Dole v. Elliott Travel & Tours, Inc., 89-1998

Decision Date22 August 1991
Docket NumberNo. 89-1998,89-1998
Citation942 F.2d 962
Parties30 Wage & Hour Cas. (BNA) 803, 120 Lab.Cas. P 35,545 Elizabeth DOLE, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. ELLIOTT TRAVEL & TOURS, INC.; and Jared Schubiner, Defendants-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

Claire Brady White (briefed), U.S. Dept. of Labor, Office of the Sol., Washington, D.C., John H. Secaras, Jerry G. Thorn, Joan E. Gestrin, Office of the Sol., Chicago, Ill., for plaintiff-appellee.

Robert Van Cleef (briefed), Becker & Van Cleef, Southfield, Mich., for defendants-appellants.

Before KENNEDY and MILBURN, Circuit Judges, and WILHOIT, District Judge *.

MILBURN, Circuit Judge.

Defendants Elliott Travel & Tours, Inc. and Jared Schubiner appeal the district court's grant of summary judgment for the Secretary of Labor in this action brought for violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. The principal issues on appeal are (1) whether there is a genuine issue of material fact as to Schubiner's status as an "employer" under the FLSA, 29 U.S.C. § 203(d); (2) whether there is a genuine issue of material fact as to the defendants' willfulness in violating the FLSA; (3) whether the district court erred by awarding liquidated damages on summary judgment; and (4) whether there is a genuine issue of material fact as to the accuracy of the calculations regarding back wages. For the reasons that follow, we affirm.

I.

Elliott Travel & Tours, Inc. ("Elliott Travel") provides travel agency services at numerous branch offices located throughout the Detroit Metropolitan area. Jared Schubiner owns, jointly with his wife, 100 percent of the stock of Elliott Travel, and he is the president of the corporation. In April 1987 the Wage and Hour Division of the U.S. Department of Labor initiated an investigation of employment practices at Elliott Travel for the period from April 1985 to April 1987. A review of payroll records revealed that employees at Elliott Travel did not receive overtime pay for hours worked in one work week in excess of forty unless biweekly hours worked exceeded eighty hours. The records also disclosed that when an overtime premium was paid, commission payments were excluded in determining the regular rate on which overtime rates were based. Moreover, at certain branch offices overtime hours were "banked"; i.e., not reported as hours worked during the week, but reserved for time off in the future.

On February 10, 1988, the Secretary of Labor filed the present action against Elliott Travel and Schubiner pursuant to section 17 of the FLSA to enjoin and restrain the defendants from violating sections 7, 11 and 15 of the FLSA. The Secretary alleged that defendants failed to pay appropriate overtime wages and failed to keep accurate records of hours worked. The Secretary alleged that defendants' violations were willful and requested interest, costs, and recovery of liquidated damages pursuant to section 16(c) of the FLSA.

Defendants denied the alleged violations in their answer filed by Schubiner, pro se. Schubiner filed a motion for dismissal of the claim against him on the ground that he could not be held individually liable for the corporation's alleged violations of the FLSA. Following a hearing, the district court denied Schubiner's motion for dismissal, and the Secretary subsequently filed a motion for sanctions against Schubiner pursuant to Federal Rule of Civil Procedure 11 for his filing of the motion to dismiss. Schubiner agreed to pay the Secretary $250 pursuant to a stipulation and order entered by the court without contest.

On April 10, 1989, the Secretary filed a motion for summary judgment supported by the pleadings, defendants' answers to interrogatories, admissions, and the affidavits of the Wage and Hour Division's area director and the compliance officer who investigated the case. Defendants opposed the motion for summary judgment on grounds that there existed genuine issues of material fact as to the Secretary's wage computations and that the affidavits filed by the Secretary in support of the motion for summary judgment were improper and should not be considered by the court. Defendants also asserted that it was improper to award liquidated damages on summary judgment. Defendants filed an affidavit of Schubiner and two unsworn statements by Elliott Travel employees to support their response to the motion for summary judgment.

Following a hearing on June 8, 1989, the district court issued a bench ruling granting the Secretary's motion for summary judgment. Thereafter, a formal judgment was entered permanently enjoining and restraining defendants from violating the FLSA by failing to pay overtime compensation and by failing to keep employment records. The district court ordered defendants to pay $18,015.22 for unpaid overtime compensation due employees, and the court also ordered defendants to pay $17,556.78 as liquidated damages. This timely appeal followed.

II.

Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. This court reviews the district court's grant of summary judgment de novo, Pinney Dock & Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445, 1472 (6th Cir.), cert. denied, 488 U.S. 880, 109 S.Ct. 196, 102 L.Ed.2d 166 (1988), viewing all facts and inferences drawn therefrom in the light most favorable to the nonmoving party. 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987). The party seeking summary judgment bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). However, in responding to a summary judgment motion, the nonmoving party cannot rest on its pleadings but must present some "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. at 2553 (quoting Fed.R.Civ.P. 56(e)). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986) (emphasis in original).

A. Status as employer

Defendants argue that Schubiner did not have sufficient control over the corporation to be held individually liable as an "employer" under 29 U.S.C. § 203(d). Defendants rely on Schubiner's affidavit and their answers to the Secretary's request for admissions as evidence creating a genuine issue of fact regarding Schubiner's status as an employer.

The FLSA defines "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee...." 29 U.S.C. § 203(d). The FLSA contemplates there being several simultaneous employers who may be responsible for compliance with the FLSA. Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 431, 38 L.Ed.2d 406 (1973). "The remedial purposes of the FLSA require the courts to define 'employer' more broadly than the term would be interpreted in traditional common law applications." McLaughlin v. Seafood, Inc., 867 F.2d 875, 877 (5th Cir.1989) (per curiam). In deciding whether a party is an employer, "economic reality" controls rather than common law concepts of agency. Goldberg v. Whitaker House Cooperative, 366 U.S. 28, 33, 81 S.Ct. 933, 936, 6 L.Ed.2d 100 (1961). Whether a party is an employer within the meaning of the FLSA is a legal determination. Patel v. Wargo, 803 F.2d 632, 634 (11th Cir.1986); Karr v. Strong Detective Agency, Inc., 787 F.2d 1205, 1206 (7th Cir.1986); see Donovan v. Brandel, 736 F.2d 1114, 1116 (6th Cir.1984) ("[T]he determination of whether a particular factual setting gives rise to coverage under the FLSA is a matter of law."). But see Donovan v. Sabine Irrigation Co., 695 F.2d 190, 194 (5th Cir.) (whether party is employer is question of fact), cert. denied, 463 U.S. 1207, 103 S.Ct. 3537, 77 L.Ed.2d 1387 (1983).

"The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir.1983). In Agnew, the court determined that "corporate officers with a significant ownership interest who had operational control of significant aspects of the corporation's day to day functions, including compensation of employees, and who personally made decisions to continue operations despite financial adversity during the period of non-payment" were employers under the FLSA. Id. at 1514. "No one factor is dispositive; rather, it is incumbent upon the courts to transcend traditional concepts of the employer-employee relationship and assess the economic realities presented by the facts of each case." Sabine, 695 F.2d at 195.

The record in this case reveals that Schubiner was involved in the business operations of the corporation, and he controlled the purse strings of the corporation. See Donovan v. Grim Hotel Co., 747 F.2d 966, 972 (5th Cir.1984), cert. denied, 471 U.S. 1124, 105 S. Ct. 2654, 86 L.Ed.2d 272 (1985). Schubiner is president of Elliott Travel, and he and his wife are co-owners of the corporation. In response to the Secretary's first set of interrogatories, defendants stated that day-to-day control of the corporation was in the hands of Schubiner. However, in an amended response to the interrogatories, defendants stated that although major corporate decisions were made by Schubiner, the day-to-day control of specific operations was not entirely in his hands. In the amended response, defendants stated that Schubiner determined...

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