Individuals v. E&s Landscaping Serv. Inc.

• Decision Date: 31 August 2010
• Docket Number: Nos. 08-15154, 08-15290, 08-15963, 08-17055, 08-17109 and 09-10938.,s. 08-15154, 08-15290, 08-15963, 08-17055, 08-17109 and 09-10938.
• Citation: 616 F.3d 1217
• Parties: Resias POLYCARPE, Reynold Sully, and other similarly situated individuals, Plaintiffs-Appellants, v. E&S LANDSCAPING SERVICE, INC., Ernst Mayard, Defendants-Appellees. Pierre C. Bien-Aime, Plaintiff-Appellant, v. Nanak's Landscaping, Inc., Defendant-Appellee. Reinaldo Ramon Lamonica, Reonaldo Gomez Morsa, Augustin Milan, Angeles Lamonica Soler, Mario Feliciano, Guillermo Alborez, Julio Alborez, Giovani Perez, Pedro Lopez Vasquez, on behalf of themselves and other employees similarly situated, Plaintiffs-Appellants, v. Safe Hurricane Shutters, Inc., a Florida corporation d.b.a. Advanced Hurricane Protection, Edward Leiva, Steve Heidelberger, Francis McCarroll, Defendants-Appellees. Richard Milbourn, individually and on behalf of others similarly situated, Plaintiff-Appellant, v. Aarmada Protection Systems 2000, Inc., a Florida corporation, and Wainsworth Jackson, individually, Defendants-Appellees. Edgardo Flores, Jose Rosales, Nestor Benitez, Plaintiffs-Appellants, v. Nuvoc, Inc., a dissolved Florida Corporation, Baruch Raphael, Juan Sarda, Defendants-Appellees. Juan Carlos Vallecillo, and all others similarly situated, Wilard Dulanto, Felipe Mendoza, Troy Allen Whitten, Juan Antonio Vargas, Claudio Whitten, Plaintiffs-Appellants, v. Wall To Wall Residence Repairs Inc., Jorge Acosta, Registered Agent 5701 N.W. 23 Street Margate, FL 33063, Jorge Acosta, Eloisa M. Lim, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

616 F.3d 1217

Resias POLYCARPE, Reynold Sully, and other similarly situated individuals, Plaintiffs-Appellants,

v.E&S LANDSCAPING SERVICE, INC., Ernst Mayard, Defendants-Appellees.

Pierre C. Bien-Aime, Plaintiff-Appellant,

v.Nanak's Landscaping, Inc., Defendant-Appellee.

Reinaldo Ramon Lamonica, Reonaldo Gomez Morsa, Augustin Milan, Angeles Lamonica Soler, Mario Feliciano, Guillermo Alborez, Julio Alborez, Giovani Perez, Pedro Lopez Vasquez, on behalf of themselves and other employees similarly situated, Plaintiffs-Appellants,

v.Safe Hurricane Shutters, Inc., a Florida corporation d.b.a. Advanced Hurricane Protection, Edward Leiva, Steve Heidelberger, Francis McCarroll, Defendants-Appellees.

Richard Milbourn, individually and on behalf of others similarly situated, Plaintiff-Appellant,

v.Aarmada Protection Systems 2000, Inc., a Florida corporation, and Wainsworth Jackson, individually, Defendants-Appellees.

Edgardo Flores, Jose Rosales, Nestor Benitez, Plaintiffs-Appellants,

v.Nuvoc, Inc., a dissolved Florida Corporation, Baruch Raphael, Juan Sarda, Defendants-Appellees.

Juan Carlos Vallecillo, and all others similarly situated, Wilard Dulanto, Felipe Mendoza, Troy Allen Whitten, Juan Antonio Vargas, Claudio Whitten, Plaintiffs-Appellants,

v.Wall To Wall Residence Repairs Inc., Jorge Acosta, Registered Agent 5701 N.W. 23 Street Margate, FL 33063, Jorge Acosta, Eloisa M. Lim, Defendants-Appellees.

Nos. 08-15154, 08-15290, 08-15963, 08-17055, 08-17109 and 09-10938.

United States Court of Appeals,Eleventh Circuit.

Aug. 31, 2010.

Sam J. Smith, Marguerite Maria Longoria, Burr & Smith, LLP, Tampa, FL, Jason Saul Remer, Remer & Georges-Pierre, PLLC, North Miami, FL, Jamie H. Zidell, J.H. Zidell, P.A., Miami Beach, FL, Keith M. Stern, Shavitz Law Group, P.A., Boca Raton, FL, for all Plaintiffs-Appellants.

Chris Kleppin, Glasser, Boreth & Kleppin, P.A., Plantation, FL, Robert Ingham, Ingham & Associates, PA, Ft. Lauderdale, FL, for all Defendants-Appellees.

Mary J. Rieser, U.S. Dept. of Labor, Washington, DC, for Amicus Curiae.

Appeals from the United States District Court for the Southern District of Florida.

Before EDMONDSON and PRYOR, Circuit Judges, and CAMP, ^* District Judge.

PER CURIAM:

These six cases come before us because of controversy about the Fair Labor Standards Act (“the FLSA” or “the Act”). Defendants disputed their obligation to pay Plaintiffs the minimum wage or overtime under the Act. All of the district courts dismissed the cases on summary judgment or judgment as a matter of law because the courts concluded that the FLSA did not apply. We conclude that the district courts inaccurately interpreted the FLSA; so, in all cases except Flores v. Nuvoc, Inc., we vacate the judgments and remand the cases.

I. BACKGROUND

This matter is a consolidated appeal of six cases from Florida. ¹ All of the cases involve interpreting the Fair Labor Standards Act to determine whether employers are covered by the Act. Plaintiffs are all employees who worked for Defendant employers in various capacities: landscapers, security-system technicians, and construction workers, among others. Defendants are principally local service providers to customers within the state of Florida, although some Defendants also provide products in connection with their services.

Plaintiffs claimed that, during their employment, they worked more than forty hours per week and Defendant employers failed to pay them either a federally mandated minimum wage, federally mandated overtime pay, or both. Each Plaintiff also described some of the items used in the course of his employment and provided some evidence showing that those items came from outside of Florida. ² Defendants did not dispute that they failed to pay Plaintiffs the minimum wage or overtime wages. With the exception of Flores v. Nuvoc, Inc., Plaintiffs provided evidence (or received a stipulation) that Defendants grossed more than $500,000 in annual sales.

Plaintiffs all sued pursuant to the Act's provisions requiring covered employers to pay their employees minimum and overtime wages. See 29 U.S.C. §§ 206(a)-207(a). Defendants argued that they were not covered enterprises and so not subject to the Act.

Each Defendant ultimately prevailed. The district courts dismissed the cases because the courts concluded that the FLSA did not cover Defendant businesses. The courts concluded that, because the employers had purchased potentially qualifying “goods” or “materials” intrastate after those items had “come to rest,” no sufficient interstate-commerce connection existed to bring about FLSA coverage. Several of the courts additionally concluded that Plaintiff employees had not handled the kind of “goods” or “materials” necessary to subject that employer to coverage under the FLSA. One case, Flores v. Nuvoc, Inc., was also dismissed because the Defendant supposedly did not meet the minimum threshold of annual sales to be covered by the FLSA. ³ Plaintiffs appealed, and the cases were consolidated.

II. DISCUSSION

A.

The Fair Labor Standards Act of 1938 requires employers who meet its preconditions to pay workers a minimum wage and to provide overtime pay where workers exceed forty hours per week. See 29 U.S.C. § 206(a) (minimum wage); id. § 207(a) (overtime pay). While either individual coverage or enterprise coverage can trigger the Act's applicability, we are only concerned in this appeal with enterprise coverage. See Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1265-66 (11th Cir.2006).

An employer falls under the enterprise coverage section of the FLSA if it 1) “has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person” and 2) has at least $500,000 of “annual gross volume of sales made or business done.” 29 U.S.C. § 203(s)(1)(A).

Since its original enactment in 1938, Congress has amended the FLSA three times, each time enlarging the number of entities subject to coverage under the Act. See Dunlop v. Indus. Am. Corp., 516 F.2d 498, 500-02 (5th Cir.1975). The Act's coverage initially was defined in terms of individual employees, not employers. Id. at 500. With the first amendment, in 1961, Congress expanded the FLSA in two relevant respects. See Fair Labor Standards Amendments of 1961, Pub.L. No. 87-30, 75 Stat. 65 (1961). First, it provided for enterprise-wide coverage rather than coverage of only certain qualifying individual employees. After the amendment, if an employer had two or more workers engaged in commerce or the production of goods for commerce, FLSA coverage extended to all of the enterprise's employees. Dunlop, 516 F.2d at 500-01.

Second, Congress added what has come to be known as the “handling clause.” Under this clause, an employer will be considered to be an “enterprise engaged in commerce” if it has employees “handling, selling, or otherwise working on goods that have been moved in or produced for commerce ....” 29 U.S.C. § 203(s) (1961). We have already noted, this amendment allowed the FLSA potentially to reach retail and service businesses that were otherwise locally focused. Dunlop, 516 F.2d at 501.

After amendments (that do not bear on these appeals) in 1966, Congress amended the FLSA yet again in 1974, also, seemingly, to expand the Act's coverage. See Fair Labor Standards Amendments of 1974, Pub.L. 93-259, 88 Stat. 55 (1974). First, immediately before the handling clause, by replacing the word “including” with the word “or,” Congress made satisfying the handling clause an independent basis for bringing an enterprise under FLSA coverage. Id. Second, Congress added the words “or materials” to the handling clause. Id.

The focus of these consolidated cases is this amended handling clause: whether Defendant employers had employees (not necessarily Plaintiffs specifically) “handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person.” 29 U.S.C. § 203(s)(1)(A)(i) (emphasis added).

B.

The handling clause only pertains to “goods or materials that have been moved in or produced for commerce by any person.” Id. § 203(s)(1)(A)(i) (emphasis added). The FLSA defines “commerce” as “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” Id. § 203(b) (emphasis added). The plain meaning of the handling clause is that it only applies to “goods” or “materials” that have been subject to interstate commerce.

An erroneous view of FLSA enterprise coverage-one that hangs on what is called the “coming to rest” doctrine-is at odds with this statutory text. The “coming to rest” doctrine is the belief that interstate goods or materials can lose their interstate quality if the items have already come to rest within a state before intrastate purchase by a business. See Donovan v. Scoles, 652 F.2d 16, 18 (9th Cir.1981) (stating that this doctrine was appropriate when FLSA coverage depended not on enterprise coverage, but only on individual coverage: employees who were “engaged in commerce or the production of goods for commerce”) (internal quotation marks omitted).

Binding precedent rejects this doctrine in the enterprise coverage context as based on an incorrect reading of the amended FLSA. “ ‘[T]he legislation was designed to regulate enterprises dealing in articles acquired intrastate after travel in interstate commerce.’ ” Brennan v. Greene's Propane Gas Serv., Inc., 479 F.2d 1027, 1030 (5th Cir.1973) (quoting Schultz v. Kip's Big Boy, Inc., 431 F.2d 530, 533 (5th Cir.1970)). See also 29 C.F.R. § 779.242 (stating that it is “immaterial ... that the goods may have ‘come to rest’ ”).

The plain language of the statute compels this conclusion. Defendants fall under enterprise coverage if they have “employees handling, selling, or otherwise working on goods or...