694 F.Supp. 651 (D.Ariz. 1988), Civ. 86-1318, Young v. Cutter Biological, a Div. of Script Miles Laboratories

Docket Nº:Civ. 86-1318
Citation:694 F.Supp. 651
Party Name:Young v. Cutter Biological, a Div. of Script Miles Laboratories
Case Date:August 03, 1988
Court:United States District Courts, 9th Circuit, District of Arizona

Page 651

694 F.Supp. 651 (D.Ariz. 1988)

Donald Eugene YOUNG, et al., Plaintiffs,



No. CIV 86-1318 PHX RCB (MM).

United States District Court, D. Arizona.

Aug. 3, 1988

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        Michael E. St. George, St. George & Reed, Tempe, Ariz., for plaintiffs.

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        Thomas P. Prose, Asst. Atty. Gen., Phoenix, Ariz., for State defendants.

        William R. Hayden, Tibor Nagy, Jr., Snell & Wilmer, Phoenix, Ariz., for defendants Cutter, Gray and Estenson.


        BROOMFIELD, District Judge.

        On July 11, 1988, the court heard oral argument on a series of dispositive motions filed by the parties. Pursuant to the order of the court, these motions are deemed directed at all plaintiffs now consolidated in the present lawsuit. 1 After a careful review of the parties' papers, and after conducting oral argument on the pending motions, the court now rules.


        Plaintiffs are inmates at the Arizona State Prison at Florence, Arizona. During their terms of incarceration, plaintiffs worked in various capacities at a "Plasma Center" located at the institution and operated by defendant Cutter Biological, a division of Scripps Miles Laboratories ("Cutter"), pursuant to a contract between defendant Cutter and defendant Ricketts, former director of the Arizona Department of Corrections. ("DOC"). In their First Amended Complaint filed June 28, 1988, plaintiffs seek to recover minimum wages for labor performed in this program. Specifically, plaintiffs allege claims for relief under: (1) 42 U.S.C. § 1983; 2 (2) the federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. (1982); and (3) A.R.S. § 31-254 (West Supp. 1987) and A.R.S. § 23-355 (West Supp. 1987). These three causes of action are directed at all named defendants, who for the purposes of this memorandum and order will be referred to as the "state defendants" (Ricketts, Lewis, Goldsmith, and DOC), and the "Cutter defendants" (Gray, Estenson, and Cutter).

        Plaintiffs seek summary judgment solely against the Cutter defendants on all claims in their First Amended Complaint. The Cutter defendants filed a cross-motion for summary judgment against plaintiffs. Additionally, the state defendants filed various motions to dismiss directed at different plaintiffs, which are to be treated as a single motion for summary judgment against all plaintiffs in this consolidated action.

        The underlying facts in this procedurally tangled litigation are generally not in dispute. The Plasma Center operated at the Florence facility for approximately twenty-one years. 3 During that time the DOC entered into several succeeding contracts with Cutter. Specifically, under the governing contracts, it was the responsibility of the DOC to "assign prisoners to [Cutter] as assistants to the staff," and that "approval of all inmate workers will be at the discretion of the [DOC]." In essence then, the Plasma Center employed a number of persons from outside the prison to operate the facility and prisoners were assigned by the DOC to assist those personnel who were employed by the Plasma Center. Under

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the terms of the governing agreement, the Plasma Center was required to pay the DOC twelve dollars per week for each prisoner who worked at the center. It is uncontested that all prisoner compensation for services performed at the center was paid directly to the Inmates Account Office, a subdivision of the DOC. Furthermore, pursuant to Arizona law, the DOC retained control over the disposition of any compensation paid by the Cutter defendants to the Inmates Accounts Office. Plaintiffs also agree that there were no oral or written agreements between the Plasma Center and any prisoner regarding compensation or conditions of employment. Finally, defendants acknowledge that the routine, day-to-day supervision of the inmate assistants at the center was conducted by the Cutter defendants, and that some inmate work assignments and removals were made at the request or suggestion of these defendants.

        However, the parties do contest where the ultimate control and regulation of the inmate/workers were vested. Both the state defendants and the Cutter defendants argue that this control was vested with the DOC. Specifically, they contend that all prisoners assigned to the Plasma Center remained under the direct authority of the DOC and could have been assigned to or removed from the center at the discretion of the DOC. Both groups of defendants also contend that the DOC maintained absolute control in screening prisoners proposed as plasma center workers and that the Cutter defendants did not maintain any employment records for any of the inmates assigned to the facility. To support their statement of facts, the Cutter defendants submit the affidavits of former Plasma Center managers Estenson and Gray, and a copy of the January 2, 1985 contract agreement between the state defendants and the Cutter defendants. Plaintiffs merely state in their corresponding statement of facts that the above contentions are "denied."

        Plaintiffs' own statement of facts in support of their motion for summary judgment merely posits the legal conclusion that plaintiffs were "employees" of the Cutter defendants within the meaning of the applicable state and federal statutes. Plaintiffs' sole statement of fact offered in support of their motion is an affidavit from plaintiff Ashelman. In this document, Ashelman alleges that "[o]n April 22, 1985, I was hired and employed by Norman L. Gray, Manager of the Arizona State Plasma Center, Cutter Biological." Plaintiff's Motion for Summary Judgment, Exhibit A, ¶ 7. Ashelman further states that

in order for plaintiff to work for Cutter Biological, affiant applied for the job and position which is more specifically described hereinbelow, was approved for employment by Cutter Biological by the prison staff of the DOC (via a classification evaluation); throughout his employment by Cutter, affiant did retain his position by satisfactorily performing his assigned duties in the opinion of Cutter Biological and its staff; that Cutter Biological could have requested that the prison remove plaintiff from his employment by administrative request of the DOC; that the DOC could remove at its whim an inmate worker, including plaintiff, from the plasma center and from his position at Cutter by reclassification or other security or disciplinary move or charge; that insofar as it is descriptive of the working conditions, the Affidavit of Darryl Estenson is true and correct insofar as it sets forth the "economic realities" of the overall employment setting for inmates at Cutter Biological and the interplay between the Cutter employees, the prison staff and the inmate employees.

Id., ¶ 12. Finally, Ashelman's sworn statement concludes:

So long as I was not reclassified by the DOC or committed no disciplinary infraction so as to cause a loss of job or other privilege, I was allowed to continue working by the DOC in the Cutter Biological plasma center. The DOC could remove me from the job at any time and without any reason therefor. I was paid by having Cutter pay the DOC and the DOC would weekly credit to my account the wages earned. The amount of wages

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earned was known to the DOC and the Cutter civilian personnel.

Id., ¶ 13.


        Plaintiffs claim that they are entitled to minimum wages, pursuant to the provisions of the FLSA, for the work they performed as assistants at the Plasma Center. The FLSA requires an "employer to pay minimum wage to an 'employee' under specific circumstances." See 29 U.S.C. § 206(a)(1) (1982). The statute defines "employee" as "any individual employed by an employer." 29 U.S.C. § 203(e)(1) (1982). The term "employ" is defined as including "to suffer to permit work." 29 U.S.C. § 203(g) (1982). An "employer" is one who acts "directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d) (1982). An entitlement to minimum wage must be predicated upon the existence of an employment relationship. See 29 U.S.C. § 206(a)(1) (1982).

        Because the above definitions are stated in only the broadest of terms, courts have adopted a case by case analysis to determine whether an individual is entitled to the minimum wage provisions of the FLSA. See Carter v. Dutchess Community College, 735 F.2d 8, 12 n. 1 (2d Cir.1984). This does not mean, however, that there are no governing standards to assist the reviewing court. Rather, courts have adopted an "economic realities" test to determine whether an employment relationship exists for the purposes of the FLSA. 4 The most recent formulation of this standard was set forth in Bonnette v. California Health and Welfare Agency, 704 F.2d 1465, 1470 (9th Cir.1983), in which the Court of Appeals stated that a court should inquire into "whether the alleged employer (1) had the power to hire and fire employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records." Id.

        It is undisputed that in FLSA cases not involving inmates, the "economic realities" test is the appropriate standard used by courts to determine whether an employer-employee relationship exists under the statute. Defendants also acknowledge that courts have applied this same test in cases involving inmates seeking minimum wages for their labor. In fact, plaintiffs cite four cases in which the reviewing court applied the "economic realities" test to inmates' FLSA actions. See Carter v. Dutchess Community College, 735 F.2d 8, 12 (2d Cir.1984); Alexander v. Sara, Inc., 559 F.Supp. 42, 44 (M.D.La.1983),...

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