered in the context of the expansive interpretation 22 that courts have afforded the statute, this policy reasoning 46 1 particularly counsels in favor of finding that Catsimatidis 2 was an employer given the failure of the settlement 3 between the corporate defendants and the plaintiff 4 employees. 5 the FLSA violations that led to this lawsuit, but he 6 nonetheless profited from them. 7 Supermarkets business entity appears to have been larger 8 than other businesses discussed in the cases that have 9 considered this question, the company was not so large as to Catsimatidis was not personally responsible for And although the Gristede s 10 render Catsimatidis s involvement a legal fiction. The 11 company is not public. 12 actively exercised his influence, are all in the New York 13 City metropolitan area, as are the company headquarters, 14 where he worked almost daily. 15 concluded, it is pellucidly clear that he is the one person 16 who is in charge of the corporate defendant. 7 17 2011 WL 4571792, at *3. Its stores, in which Catsimatidis In sum, as the district court Torres III, 18 7 The district court s decision indirectly referenced statements made by Catsimatidis in open court at a hearing on the settlement agreement to the effect that he was here to speak for 1,700 employees that [sic] their jobs . . . on the line, that he represent[ed] the 1,700 current employees, and that he was their employer. Joint App x 3594-95. We do not, of course, afford these statements weight as legal conclusions, but they are telling. 47 1 Although we must be mindful, when considering an 2 individual defendant, to ascertain that the individual was 3 engaged in the culpable company s affairs to a degree that 4 it is logical to find him liable to plaintiff employees, we 5 conclude that this standard has been met here. 6 Catsimatidis s actions and responsibilities particularly 7 as demonstrated by his active exercise of overall control 8 over the company, his ultimate responsibility for the 9 plaintiffs wages, his supervision of managerial employees, 10 and his actions in individual stores demonstrate that he 11 was an employer for purposes of the FLSA. 12 III. 13 New York Labor Law The NYLL defines employer as any person . . . 14 employing any individual in any occupation, industry, trade, 15 business or service or any individual . . . acting as 16 employer. 17 definition of employed under the NYLL is that a person is 18 permitted or suffered to work. 19 N.Y. Lab. Law. §§ 190(3), 651(6). The Id. § 2(7). The district court granted partial summary judgment in 20 plaintiffs favor on their NYLL claims, but neither its oral 21 nor its written decision contained any substantive 22 discussion of the issue. Plaintiffs assert that the tests 48 1 for employer status are the same under the FLSA and the 2 NYLL, but this question has not been answered by the New 3 York Court of Appeals. 4 officers cannot be held liable under the NYLL simply by 5 virtue of their status, but plaintiffs are arguing that 6 Catsimatidis should be held liable not as [a] corporate 7 officer[] or shareholder[], but as [an] employer[]. 8 Chu Chung v. New Silver Palace Rest., Inc., 272 F. Supp. 2d 9 314, 318 (S.D.N.Y. 2003). 10 Defendants respond that corporate See Plaintiffs also contend in their response brief that 11 there is no need to also establish [Catsimatidis s] status 12 as an employer under state law because the settlement 13 agreement establishes that he will be personally liable if 14 the Court holds John Catsimatidis to be an 15 employer period. 16 Settlement Agreement § 3.1(H)). 17 to this in their reply brief. 18 Appellees Br. at 41-42 (quoting Defendants do not respond In light of the possible disagreement between the 19 parties regarding the need for us to decide this issue of 20 state law, and particularly in light of the absence of 21 discussion of the issue in the district court s decision, we 22 vacate the grant of summary judgment in plaintiffs favor on 49 1 the NYLL claims and remand to the district court. The case 2 will return to the lower court in any event for a 3 determination of damages in light of our holding today; in 4 the process, the parties and the district court may 5 determine (1) whether the NYLL question requires resolution, 6 and (2) what that resolution should be. 7 Conclusion 8 We have examined all of Catsimatidis s arguments on 9 appeal and find them to be without merit. For the foregoing 10 reasons, the judgment of the district court granting partial 11 summary judgment in favor of plaintiffs is AFFIRMED IN PART, 12 VACATED IN PART, AND REMANDED. 50
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