Costello v. Molari, Inc.

• Decision Date: 20 November 2019
• Docket Number: Civil Action No. 3:17-cv-30184-KAR
• Parties: NICHOLAS COSTELLO, Plaintiff, v. MOLARI, INC., and GAIL MOLARI, Defendants.
• Court: U.S. District Court — District of Massachusetts

NICHOLAS COSTELLO, Plaintiff, v. MOLARI, INC., and GAIL MOLARI, Defendants.

Civil Action No. 3:17-cv-30184-KAR

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

November 20, 2019

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

(Dkt. No. 31)

ROBERTSON, M.J.

I. INTRODUCTION

Plaintiff Nicholas Costello ("Plaintiff") brings his wage and hour claims under federal and state law against Defendants Molari, Inc. ("Molari") and Gail Molari (collectively, "Defendants"). Defendants seek summary judgment against Plaintiff, arguing, inter alia, that Plaintiff has not shown that Defendants were "engaged in commerce" within the meaning of the Fair Labor Standards Act, 29 U.S.C. § 203(b), (s) ("FLSA"). Plaintiff's FLSA claim, Count I in the complaint, is the only federal claim he asserts. The parties have consented to this court's jurisdiction (Dkt. No 11). See 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Because the court agrees that Plaintiff has not shown that Defendants are covered by the FLSA, the court grants Defendants' summary judgment motion as to Count I of the complaint and dismisses the pendent state law claims in Counts II-IV without prejudice.

II. RELEVANT FACTS

The following facts are drawn from Defendants' and Plaintiff's separate Statements of Facts (Dkt. Nos. 33, 36) and documents referenced therein. Molari is a temporary employment agency (Molari Dep. 9:22-24 - 10:1-21, Dkt. No. 33-27 at 4-5), which, at the relevant time, employed some 150 people as home health aides, personal care assistants, homemakers, and companions (Molari Dep. 16:10-24). The company had an in-house staff that ran the business, and a field staff comprised of the employees who worked in Molari's employment services business or its health care department (Sime Dep. 17:7-24, Dkt. No. 33-17 at 6). Molari has its sole office in Pittsfield, Massachusetts (Sime Aff. ¶ 3, Dkt. No. 33-16 at 1). The company operates and markets its services exclusively in Massachusetts. All of the company's clients are in Massachusetts, and it derives all its revenue from these Massachusetts clients (Sime Aff. ¶¶ 9-16). Plaintiffs do not dispute these facts (Dkt. No. 36 at 4-5, ¶¶ 18-26).

In February 2014, Plaintiff was hired by Molari as a staffing coordinator/recruiter (Dkt. No. 33 at 1, ¶¶ 2-3; Dkt. No. 36 at 1, ¶¶ 2-3). About six months into his job, Plaintiff transferred into a different position in the health care division. The parties dispute whether, in this position, Plaintiff functioned primarily as a supervisor or did little more than arrange the schedules of Molari's field staff. On October 28, 2016, Plaintiff resigned his employment with Defendants (Costello Dep. 18:17-18, Dkt. No. 33-7 at 6). On December 29, 2017, Plaintiff filed this action (Dkt. No. 1). In paragraphs 12 and 13 of his complaint, respectively, Plaintiff alleged that "Defendants were at all relevant times an 'enterprise engaged in commerce or in the production of goods for commerce' as defined in defined in 29 U.S.C. § 203(s)" and that "Plaintiff was at all relevant times an employee 'engaged in commerce or in the production of goods for commerce' as defined in 29 U.S.C. § 207(a)" (Dkt. No. 1 at 2, ¶¶ 12, 13). In their answer (Dkt. No. 6 at 2) and their amended answer (Dkt. No. 9 at 2), in response to these allegations, Defendants objected to the use of the term "relevant period" on the grounds that the term had not been identified or defined with any specificity and "[a]dmit[ted] to the remainder."

III. DISCUSSION

A. Standard of Review

The court shall grant summary judgment when "'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P. 56(c)). "A 'genuine' issue is one that could be resolved in favor of either party, and a 'material fact' is one that has the potential of affecting the outcome of the case." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir. 2004). The initial burden rests with the moving party to apprise the court "'of the basis for its motion, and [to] identify[] those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.'" Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000) (quoting Celotex Corp., 477 U.S. at 323). "Once the moving party has properly supported [its] motion for summary judgment, the burden shifts to the nonmoving party, with respect to each issue on which [it] has the burden of proof, to demonstrate that a trier of fact reasonably could find in [its] favor." DeNovellis v. Shalala, 124 F.3d 298, 306 (1st Cir. 1997).

B. Defendants' Summary Judgment Motion

1. FLSA Claim

"Pursuant to § 16(b) of the FLSA, any employer who violates the overtime compensation or minimum wage provisions of sections 6 or 7 is liable to the employee or employees affected in the amount of their unpaid minimum wages or overtime compensation, plus an additional equal amount as liquidated damages." Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 674 (1st Cir. 1998) (citing 29 U.S.C. § 216(b)).

In order for the [defendant's] commercial activities to be subject to the Fair Labor Standards Act, two conditions must be satisfied. First, the [defendant's] businesses must constitute an "[e]nterprise engaged in commerce or in the production of goods for commerce." 29 U.S.C. § 203(s). Second, the associates must be "employees" within the meaning of the Act.

Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295 (1985).

"The burden is on the employee to prove a sufficient nexus to interstate commerce as an essential element of the claim." Martinez v. Petrenko, 792 F.3d 173, 175 (1st Cir. 2015) (citing Chao v. Hotel Oasis, Inc., 493 F.3d 26, 32-33 & n.6 (1st Cir. 2007)). "A plaintiff can establish this nexus either by showing that they, as an employee, engaged in interstate commerce ('individual coverage') or that their employer has other employees engaging in interstate commerce and has annual gross sales of at least $ 500,000 ('enterprise coverage')." Brown v. J&W Grading, Inc., 390 F. Supp. 3d 337, 348 (D.P.R. 2019) (citing Martinez, 792 F.3d at 175) (emphasis in original); see also Sam Li v. Fu Hing Main Rest., Inc., CIVIL ACTION NO. 1:17-cv-10670-MPK, 2018 WL 3682488, at *3 (D. Mass. Aug. 2, 2018). "In this context, the term 'commerce' means 'trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.'" Culver-Taylor v. Foster, Case No. 5:17-CV-289-LC/MJF, 2019 WL 1430402, at *4 (N.D. Fla. Feb. 22, 2019), report and recommendation adopted, Case No. 5:17CV289/MCR/MJF, 2019 WL 1430418 (N.D. Fla. Mar. 30, 2019) (citing 29 U.S.C. § 203(b)). "If enterprise coverage applies, all of the enterprise's employees are protected under the FLSA, even if they are not personally involved in interstate commerce." Cruz v. Bos. Litig. Sols., Civil Action No. 13-11127-LTS, 2016 WL 3568254, at *5 (D. Mass. May 24, 2016). To show that enterprise coverage exists, Plaintiff must point to evidence that the employer had "employees engaged in commerce or in the production of goods for commerce, or . . . has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person," and there must be evidence that the employer had gross volume sales "not less than $500,000 (exclusive of excisetaxes at the retail level that are separately stated)." 29 U.S.C.A. § 203(s)(1)(A)(i), (ii). See Donovan v. Agnew, 712 F.2d 1509, 1516 (1st Cir. 1983) (remanding the appeal of a summary judgment decision where the plaintiff's allegations that the defendant employer had gross volume sales over the limit were "insufficiently supported"). As to the alternative theory of coverage, "the First Circuit offers no 'road map' as to how employees can show individual coverage." Brown, 390 F. Supp. 3d at 353 (quoting Martinez, 792 F.3d at 175). In Brown, another session of this court looked to the Department of Labor ("DOL") regulations interpreting the reach of the FLSA's wage and hour laws, noting that the DOL regulations:

offer the following considerations:

"One practical consideration to be asked is whether, without the particular service, interstate or foreign commerce would be impeded, impaired or abated; others are whether the service ... makes it possible for existing instrumentalities of commerce to accomplish the movement of such commerce effectively and to free it from burdens or obstructions."

Id. (quoting 29 C.F.R. § 776.9).

As noted above, Plaintiff alleged in the complaint that "Defendants were at all relevant times an 'enterprise engaged in commerce or in the production of goods for commerce' as defined in 29 U.S.C. § 203(s)" and that he "was at all relevant times an employee 'engaged in commerce or in the production of goods for commerce' as defined in 29 U.S.C. § 207(a)" (Dkt. No. 1 at 2, ¶¶ 12, 13). In response to each of these allegations, Defendants responded: "The defendants object to the use of the term 'Relevant Period' which has neither been identified nor defined with any specificity within the Plaintiffs [sic] Complaint. Admit the remainder" (Am. Answer ¶¶ 12, 13 at 2). Plaintiff resists summary judgment for Defendants on the basis of these responses to the allegations of FLSA coverage in Plaintiff's Complaint, contending that Defendants admitted to being covered by the FLSA in their amended answer to the complaintand are bound by these admissions (Dkt. No. 35 at 3-4).

"Generally speaking, '[a] party's assertion of fact in a pleading is a judicial admission by which it normally is bound throughout the course of the proceeding.'" Lima v. Holder, 758 F.3d 72, 79 (1st Cir. 2014) (quo...