Irizarry v. Catsimatidis
722 F.3d 99
| 2d Cir. | 2013Background
- Plaintiffs are a class of current and former Gristede’s department managers and co-managers who sued under the FLSA and New York Labor Law (NYLL) for unpaid overtime and related wage violations.
- After district-court summary judgment for plaintiffs on liability, settlement was approved but the corporate defendants defaulted on payments. Plaintiffs then moved for partial summary judgment holding John Catsimatidis (owner/CEO) personally liable as an "employer."
- Catsimatidis is chairman, president, and CEO of Gristede’s Foods, Inc., works at corporate HQ several days a week, reviews financial and store reports, signs paychecks electronically, and occasionally visits stores and directs merchandising or forwards consumer/employee complaints.
- He delegates daily operations to executives (e.g., COO, VP of operations, district managers) but retains and occasionally exercises broad authority (financial control, hiring/promoting certain managers, power to open/close/sell stores).
- The district court granted partial summary judgment that Catsimatidis was an "employer" under both the FLSA and NYLL; the Second Circuit affirmed as to the FLSA, vacated and remanded as to the NYLL.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Catsimatidis is an "employer" under the FLSA | Catsimatidis exercised operational control (hiring/promotions, financial control, signing paychecks, store visits, directing merchandising) and thus is jointly liable | He was a high-level owner who only made ‘‘big picture’’ decisions and mostly delegated day-to-day employment matters; symbolic or infrequent involvement is insufficient | Affirmed: under an economic-reality/operational-control test Catsimatidis is an FLSA employer given his financial control, hiring/promoting managers, involvement affecting store operations, and signature authority over paychecks |
| What standard applies to individual liability under the FLSA | Plaintiffs: broad remedial FLSA standard, look to totality of circumstances and operational control over employment-related matters | Catsimatidis: test should require direct, day-to-day control over plaintiffs' work or that unexercised authority is insufficient | Court: apply flexible economic-reality test (Carter factors plus operational-control inquiry); operational control relevant even if exercised intermittently |
| Whether unexercised or latent authority suffices for liability | Plaintiffs: ownership plus powers to delegate and occasional exercise of authority can establish employer status | Catsimatidis: mere ownership or latent authority without actual involvement should not create personal liability | Court: unexercised authority may be relevant but courts should look for a demonstrated relationship between the individual’s powers and the employees’ work; here the exercised powers tipped the balance |
| Whether Catsimatidis is an "employer" under NYLL | Plaintiffs: state law follows FLSA and Catsimatidis is an employer under NYLL as well | Catsimatidis: state law may differ; corporate officer status alone should not create liability | Vacated and remanded: Second Circuit declined to decide NYLL issue because district court did not analyze it; remand for consideration of state-law test and any settlement-based issues |
Key Cases Cited
- Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985) (FLSA to be construed broadly for remedial purposes)
- Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (1992) (FLSA defines "employ" expansively; employ/suffer or permit to work)
- Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947) (no rigid definition of employer; focus on totality/economic reality)
- Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28 (1961) (economic-reality test applied over technical agency labels)
- Herman v. RSR Sec. Servs. Ltd. (RSR), 172 F.3d 132 (2d Cir. 1999) (individual officer can be an employer; operational control and financial control relevant)
- Carter v. Dutchess Community College, 735 F.2d 8 (2d Cir. 1984) (four-factor test for employer: hire/fire, supervise schedules/conditions, set pay, maintain records)
- Barfield v. NYC Health & Hosps. Corp., 537 F.3d 132 (2d Cir. 2008) (economic-reality approach; flexible factors)
- Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003) (factors for joint-employer analysis in subcontracting contexts)
- Wirtz v. Pure Ice Co., 322 F.2d 259 (8th Cir. 1963) (ownership alone insufficient where no operational involvement)
- Donovan v. Sabine Irrigation Co., 695 F.2d 190 (5th Cir. 1983) (liability where individual dominates administration or independently controls work situation)
- Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991) (operational control over salaries and day-to-day functions supports employer status)
- Donovan v. Agnew, 712 F.2d 1509 (1st Cir. 1983) (corporate officers with operational control over day-to-day functions held jointly liable)
- Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668 (1st Cir. 1998) (caution against overly expansive individual liability absent personal responsibility for business decisions contributing to violations)
- Gray v. Powers, 673 F.3d 352 (5th Cir. 2012) (limited, occasional financial/account signatures not enough where operational control lacking)
- Patel v. Wargo, 803 F.2d 632 (11th Cir. 1986) (officer status alone insufficient without operational control over day-to-day employment matters)
- Reich v. Circle C. Investments, Inc., 998 F.2d 324 (5th Cir. 1993) (non-owner exerting direct control over hiring, payroll, and work conditions held an employer)