ISRAEL ALVAREZ PEREZ, Plаintiff-Appellee Cross-Appellant, versus SANFORD-ORLANDO KENNEL CLUB, INC., COLLINS & COLLINS, d.b.a. CCC Racing, Defendants-Appellants Cross-Appellees, JACK COLLINS, Defendant Cross-Appellee.
No. 06-15931
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
JANUARY 29, 2008
D. C. Docket No. 05-00269-CV-ORL-28-JGG
Appeals from the United States District Court for the Middle District of Florida
(January 29, 2008)
CARNES, Circuit Judge:
This appeal and cross-appeal arise from an overtime wages lawsuit brought under the Fair Labor Standards Act,
Kennel Club and CCC Racing have appealed from the judgment insofar as it found them liable on the overtime claim. They contend that the district court should have granted them judgment as a matter of law on the theory that they are separate establishments, which would mean that each of them was a seasonal oрeration qualifying for the recreational and amusement exemption in
Perez has cross-appealed from two aspects of the judgment. He contends that the district court erred in granting Collins, Sr. judgment as a matter of law on the theory that he was not Perez‘s employer. He also contends that in light of the
I.
From 1955 through 2001, Kennel Club operated a winter greyhound racing season from November through May of each year at its Longwood facility near Orlando, Florida. At that time, there was another facility—the Seminole Raceway—located just two or three miles away from Kennel Club that operated a summer season of greyhound racing. In November 2000 Jack Collins, Jr., on behalf of Kennel Club, initiated discussions with Seminole Raceway‘s management, inquiring whether Seminole would sell its summer racing permit to Kennel Club. Seminole wanted to get out of the greyhоund racing business, but some Kennel Club shareholders refused to help Collins, Sr. put up the necessary capital to finance the purchase agreement.
As a result, Collins & Collins Partnership purchased Seminole‘s summer racing permit with the personal funds of Jack Collins, Sr., who was an officer and majority shareholder of both Kennel Club and Collins & Collins Partnership. The purchase added a summer race season at Kennel Club‘s facility to the winter one already being conducted there. Around the same time, Kennel Club registered with
In May 2001 CCC Racing entered into an agreement with Kennel Club to use its facility during the summer months. In that agreement Kennel Club authorized CCC Racing to operate a summer season of greyhound racing at the Longwood facility from May through October of each year. During that summer season, CCC Racing would be responsible for the operations of the Longwood facility: the “general operational activities,” “marketing activities,” and all “administrative activities, including accounting, legal, and compliance activities.” As considеration, the agreement entitled Kennel Club “to receive One and One-Half (1.5%) of the aggregate ‘pari-mutuel wagering handle‘” earned by CCC Racing during each summer season. That percentage amounted to $398,821 in 2002 and $388,044 in 2003.
Kennel Club continued conducting winter race meets at the Longwood facility, while CCC Racing began conducting summer race meets there. Although Kennel Club and CCC Racing maintained separate bank accounts, payrolls, tax identification numbers, and permits, the companies did share the same facility, telephone number, credit card, and general liability insurance policy. Money coming from Kennel Club‘s operating accounts was also recorded as a payable on CCC Racing‘s books, and CCC Racing controlled Kennel Club‘s operating cash.
Once the Longwood facility began operating year-round, many employees who worked for Kennel Club during the winter race seasons continued to work for CCC Racing during the new summer seasons. In fact, a majority of the employees at Kennel Club and CCC Racing worked for both companies. These employees performed the same work year-round, with the only notable difference being that they received separate paychecks from the two entities for each half of the year. Perez, who worked maintenance at the racetrack facility for nearly twо years, was one of these employees. He generally received separate tax forms and paychecks from Kennel Club and CCC Racing. On one occasion, however, Perez was paid by
In February 2005 Perez filed a complaint in the Middle District of Florida against both Kennel Club and Jack Collins, Sr., which Perez later amended to include CCC Racing as an additional defendant. The complaint contended that all of the defendants were Perez‘s former employers and had “repeatedly and willfully” violated
The defendants answered Perez‘s complaint by asserting that they were not his employers under the FLSA, and that his claims were barred by the rеcreational and amusement exemption in
Following the jury‘s verdict, the defendants renewed their motions for judgment as a matter of law and also moved for a new trial. The district court granted judgment as a matter of law to Collins, Sr. concluding that he was not Perez‘s employer under the FLSA because, although he “may have owned the company and he may have had control as the owner,” he did not have the dealings
Although the district court allowed the jury‘s verdict against Kennel Club and CCC Racing to stand, it denied Perez‘s motion for liquidated damages. As a basis for that denial, the court relied on its own finding that Kennel Club and CCC Racing had sought advice regarding the exemption issue from both an attorney and their payroll company. The court was satisfied that this was enough to show that they had acted in gоod faith for purposes of
Kennel Club and CCC Racing filed this appeal. They contend that the district court erred in denying their motions for judgment as a matter of law because they are exempt from the overtime requirement of the FLSA pursuant to the recreational and amusement exemption in
II.
Congress enacted the FLSA “in order to eliminate ‘labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.‘” Antenor v. D & S Farms, 88 F.3d 925, 929 (11th Cir. 1996) (quoting
The recreational and amusement exemption at issue in this case provides:
The provisions of ... section 207 of this title shall not apply with respect to ... any employee employed by an establishment which is an amusement or recreational establishment . . . if (A) it does not operate for more than seven months in any calendar year, or (B) during the
preceding calendar year, its average receiрts for any six months of such year were not more than 33 1/3 per centum of its average receipts for the other six months of such year . . . .
No one questions that Kennel Club and CCC Racing are in the recreation or amusement business. And no one disputes that if they are considered as separate establishments, each of them qualifies for the
Kennel Club and CCC Racing contend that Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590 (11th Cir. 1995) (per curiam), supports their position that they are exempt under
The Supreme Court‘s decision in A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 65 S. Ct. 807 (1945), interpreted an earlier version of the retail and service
In Marshall v. Sundial Associates, Ltd., 588 F.2d 120, 122 (5th Cir. 1979), we applied the Supreme Court‘s teachings in Phillips when we interpreted the term “establishment” as used in the hotel establishment exemption of
As additional support for our interpretation of the term “establishment,” we cited in Sundial to
Although . . . two or more departments of a business may constitute a single establishment, two or more physically separated portions of a business though located on the same premises, and even under the same roof in some circumstances may constitute more than one establishment for purposes of exemptions. In order to effect such a result physical separation is a prerequisite. In addition, the physically separated portions of the business also must be engaged in operations which are functionally separated from each other. . . . In other words, [a] portion of an establishment would be considered a separate establishment from the unrelated portion for the purpose of the exemption if: (a) It is physically separated from the other activities; and (b) it is functionally operated as a separate unit having separate records, and separate bookkeeping; and (c) there is no interchange of employees between the units. The requirement that there be no interchange of employees between the units does not mean that an employee of one unit may not occasionally, when circumstances require it, render some help in the other units or that one employee of one unit may not be transferred to work in the other unit. The requirement has reference to the indiscriminate use of the employee in both units without regard to the segregated functions of such units.
Because the companies in the Sundial case were “completely physically intertwined,” we determined that they were to be treated as a single establishment despite the fact that they maintained separate business identities, books, and payrolls. Id. at 123. We acknowledged that those factors may be relevant in
The Phillips, Sundial, and Montalvo decisions govern situations where there are two business operations being conducted at the same time, which is what each of those cases involved. It makes sense that two businesses being conducted at the same time are more likely to be considered one establishment if they are at the same place. Physical separation is important when there is no separation in time. When, however, business operations are conducted in different seasons, physical separation is of much less importance. As the First Circuit has explained:
While “physical location” may be relevant in applying an exemption depending on the naturе of a particular business (such as whether the employer is a retail sales company), it has little to do with an exemption based on the periods in which a business operates. A common place of business alone is particularly inapposite to application of an exemption based on seasonality, as two seasonal businesses may, by operating at different times, utilize the same location while retaining their independence. Such a test in effect begs
the question, because the possibility remains that the two businesses, being independently seasonal, are able to retain their separate identities notwithstanding common use of the single facility.
Marshall v. New Hampshire Jockey Club, Inc., 562 F.2d 1323, 1331 n.3 (1st Cir. 1977).
What we take away from our Sundial decision is that while
Because
Although Kennel Club and CCC Racing also maintained separate records and tax identification numbers, unlike the defendants in Marshall, they operated the same sport—greyhound racing—and were similarly regulated by the state.
Kennel Club paid the Department of State filing fee to register CCC Racing‘s fictitious name. The two shared a single credit card. They shared one general liability insurance policy. On at least one occasion when Perez was supposedly working for CCC Racing, he was actually paid by Kennel Club. CCC Racing controlled Kennel Club‘s operating cash, and money from Kennel Club‘s operating accounts was recorded as a payable on CCC Racing‘s books. CCC Racing‘s summer racing permit was purchased with the personal funds of Jack Collins, Sr., who was the majority shareholder of both Kennel Club and CCC Racing. He was also the designated managing agent at the Longwood facility year-round pursuant to the agreement between the companies. Similarly, Tom Bowersox served as the director of racing and operations at the facility for both companies. Because Kennel Club and CCC Rаcing intermingled funds and in many aspects of management functioned as a single unit, they were not separate establishments.
For these reasons, the jury reasonably could have found, as it did, that Kennel Club and CCC Racing failed to carry their burden of establishing that they were entitled to the recreational and amusement exemption of
III.
Turning now to Perez‘s cross-appeal, his first contention is that the district court erred when it granted Collins, Sr.‘s renewed motion for judgment as a matter of law on the ground that he was not an employer within the meaning of the FLSA. When deciding whether to uphold a ruling on such a motion, “the standard of review to be applied by this Court is the same as that applied by the district court . . . If the facts and inferences point overwhelmingly in favor of one party, such that reasonable people could not arrive at a contrary vеrdict, then the motion was properly granted.” Carter v. City of Miami, 870 F.2d 578, 581 (11th Cir. 1989).
Collins, Sr. cannot be held individually liable for violating the overtime provision of the FLSA unless he is an “employer” within the meaning of the Act.
Perez argues that Collins, Sr. exercised enough control over Kennel Club and CCC Racing for him to be treated as an employer under the FLSA. We have recognized that “[t]he 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.” Patel v. Wargo, 803 F.2d 632, 637–38 (11th Cir. 1986) (internal quotation marks and citation omitted). However, we have also made clear that in order to qualify as an employer for this purpose, an officer “must either be involved in the day-to-day operation or have some direct responsibility for the supervision of the employee.” Id. at 638.
Our decision in Patel is instructive. There we held that the defendant, who was both the president and vice-president of a corporation, as well as a director and a principal stockholder, was not an employer for FLSA purposes. We reached that conclusion because he did not “have operational control of significant aspects of [the company‘s] day-to-day functions, including compensation of employees or other matters in relation to an employee.” Id. (internal quotation marks omitted);
see also Wirtz v. Pure Ice Co., 322 F.2d 259, 263 (8th Cir. 1963) (finding that a majority stockholder who visited the company only two or three times a year and “had nothing to do with the hiring of the employees or fixing their wages or hours” was not an employer under the FLSA). While acknowledging that the defendant in Patel could have, if he had chosen, played a greater role in the operations of the company, we focused on the role that he did play in concluding that he “lacked the operational control necessary for the imposition of liability as an ‘employer’ under the FLSA.” Patel, 803 F.2d at 638; see also Wirtz, 322 F.2d at 262 (“There is little question from the record but what Thompson as the majority stockholder and dominant personality in Pure Ice Company, Inc., could have taken over and supervised the relationship between the corporation and its employees had he decided to do so. A careful reading of the record, however, indicates that he did not do so.“).
Like the president in Patel, Collins, Sr. did not take such an active role in the day-to-day operations of Kennel Club and CCC Racing. The undisputed evidence established that his sons—not Collins, Sr. himself—had exercised considerable control at the Longwood facility since 1998, the year he had a heart attack. Jack Collins, Jr. testified that he was the one who had the ultimate say concerning hiring and firing decisions at Kennel Club, and that his father had not even visited the
Perez‘s attorney suggested at oral argument that we should find the Sixth Circuit‘s decision in Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991), helpful on this issue, but we don‘t find it helpful to his side. In Dole, the Sixth Circuit affirmed the district court‘s order granting summary judgment against the president and co-owner of a corporation on the FLSA employer issue. Id. at 966. The president in the Dole case, howevеr, not only had a “significant ownership interest in the corporation,” but also had and exercised “control over
The Sixth Circuit noted in Dole that, “To be classified as an employer, it is not required that a party have exclusive control of a corpоration‘s day-to-day functions. The party need only have operational control of significant aspects of the corporation‘s day to day functions.” Dole, 942 F.2d at 966 (internal quotation marks omitted). For that reason the fact that a payroll bookkeeper handled the details of calculating hours, overtime, and commissions did not prevent the president, who actually decided how much the employee compensation would be, from being an employer. Id.; see also Schultz v. Mack Farland & Sons Roofing Co., 413 F.2d 1296, 1299-1300 (5th Cir. 1969) (finding that the founder, president, and sole investor in two corporations was an employer where he set the management policy for both corporations and exercised authority over the hiring, firing, hours, work assignments, and compensation of supervisory personnel). Nor did it matter in the Dole case that a general manager handled many of the day-to-day problems relating to the operation of the corporation or that branch managers exercised some control over the hours that their employees worked. Dole, 942 F.2d at 966. Because he “was involved in the business operations of the corporation, and he controlled the purse strings of the corporation,” the Sixth Circuit held the president in Dole jointly and severally liable as an employer under the FLSA. Id.
Our case, however, is different. There was insufficient evidence for a jury reasonably to conclude that Collins, Sr. was either involved in the day-to-day operation of the Longwood racetrack facility or was directly responsible for the supervision of employees during the relevant years. Perez introduced no evidence to contradict the uniform testimony of Collins, Sr., of Tom Bowersox, and of Jack Collins, Jr. that since Collins, Sr. suffered a heart attack in 1998, his sons had run the business and made all the decisions about hiring and firing and compensation. Perez was left to rely on Collins, Sr.‘s official position as managing agent under
The district court correctly granted Collins, Sr.‘s motion for judgment as a matter of law on the issue involving his individual liability.
IV.
Perez also contends that the district court erred in finding that the defendants actеd in good faith, which was the basis for the court‘s decision not to award liquidated damages against them. This contention focuses on the inconsistency between that finding by the judge and the jury‘s earlier finding that the defendants’ violations were willful, which it implicitly made in the course of deciding on the length of the statute of limitations period. Perez argues that the court‘s finding of good faith cannot be reconciled with the jury‘s finding of willfulness and must yield to it. If so, it was error for the district court not to assess liquidated damages.
The seed bed that gave rise to this conflict between findings lies in having the judge and jury answer what is essentially the same question for two different purposes. The willfulness or good faith question is answered first by the jury to determine the period of limitations and then, if there is a verdict for the employee, again by the judge to determine whether to award liquidated damages.
The other side of the potential conflict is that the Act assigns to the judge the role of finding whether the employer acted in subjective and objective good faith for liquidated damages purposes. See
We discussed this conflict of findings issue in our recent decision in another FLSA overtime wages case. See Rodriguez v. Farm Stores Grocery, Inc., 517 F.3d 1259 (11th Cir. 2008). There we had the flip side of the present circumstances. The
We found it unnecessary to decide in Rodriguez whether the judge could make a finding on good faith inconsistent with the jury‘s finding on willfulness, because the different burdens of proof meant that the findings in that case were not inconsistent. Id. Viewed in light of which party had the burden, the jury‘s finding was that the employee had not proven by a preponderance of the evidence that there was willfulness, while the judge‘s finding was that the employer had not proven by a preponderance of the evidence that there was a lack of good faith. Id. As we explained, the two findings were not inconsistent because a reasonable factfinder could have found the еvidence to be in equipoise on the willfulness/good faith question, with the result that the employee had not proven willfulness at the same time the employer had not proven good faith. Id. In other words, it is logically possible for the losing side to have varied with, because it depended on, the burden of proof.
That theory of reconciliation will not work in the present case. The jury‘s verdict on the statute of limitations issue amounts to a finding that the employee
We have not decided this issue in the FLSA context, but we have resolved closely analogous issues in the Equal Pay Act and Age Discrimination in Employment Act contexts. See Glenn v. Gen. Motors Corp., 841 F.2d 1567 (11th Cir. 1988); Castle v. Sangamo Weston, Inc., 837 F.2d 1550 (11th Cir. 1988). The Equal Pay Act amended
The second reason we gave for affirming the award of liquidated damages in Glenn was that a finding the defendant had acted willfully for statute of limitations purposes precludes a finding that it acted in good faith for liquidated damages purposes. Id. at 1573 n.14 (explaining “that our conclusion in the context of the discussion on the statute of limitations issue that GM‘s actions met [the] . . . definition of ‘willful’ precludes a finding of good faith on the part of GM“); see also EEOC v. City of Detroit Health Dep‘t, Herman Kiefer Complex, 920 F.2d 355, 358 (6th Cir. 1990) (“Since the jury determined that the City‘s violation of the Equal Pay Act was willful, and since the district court was, in determining whether the violation was in good faith and with reasonable grounds, presented with the same issue, the district court was bound by the jury finding.“). The preclusion holding in Glenn was an alternative one, but alternative holdings are binding precedent. Massachusetts v. United States, 333 U.S. 611, 623, 68 S. Ct. 747, 754 (1948); Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 340, 48 S. Ct. 194, 196 (1928); Johnson v. DeSoto County Bd. of Comm‘rs, 72 F.3d 1556, 1562 (11th Cir. 1996); McLellan v. Miss. Power & Light Co., 545 F.2d 919, 925 n.21 (5th Cir. 1977).
Of course, we did not have the jury versus judge aspect of the question in the Glenn case. But we did have it in the Castle ADEA case. That statute provides for liquidated damages only where the defendant‘s violation was “willful.”
That willfulness has the same meaning under both the FLSA and the ADEA is important for our purposes, because we pointed out in Castle that when a jury finds that a defendant‘s violation is willful for statute of limitations purposes, “it has already factored the possibility of good faith into its examination.” Castle, 837 F.2d at 1561. We held that a jury‘s finding of willfulness deprives the district court of any discretion to reduce liquidated damages based on its own finding of
citation omitted) (ellipsis in original)); Powell v. Rockwell Int‘l Corp., 788 F.2d 279, 287 (5th Cir. 1986) (affirming the district court‘s award of liquidated damages in an ADEA case because under “the Thurston rule . . . ‘good faith’ can no longer coexist with ‘willfulness‘” and concluding that “a further examination of good faith becomes irrelevant because it has already been factored into the Thurston ‘willfulness’ definition” by the jury).
We conclude, based on the reasoning and holdings of our Glenn and Castle decisions, that in an FLSA case a jury‘s finding in deciding the limitations period question that the employer acted willfully precludes the court from finding that the employer acted in good faith when it decides the liquidated damages question. Our conclusion puts us on what appears to be the majority side of the circuit split on this issue. Compare Singer v. City of Waco, Tex., 324 F.3d 813, 823 (5th Cir. 2003) (affirming an award of liquidated damages where the jury had found that the defendant‘s violation of the FLSA was willful, because the defendant could nоt show it had acted in good faith), and Chao v. A-One Med. Servs., Inc., 346 F.3d 908, 920 (9th Cir. 2003) (affirming an award of liquidated damages under the FLSA where there had been a finding of willfulness, and noting that “a finding of good faith is plainly inconsistent with a finding of willfulness“), and Herman v. Palo Group Foster Home, Inc., 183 F.3d 468, 474 (6th Cir. 1999) (affirming a
We reject the defendants’ argument that the district court was empowered to decide the good faith question and decline to award liquidated damages because of the evidence that they had consulted an attorney and their payroll company about whether they qualified for the recreational and amusements exemption and had been advised that they did. Given our holding that a jury‘s finding of willfulness forecloses a judge from finding good faith, evidence that an employer acted without willfulness and in good faith makes a difference at this stage only if that evidence compels judgment as a matter of law for the employer. In deciding that question we apply the usual standard of whether “no jury reasonably could have reached a verdict for the plaintiff” on the claim or defense. Collado v. United Parcel Serv., Co., 419 F.3d 1143, 1149 (11th Cir. 2005). We apply that standard
The defendants presented testimony on this issue from three witnesses. Gray Laney, a CPA who worked for both Kennel Club and CCC Racing, testified that he had always thought that the companies were exempt from paying overtime. He said that he had discussed the matter with a sales representative of Paychecks Business Solutions, their payroll company, who reviewed it with an unidentified person in his company. They were of the opinion that Kennel Club and CCC Racing were exempt, but that was based on the assumption that the two were separate entities, which in turn was apparently based on the further assumption that the two companies did not intermingle any of their money. As we have already noted, however, the evidence at trial, viewed in the light most favorable to Perez, showed that the two companies shared a single credit card, that CCC Racing controlled Kennel Club‘s operating cash, and that money from Kennel Club‘s operating accounts was recorded as a payable on CCC Racing‘s books. See supra at ___.
Charles Neilson, another CPA and business consultant for Kennel Club and CCC Racing, testified that he had gotten a verbal opinion from Bill Kalish, an attorney who did work for the Collins family, about whether the companies
The final witness to testify for Kennel Club and CCC Racing on this issue was Jack Collins, Jr. He testified that after he set up CCC Racing he personally called Bill Kalish for advice about whether the two companies were exempt, and Kalish advised him that they were exempt. He also said that he had received the same advice from his payroll company. His testimony, however, does not indicate what, if anything, he disclosed to attorney Kalish or the payroll company about the financial inter-relationships and dealings between the companies.
All three of these witnesses were cross-examined, and the jury had an opportunity to observe their demeanor and come to a conclusion about their credibility. The jury could have been persuaded not to believe the testimony of these witnesses for several reasons. One is that the attorney Bill Kalish, on whose opinion Kennel Club and CCC Racing supposedly relied, did not testify. At the time of this trial, which was held in Orlando, Kаlish‘s office was eighty or ninety
The same is true of the failure to call the person at the payroll company who supposedly advised Kennel Club and CCC Racing that they were exempt. That person was not called and, again, no explanation for the failure to do so appears in the record. The jury could have found it telling that neither of the two people who allegedly arrived at the opinion on which Kennel Club and CCC Racing relied was called to testify that he actually did render that opinion or the basis for it.
The jury also justifiably could have been skeptical about the opinion because it was not reduced to writing by either attorney Kalish or the unidentified person at the payroll company, or otherwise reflected in any document. But even if the jury credited all of the testimony of the three witnesses who testified about the opinions, it still reasonably could have concluded that Kennel Club and CCC Racing acted willfully, because they and those acting on their behalf failed to supply Kalish and the payroll company with all of the information needed to arrive at an informed opinion on the subject.
For these reasons, we conclude that the jury reasonably could have concluded that Kennel Club and CCC Racing‘s violations of the FLSA were
V.
In conclusion, we AFFIRM the judgment of the district court insofar as it denies Kennel Club and CCC Racing‘s motions for judgment as a matter of law and grants Collins, Sr.‘s renewed motion for judgment as a matter of law. We REVERSE the judgment of the district court denying liquidated damages and REMAND for entry of a judgment that includes liquidated damages.