Hickton v. Enter. Holdings, Inc. (In re Enter. Rent–A–Car Wage & Hour Emp't Practices Litig.)

• Decision Date: 28 June 2012
• Docket Number: No. 11–2883.,11–2883.
• Citation: 19 Wage & Hour Cas.2d (BNA) 385,683 F.3d 462
• Court: U.S. Court of Appeals — Third Circuit
• Parties: In re ENTERPRISE RENT–A–CAR WAGE & HOUR EMPLOYMENT PRACTICES LITIGATION, Nickolas Hickton; Sean Herbster; Miquel McDonald; Michael Keith Averill, Jr.; Jasmine Bromfield; Nils Hagstrom; Elsa Depina; Jeffrey Galia; Robert Bajkowski; Tori Gaudelli; Donnashekia Richard; Wayman F. Graham, II; Kevin C. Hagler, on behalf of themselves and all others similarly situated, Appellants v. Enterprise Holdings, Inc., f/k/a Enterprise Rent–A–Car Company; Enterprise Rent–A–Car Company of Pittsburgh, LLC, f/k/a Enterprise Rent–A–Car Company of Pittsburgh; Enterprise Leasing Company of Philadelphia, LLC, f/k/a Enterprise Leasing Company of Philadelphia; Enterprise Leasing Company–South Central, LLC, f/k/a Enterprise Leasing Company–South Central, Inc.; Elrac, LLC, f/k/a Elrac, Inc.; Enterprise Leasing Company of Orlando, LLC, f/k/a Enterprise Leasing Company of Orlando; Enterprise Rent–A–Car Company–Midwest, f/k/a Enterprise Rent–A–Car Company–Midwest; Enterprise Leasing Company of Chicago, LLC, f/k/a Enterprise Leasing Company of Chicago; Enterprise Rent–A–Car Company of Tennessee, LLC, f/k/a Enterprise Rent–A–Car Company of Tennessee; Enterprise Leasing Company of Florida, LLC, f/k/a Enterprise Leasing Company (a Florida Corporation); XYZ Entities 1–100.

683 F.3d 462

19 Wage & Hour Cas.2d (BNA) 385

In re ENTERPRISE RENT–A–CAR WAGE & HOUR EMPLOYMENT PRACTICES LITIGATION,Nickolas Hickton; Sean Herbster; Miquel McDonald; Michael Keith Averill, Jr.; Jasmine Bromfield; Nils Hagstrom; Elsa Depina; Jeffrey Galia; Robert Bajkowski; Tori Gaudelli; Donnashekia Richard; Wayman F. Graham, II; Kevin C. Hagler, on behalf of themselves and all others similarly situated, Appellants

v.Enterprise Holdings, Inc., f/k/a Enterprise Rent–A–Car Company; Enterprise Rent–A–Car Company of Pittsburgh, LLC, f/k/a Enterprise Rent–A–Car Company of Pittsburgh; Enterprise Leasing Company of Philadelphia, LLC, f/k/a Enterprise Leasing Company of Philadelphia; Enterprise Leasing Company–South Central, LLC, f/k/a Enterprise Leasing Company–South Central, Inc.; Elrac, LLC, f/k/a Elrac, Inc.; Enterprise Leasing Company of Orlando, LLC, f/k/a Enterprise Leasing Company of Orlando; Enterprise Rent–A–Car Company–Midwest, f/k/a Enterprise Rent–A–Car Company–Midwest; Enterprise Leasing Company of Chicago, LLC, f/k/a Enterprise Leasing Company of Chicago; Enterprise Rent–A–Car Company of Tennessee, LLC, f/k/a Enterprise Rent–A–Car Company of Tennessee; Enterprise Leasing Company of Florida, LLC, f/k/a Enterprise Leasing Company (a Florida Corporation); XYZ Entities 1–100.

No. 11–2883.

United States Court of Appeals, Third Circuit.

Argued May 15, 2012.

Filed: June 28, 2012.

Gregg I. Shavitz, Hal B. Anderson, Shavitz Law Group, Boca Raton, FL, Peter A. Muhic (Argued), James A. Maro, Kessler, Topaz, Meltzer & Check, Radnor, PA, J. Allen Schreiber, Mark Petro, Schreiber & Petro, Birmingham, AL, Alfred G. Yates, Jr., Morrow & Morrow, Pittsburgh, PA, for Appellants.

Patrick L. Abramowich, Fox Rothschild, Pittsburgh, PA, William J. Kilberg, Jason J. Mendro, Jason C. Schwartz (Argued), Gibson, Dunn & Crutcher, Washington, DC, Daniel M. O'Keefe, James R. Wyrsch, Bryan Cave, St. Louis, MO, for Appellee.

Before: SMITH, FISHER and GARTH, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge.

The only issue on this appeal is whether Enterprise Holdings, Inc., ¹ (“Enterprise Holdings”), which is the sole stockholder of thirty eight domestic subsidiaries, is a joint employer of the subsidiaries' assistant managers within the meaning of the Fair Labor Standards Act (“FLSA”). In order to answer this question, we must define the contours of the term “joint employer.”

The District Court, in a comprehensive opinion,² held that Enterprise Holdings, Inc. was not a joint employer.³ In doing so, the District Court determined that the standard to which it applied its findings of fact was found in Lewis v. Vollmer of America, No. 05–1632, 2008 WL 355607 (W.D.Pa. Feb. 7, 2008) and Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir.1983), abrogated on other grounds by Garcia v. San Antonio Transit Authority, 469 U.S. 528, 539, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). We will discuss those two cases, together with additional factors, which we hold to be significant in defining “joint employer” under the FLSA.

Although the standard we prescribe varies in some respects from the District Court's test, we hold that the District Court did not err in deciding for the appellee, Enterprise Holdings, Inc. and thus, in not certifying the class which the plaintiffs seek. We therefore will affirm the District Court's August 13, 2010 order which granted Enterprise Holdings, Inc.'s motion for summary judgment.

I.

Plaintiff Nickolas Hickton was a former assistant branch manager employed at Enterprise–Rent–a–Car Company of Pittsburgh. On December 11, 2007, Hickton filed a nationwide collective class action under the FLSA in the Western District of Pennsylvania. Hickton claimed that the defendant, Enterprise Holdings, Inc., the parent company of Enterprise–Rent–a–Car Company of Pittsburgh, violated the FLSA by failing to pay required overtime wages.

The FLSA provides that:

[n]o employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.

29 U.S.C. § 207(a)(1). Some employees are classified as exempt under the FLSA, 29 U.S.C. § 213(a), and are consequently exceptions to this rule.

Hickton's action, filed on behalf of all individuals employed during the putative class period as branch managers or assistant branch managers at the various Enterprise locations,⁴ named both Enterprise Holdings, Inc. ⁵ and Enterprise Rent–a–Car Company of Pittsburgh as defendants. By order of the United States Judicial Panel on Multidistrict Litigation, similar actions pending in other Districts were transferred to the Western District of Pennsylvania.⁶ Since that time, a number of other cases have also been transferred pursuant to the Judicial Panel on Multidistrict Litigation's order. ⁷

On October 23, 2009, Hickton, along with other named plaintiffs, filed an Amended Master Complaint on behalf of themselves and all other current and former assistant branch managers of Enterprise locations. The Complaint alleged that the plaintiffs' employers had unlawfully classified them as exempt from the FLSA's overtime provisions, and sought overtime compensation, liquidated damages, attorneys' fees, and costs. In addition to the respective subsidiaries for whom the various plaintiffs worked, the Complaint also alleged that the parent company, Enterprise Holdings, Inc., was liable for the overtime pay as a joint employer of the plaintiffs.

As we have noted, Enterprise Holdings, Inc. is the sole shareholder of 38 domestic subsidiaries, such as Enterprise Rent–a–Car Company of Pittsburgh, which rents and sells vehicles and conducts other business under the “Enterprise” brand name. These various subsidiaries each have branch locations, and the plaintiff-appellants are all former assistant managers at various branches of these subsidiaries.⁸

II.

The record reveals the following facts. Enterprise Holdings, Inc. does not directly rent or sell vehicles. These activities are carried on only by its 38 subsidiaries. However, Enterprise Holdings, Inc. directly and indirectly, supplies administrative services and support to each subsidiary. These services include, but are not limited to, business guidelines, employee benefit plans, rental reservation tools, a central customer contact service, insurance, technology, and legal services. The business guidelines provided by Enterprise Holdings, Inc. to its subsidiaries are, in turn, distributed to the subsidiaries' employees in a manual which states that “[i]nformation contained in [this manual] refers to employees of: [t]he Crawford Group, Inc., Enterprise Rent–A–Car Company and their various operating subsidiaries.”

The District Court found that the use of these services was optional in the discretion of the individual subsidiaries, but that in exchange for these services, each of the subsidiaries pays corporate dividends and management fees to Enterprise Holdings, Inc. At all times relevant to this appeal, the Board of Directors of each subsidiary consisted solely of the same three people: Andrew C. Taylor, Pamela W. Nicholson, and William W. Snyder, all of whom also served on the Board of Directors of Enterprise Holdings, Inc. They served, respectively, as Enterprise Holdings, Inc.'s Chairman and Chief Executive Officer (CEO), President and Chief Operating Officer (COO), and Executive Vice President and Chief Financial Officer (CFO).

In addition, Enterprise Holdings, Inc. has a human resources department, which provides certain services to subsidiaries, including, among other things, job descriptions, best practices, and compensation guides. These best practices and guides recommend which employees of subsidiaries should be salaried, and which employees should receive an hourly wage. The human resources department also negotiates health plans which are offered to employees of Enterprise Holdings, Inc. and to employees of the subsidiaries. Participation in such plans is not required, but if a subsidiary's employee enrolls in the various benefit programs, Enterprise Holdings, Inc. bills that subsidiary for the benefits the employee elects. Additionally, the human resources department provides assistance in relocation for employees transferring from one subsidiary to another, and maintains a list of available employment opportunities with any of Enterprise Holdings, Inc.'s subsidiaries.

The human resources department, in addition, provides training materials to subsidiaries, and supplies a standard performance review form for evaluating employees of subsidiaries. Finally, through both its business guidelines and various human resources documents, Enterprise Holdings, Inc. recommends salary ranges for branch employees. The District Court found that each individual subsidiary can choose to use any or all of these guidelines or services in its own discretion; none of these guidelines or services are mandatory.

The District Court also found that at a 2005 meeting attended by representatives of Enterprise Holdings, Inc. and its subsidiaries, Enterprise Holdings, Inc. “recommended” that the subsidiaries not pay overtime wages to “Assistant Managers” and “Assistant Branch Managers” who were employed by subsidiaries other than the California subsidiaries.

Enterprise Holdings, Inc. moved ⁹ for summary judgment on the grounds that it was not a “joint employer” of the plaintiffs, and therefore was not liable under the FLSA. The District Court granted its motion for summary judgment and the plaintiffs timely appealed.

III.

The District Court had jurisdiction over this action pursuant to 28 U.S.C. § 1331. Pursuant to the...