Tran v. Thai, CIVIL ACTION NO. H-08-3650
| Decision Date | 16 December 2010 |
| Docket Number | CIVIL ACTION NO. H-08-3650 |
| Parties | NHAN TRAN, Individually and on Behalf of Employees Similarly Situated, Plaintiff, v. TRAN THAI, doing business as Nails of America, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
This is an FLSA case involving a single plaintiff who worked in a nail salon. The case was filed in 2008. A motion for partial summary judgment is pending. After the deadline for filing motions, the defendants moved for leave to file a partial motion to dismiss the FLSA claim based on 2007 compensation for lack of subject-matter jurisdiction. (Docket Entry No. 61). The plaintiff opposes the motion as going to the merits rather than to subject-matter jurisdiction and as untimely filed. The plaintiff also argues that the FLSA applies because he was engaged in interstate commerce while performing his job duties.
The FLSA requires that overtime compensation be paid to a non-exempt employee engaged in interstate commerce while performing his job duties. 29 U.S.C. § 207(a). It is the employee's burden to prove that he engaged in interstate commerce. Sobrinio v. Medical Ctr. Visitor's Lodge, Inc., 474 F.3d 828, 829 (5th Cir. 2007) (per curiam) (citing Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88, 90, 63 S. Ct. 125 (1942)).
The FLSA also applies to the intrastate employees of enterprises that (1) have other employees engaged interstate commerce and (2) have an annual gross volume of business equal to or in excess of five hundred thousand dollars. 29 U.S.C. § 203(s)(1)(A). The FLSA defines the term "enterprise" as "the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units." 29 U.S.C. § 203(r)(1).
As the plaintiff notes, a challenge to FLSA coverage based on the absence of an employee's engagement in interstate commerce or the absence of $500,000 annual gross sales volume for an employee who is engaged in intrastate commerce is a challenge to the merits, not to subject-matter jurisdiction. See Clark v. Tarrant Cntty, Tex.,, 798 F.2d 736 (5th Cir. 1986) (); Brown v. Constant Care, Inc., No. Civ. A. 5:04-CV-165, 2004 WL 1836732, at *2 (N.D. Tex. Aug. 17, 2004) ().
The motion to dismiss the FLSA claim for 2007 for lack of subject-matter jurisdiction is denied; the motion for leave to file the motion to dismiss is moot.
Tran has moved for partial summary judgment on ten separate issues of the defendants' liability and affirmative defenses. (Docket Entry No. 58). The issues are:
1. whether plaintiff was covered by the Fair Labor Standards Act (FLSA) while employed by Bow & Mary-Nails of America #5 (the "salon");
2. whether plaintiff was an employee or an independent contractor of the salon;
3. whether the defendant can support its affirmative defense of good faith under 29 U.S.C. § 259(a);
4. whether the defendants can support the affirmative defense of good faith under 29 U.S.C. § 260;
5. whether the defendants can support or legally maintain the affirmative defense of failure to mitigate damages in this claim for unpaid overtime;
6. whether the defendants can support or legally maintain the affirmative defense of unclean hands;
7. whether the defendants can support or legally maintain the affirmative defense of laches;
8. whether the defendants can support or legally maintain the affirmative defense of waiver in this case for unpaid overtime;
9. whether the defendants can support or legally maintain the affirmative defense of estoppel; and
10. whether the defendants can support the affirmative defense of exemption from the Fair Labor Standards Act.
Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). "The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact." Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)).
If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by "'showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." See Celotex, 477 U.S. at 325. While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant's case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (citation omitted). "A fact is 'material' if its resolution in favor of one party might affect the outcome of the lawsuit under governing law." Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir. 2009) (quotation omitted). "If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant's response." United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)).
When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party's claim. Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007). "This burden will not be satisfied by 'some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiatedassertions, or by only a scintilla of evidence.'" Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir. 2008).
The plaintiff moves for summary judgment on the basis that he is an employee engaged in commerce. Employees are covered individually by the FLSA if they are engaged in commerce or in the production of goods for commerce. Individual coverage lies when the employee is engaged in commerce or the production of goods for commerce. 29 U.S.C. § 207(a)(1); Tony and Susan Alamo Found. v. Secretary of Labor, 471 U.S. 290, 295, n.8, 105 S. Ct. 1953 (1985). Enterprise coverage exists when the employee works for an enterprise with annual sales in excess of $500,000.00 that 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 moved in or been produced for interstate commerce. 29 U.S.C. § 203(s)(1)(A). The plaintiff does not seek summary judgment on the basis of enterprise coverage. Instead, he seeks summary judgment on the basis of individual coverage. (Docket Entry No. 58, p. 4, "... here Plaintiff asserts coverage based on his own engagement in commerce.").
The plaintiff does not contend that he produced goods for commerce. Instead, he contends that because he used or sold items and equipment — such as nail polish, nail files, lotions, a machine used in manicures, and heel scrapers and "collac" removers — that had previously moved in interstate commerce, and occasionally sold slippers that had previously moved in interstate commerce, he engaged in commerce.
In determining whether an employee is engaged in interstate commerce within the meaning of the FLSA, the Fifth Circuit applies a "practical test." Sobrinio, 474 F.3d at 829. Under this practical test, the court must determine if the employee's work "is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than isolated, local activity." Id. (quoting Mitchell v. H.B. Zachry Co., 362 U.S. 310, 324, 80 S. Ct. 739 (1960) (dissent)); Marshall v. Victoria Transp. Co., 603 F.2d 1122, 1123 (5th Cir. 1979) (quoting Overstreet v. N. Shore Corp., 318 U.S. 125, 63 S. Ct. 494 (1943) (quoting Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S. Ct. 332 (1943)). In Sobrinio, an employee of a motel serving the Texas Medical Center worked variously as a janitor, security guard, and driver for the hotel's guests. He ferried guests on errands to local stores but never drove to the airport or other transportation centers. The court held that although many guests were from out of state, the employee was not engaged in commerce under the FLSA. Id.
Any regular contact, no matter how minimum, will result in coverage under the FLSA. Marshall, 603 F.2d at 1124; Sobrinio, 474 F.3d at 829. However, the employee's work must be "entwined with the continuous stream of interstate commerce." Marshall, 603 F.2d at 1125; McKee v. CBF Corp., Civ. A No. 3:06-CV-1629, 2008 WL 763162, at *4 (N.D. Tex. Mar. 19, 2008). According to the Eleventh Circuit, for an employee to be "engaged in commerce" under the FLSA, he must be "directly participating in the actual...
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