Donovan v. STAR BAKERY, INC.
| Decision Date | 27 January 1986 |
| Docket Number | Civ. No. 84-2102(PG). |
| Citation | 626 F. Supp. 1208 |
| Parties | Raymond J. DONOVAN, Secretary of Labor, U.S. Department of Labor, Plaintiff, v. STAR BAKERY, INC., et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
COPYRIGHT MATERIAL OMITTED
Luis A. Micheli, U.S. Dept. of Labor, New York City, for plaintiff.
Daniel Dominguez, Hato Rey, Puerto Rico, for defendants.
This is a civil action brought by the Secretary of Labor under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201, et seq. () against Star Bakery, Inc., and Panaderia y Reposteria El Rincón Español, Inc. The complaint was filed on August 17, 1984, alleging that defendants' employees were employed in an enterprise engaged in commerce or in the production of goods for commerce within the meaning of section 3(s)(2) of the Act (29 U.S.C. § 203(s)(2)) and that from August 1, 1981, to January 1984 defendants had violated the provisions of sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Act.1
Plaintiff asserts that the business activities of defendants Star Bakery, Inc., and Panaderia y Reposteria El Rincón Español, Inc., are related and performed through unified operation or common control for a common business purpose, thus constituting an "enterprise" within the meaning of section 3(r) of the Act.2
Defendants contend that the enterprise provisions of the FLSA do not bring them within the coverage of the Act because they are not related activities performed through unified operation or common control for a common business purpose so as to constitute a single enterprise within the meaning of the Act.
On November 14, 1985, defendants filed a motion requesting that summary judgment be entered in their favor. They allege that the concept of "enterprise" is not applicable to defendants. On November 22, 1985, plaintiff filed its opposition to the motion for summary judgment. On November 25, 1985, the Court heard arguments from both parties on the motion for summary judgment. Without opposition thereto, defendants requested a bifurcation of the proceedings in order that the issue of enterprise coverage under the FLSA be tried before the issue of liability. Marshall v. Sideris, 524 F.Supp. 521 (D.Neb. 1981), reversed and remanded on other ground, Donovan v. Sideris, 688 F.2d 74 (8th Cir.1982). Trial was bifurcated and this Court proceeded to receive evidence exclusively on the issue of whether there existed coverage under the FLSA. Upon consideration of all the evidence adduced at trial and the documents and motions filed by the parties, this Court enters the following findings of facts and conclusions of law.
1. Star Bakery, Inc., (hereinafter Star Bakery) was incorporated in 1966 by Mr. Arturo Suárez and Mr. Héctor M. Lauzurique, each owning 50% of the outstanding stock. Mr. Laurzurique sold 25% of his stocks to Mr. Tomás Pérez and the remaining 25% to Mr. Ceferino González. They each paid $10,000 for the stocks.
2. The officers of Star Bakery are Tomás Pérez, President; Arturo Suárez, Vice President; Ceferino González, Treasurer; and Ilia Maria Pérez, Secretary. These same persons are the directors of the corporation.
3. Panaderia y Reposteria El Rincón Español, Inc., (hereinafter El Rincón Español) was incorporated in 1977 by Mr. Arturo Suárez, who owns 60% of the outstanding stock, and Mr. José González, who is the proprietor of the remaining 40% of the stock, having paid $12,000 for said participation.
4. The officers of El Rincón Español are Arturo Suárez, President; José González, Treasurer; Ilia Maria Pérez, Secretary. The Board of Directors is composed of these same officers.
5. José González and Ceferino González are brothers and they are cousins of Arturo Suárez. Tomás Pérez and Ilia Maria Pérez are brother and sister. Ilia Maria Pérez is married to Arturo Suárez.
6. Star Bakery is located at Royal Palm 1F-29, Lomas Verdes, Bayamón; its telephone number is 785-9422, operating for business from 6:00 a.m. to 11:00 p.m.
7. El Rincón Español is located at Santa Juanita Avenue, BR-11, Bayamón; its telephone number is 787-0222, open for business from 6:00 a.m. to 10:30 p.m.
8. The business store of Star Bakery looks physically different from El Rincón Español.3
9. At all times relevant to the complaint, the annual dollar volume of Star Bakery was less than $362,500; its income for 1981 was $245,675.88; $265,530.41 for 1982; and $280,802.95 for 1983.
10. At all times relevant to the complaint, the annual dollar volume of El Rincón Español was less than $362,500: $207,359 for 1981; $204,789.21 for 1982; and $193,076.69 for 1983.
11. At all times pertinent to this action Star Bakery and El Rincón Español had separate and independent utilities accounts, banking accounts,4 funds, inventory, offices, warehouses, accounts with suppliers, purchasing, insurance policies and lease agreements. Each corporation maintained at all times relevant hereto its own separate and independent unemployment, social security and State Insurance Fund accounts. They each filed their own separate and independent municipal taxes, movable property taxes, income taxes and domestic corporation reports. Each corporation has its own separate and independent advertisement and publicity and pays for it from its own independent funds.
12. The employees of each corporation are not the same and there is no evidence of hourly, daily, weekly or monthly interchange of personnel during the periods referred to in the complaint. They each have separate pay weeks and pay days.
13. The hiring and firing, supervision and job assignment of employees is done by the corporate officials of each respective corporation. There is no interchange in these duties and there has been none during the periods referred to in the complaint.
14. Mr. Ariel Silva worked part-time as a baker for El Rincón Español and for a short period during his free time he also worked part-time for Star Bakery as a baker.
15. Mr. Arturo Suárez, from 1981 to 1984 did not personally hire any of the employees of Star Bakery or El Rincón Español.
16. Mr. Tomás Pérez and Ceferino González did all the hiring, firing and determination of the employees' schedules at Star Bakery from 1981 to 1984. They did no hiring or firing for El Rincón and they did not participate in operational decisions of El Rincón.
17. Mr. José González did all the hiring and firing of employees at El Rincón Español. He also determined the working schedules of the employees during the periods referred to in the complaint. He did no hiring or firing and he did not participate in operational decisions of Star Bakery.
18. Each corporation paid the salaries of its employees from its own funds at all times relevant hereto.
19. Each corporation owns its equipment and machinery and is responsible for its maintenance. No interchange of machinery or equipment transpired between defendants during the periods referred to in the complaint.
20. Some items in the menus of each defendant corporation are the same; others are not. There are items not served by the other. The prices are mostly more expensive at Star Bakery than at El Rincón Español. The sector of the public to which Star Bakery caters is more affluent.
21. Each corporation has had its own separate financing. Mr. Arturo Suárez has not been the sole financial source of either corporation. The funding for each corporation between 1981 and 1984 came from their own respective shareholders, all of whom paid for their stocks.
22. There is no intermingling of funds between the corporations, and they do not participate in the profits and losses of the other.
23. The corporate defendants kept separate records for profits, expenditures and personnel matters at all times relevant to the complaint.
24. Fifty per cent (50%) of the stockholders of Star Bakery do not participate operationally or financially in activities of El Rincón Español.
25. Forty per cent (40%) of the stockholders of El Rincón Español do not participate operationally or financially in activities of Star Bakery.
26. At all times pertinent hereto, all the decisions regarding Star Bakery were made by Tomás Pérez, Ceferino González or Arturo Suárez.
27. At all times pertinent hereto, all the decisions regarding El Rincón Español were made by José González or Arturo Suárez.
28. Each corporation buys from local distributors separately and independently. The corporations sometimes buy from the same distributors since said distributorships are exclusive in nature.
29. There are some common elements between Star Bakery and El Rincón Español, to wit: Mr. Arturo Suárez is a stockholder, officer and director in both corporations; Mrs. Ilia Maria Pérez is the secretary of both corporations; both use the same outside accountant.
This Court has jurisdiction over the subject matter and the parties pursuant to 29 U.S.C. § 217. The sole question now before the Court for determination is whether the activities of Star Bakery and El Rincón Español are covered by the FLSA as an "enterprise" engaged in commerce or the production of goods for commerce within the meaning of 29 U.S.C. §§ 203(r) and 203(s).5
Should there exist an "enterprise" under the Act, it is undisputed that the gross volume sales will exceed the amount designated in the statute. On the other hand, if there is no "enterprise", the gross volume sales of each does not reach the designated jurisdictional amount and defendants are not covered by the Act.
The determination as to whether two businesses constitute a single enterprise for purposes of the FLSA is an issue to be resolved case by case based upon the particular facts of each case. Wirtz v. Barnes Grocer Co., 398 F.2d 718 (8th Cir.1968); Wirtz v. Hardin Co., 253 F.Supp. 579 (D.Ala.1964), aff'd., 359 F.2d 792 (5th Cir. 1966). There must coexist three elements before defenda...
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Hurtado v. Raly Dev., Inc.
...29 U.S.C. § 203(r)). "Plaintiff[s] ha[ve] to establish only one of these two alternative requirements." Donovan v. Star Bakery, Inc., 626 F. Supp. 1208, 1214 (D.P.R. 1986) (citing Dunlop, 555 F.2d 1228). Here, Plaintiffs do not specify which requirement is satisfied (see Pls.' Mot. 9), but ......