Dean v. Pacific Bellwether, LLCDean v. Pacific Bellwether, LLC
OPINION AND ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
The question of how old law applies to the Internet has often challenged courts. See Edward Lee, Rules and Standards for Cyberspace, 77 Notre Dame L.Rev. 1275, 1278, 1283-84 (2002). Undertaking the challenge, this Court addresses how use of the Internet affects coverage under the Fair Labor Standards Act (“FLSA”). It concludes that use of the Internet to download freely available recipes, without more, does not provide a basis for coverage.
The Court also addresses another issue in flux: Does the FLSA anti-retaliation provision require showing that the employee or employer was engaged in commerce or in the production of goods for commerce? The Court holds it does not.
For these reasons and others, the Court DENIES Defendant Pacific Bellwether’s motion for summary judgment (ECF No. 7 (hereinafter “Motion”)).
I. BACKGROUND
Plaintiff Corazón Dean is a citizen of the Philippines and a resident of the Commonwealth of the Northern Mariana Islands (“Commonwealth”). (ECF No. 4 at ¶ 2 (hereinafter “Complaint”).) She worked at Defendant Pacific Bellwether’s restaurant, Shenanigan’s, as a cook from 2010 to 2013. (See id. at ¶ 4; ECF No. 11-3 at 1 (hereinafter “Dean Declaration”).)
What Dean’s duties included, besides cooking meals (ECF No. 7-1 at 5), is disputed. She contends that she was in charge of recipe development and that this duty often required using the Internet to download recipes from websites like food-network.com. (See Dean Declaration at 1-3; ECF No. 11-5; see also ECF Nos. 11-7, 11-8.) Pacific Bellwether provides evidence to the contrary: Dean never participated in recipe development. (See ECF No. 7-1 at 4-5.)
Dean alleges that Pacific Bellwether wrongfully paid her below the minimum wage and failed to pay her overtime, as required by FLSA. (See Complaint at ¶¶ 12, 1619.) Dean also alleges that she gave four weeks’ notice of her resignation in March 2013, as required by her employment contract, and demanded her unpaid overtime. (Id. at ¶ 13.) In response, Pacific Bellwether terminated Dean’s employment almost immediately. (See id. at ¶¶ 13-14, 20-21.) Dean alleges that this was a form of retaliation in violation of FLSA. (See id. at ¶¶ 20-21.)
Dean filed this action in August 2013. (ECF No. 1.) Within a month, Pacific Bellwether filed a motion to dismiss (ECF No. 3), and Dean responded by filing an amended complaint (Complaint). About a
II.JURISDICTION
This Court has jurisdiction pursuant to 28 U.S.C. § 1331 (federal question) and § 1367 (supplemental).
III.STANDARD
On a Rule 56 motion for summary judgment, “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In considering the motion, “[t]he court must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial.” Crane v. Conoco, Inc.,
The moving party bears the initial burden of identifying “particular parts of materials in the record” that “demonstrate the absence of a genuine issue of material fact.” Fed.R.Civ.P. 56(c)(1); Celotex Corp. v. Catrett,
IV.DISCUSSION
The Court analyzes two questions: Can Dean bring FLSA overtime and minimum wage claims against Pacific Bellwether, and can she bring a FLSA retaliation claim?
A. OVERTIME & Minimum Wage Claims
To bring a FLSA overtime or minimum wage claim, FLSA must cover either the employee’s activities or the employer’s activities. That is, there must be either individual coverage or enterprise coverage. See Chao v. A-One Med. Serve., Inc.,
Currently, the parties dispute both bases of coverage. With individual coverage, they disagree on whether it is satisfied. And with enterprise coverage, they disagree on whether Dean can undergo discovery on this issue. Each issue is addressed in turn.
1. Individual Coverage
Individual coverage for FLSA overtime and minimum wage claims require that the employee is “engaged in commerce or in the production of goods for commerce....” See 29 U.S.C. §§ 206(a), 207(a).- For brevity, the Court refers to this as the commerce requirement.
To satisfy this requirement, the “employee ... must be directly participating in the actual movement of persons or things in interstate commerce by (i) working for an instrumentality of interstate commerce, e.g., transportation or communication industry employees, or (ii) regularly using the instrumentalities of interstate commerce in his work, e.g., regular and recurrent use of interstate telephone,
This doctrine has been applied within the context of foodservice. A cook — possessing the duties of cooking and caretaking' — does not meet the commerce requirement. McLeod,
Dean is a restaurant cook, and her employer’s customers at least sometimes include foreign travelers. (See ECF No. 1-3 at 1, 4 (hereinafter “Dean Declaration”).) If that were all to this case, we could stop here, as she would not have met the commerce requirement.
But there’s more. Dean also develops recipes by downloading them off foodnet-work.com and similar websites.
The Commerce requirement can be divided into two substantive components. The first is quantitative. The employee must regularly and recurrently use the Internet or other interstate communication device. See Thorne,
So the question here is two-fold: Is Dean’s use of the Internet regular and recurrent, and are Dean’s activities on the Internet — searching and downloading recipes off foodnetwork.com and similar sites — qualitatively sufficient to constitute commerce? The first question is easily disposed of on summary judgment. Regular and recurrent use does not actually require much use; five independent uses annually may suffice. See Boekemeier v. Fourth Universalist Soc’y in the City of New York,
The qualitative question • is far harder. As already said, the activity must “constitute interstate commerce, not merely affect[ ] interstate commerce.” Thorne,
There is no movement of commerce here. Dean searched for recipes on the Internet and downloaded them. She did
To be sure, though, another result is possible through narrow readings of the regulations, divorced from both the regulation itself and its drafting context. These regulations state that the commerce requirement is satisfied where a worker regularly “use[s] the mails, telephone or telegraph for interstate communication,” 29 C.F.R. § 779.103, or uses these communication “instrumentalities in obtaining or communicating information or in sending or receiving written reports or messages,” 29 C.F.R. § 776.10. Narrowly construed, the Internet is a communication instrumentality, and Dean regularly used it in obtaining information (recipes).
This narrow construction is not appropriate. Both regulations imply that this use must somehow be related to the movement of commerce. The first regulation begins by defining the commerce requirement as “work involving or related to the movement of persons or things” and goes on to say that this is “[t]ypically” satisfied where interstate communication occurs. See 29 C.F.R. § 779.103. The other regulation is simply titled “Employees participating in the actual movement of commerce.” Id. § 776.10.
Buttressing this conclusion is the regulation’s drafting context. Both were drafted in an era before the Internet. See 29 C.F.R. § 776.10 (last amended in 1957); 29 C.F.R. § 779.103 (not meaningfully amended since 1970); see also The Fair Labor Standards Act as Applied to Retailers of Goods or Services, 35 Fed.Reg. 5863 (Apr. 9, 1970) (codifying § 779.103 exactly in its current form); Updating Regulations Issued under the Federal Labor Standards Act, 76 Fed.Reg. 18858 (Apr. 5, 2011) (amending all regulations under part 779, including § 779.103, to change the authority citation but not changing § 779.103’s substantive text). Thus, most uses of interstate communication devices necessarily contemplated the movement or prospective movement of goods. Businesses ordered supplies by phone, and manufacturers shipped those supplies; prospective tenants called an apartment complex to inquire about vacancies, and those tenants actually moved there. Interstate communication begot physical movement. No such movement follows from downloading recipes off the Internet.
Of course, there are numerous uses of the Internet that could constitute commerce-emailing a prospective landlord, ordering cookware, or maybe even corresponding with a culinary institute for their tutelage, cf. Thorne,
Dean advances three contrary arguments, attempting to ascribe greater breadth to the commerce requirement. None are persuasive. First, she argues that “commercial relations between citizens and aliens are, by definition, foreign commerce.... ” (Opposition at 5.) She goes on to cite a Fourth Circuit case and a regulation.
These authorities do not provide the expansive support Dean claims. The Fourth Circuit did define commerce to include trade between foreign citizens. See Int’l Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Estrangers a Monaco, 329
Second, Dean cites a regulation interpreting the statutory definition of commerce. By statute, “commerce” is defined as “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” 29 U.S.C. § 203(b) (emphasis added). The regulation then concludes that, because the definition itself includes “commerce,” its scope must be “at least as broad as it would be under concepts of ‘commerce’ established without reference to this definition.” 29 C.F.R. § 776.8(b). The thrust of Dean’s opposition appears to be that this regulation means that commerce must be defined the same as it is under the Commerce Clause. {See Opposition at 5-6 (arguing that this regulation provides no less breadth than the Fourth Circuit’s definition).)
But the regulation does not compel this reading. Rather, it is urging that “no special or limited meaning is intended ...” See 29 C.F.R. § -776.8(b). Another regulation confirms that “commerce” is to be afforded its “practical meaning.” See. id. § 776.9. It therefore expels Dean’s reading that the commerce requirement is coterminous with Congress’ Commerce Clause power — a technical meaning — and requires that courts ask whether the activities constitute commerce under an everyday understanding. Downloading freely available recipes does not comport with this Court’s understanding of commerce.
Still further, -note that the regulation Dean cites states that commerce is “at least as broad as it would be under concepts of ‘commerce’ established without reference to this definition.” See 29 C.F.R. § 776.8(b) (emphasis added). If the regulation intended commerce to mean the maximum zenith permissible under the Commerce Clause, then using “at least as broad” would be nonsensical. Commerce under FLSA can be defined no broader than it is under the Commerce Clause. So for “at least as broad” to have any meaning, it cannot be referring to concepts of commerce under the Commerce Clause.
Dean’s second and third arguments divide the commerce requirement into its two components — engaged in commerce and production of goods for commerce — ■ and contend both are satisfied. First, consider the engaged in commerce argument. She, as one of many foreign citizens possessing a contract worker visa from the Commonwealth, “is herself the very embodiment of foreign commerce” — and therefore is engaged in commerce — because many like her have moved to the Commonwealth for employment. (Opposition at 9 (emphasis removed).) But this overlooks the fact that individual coverage examines only that employee’s activities. So it is irrelevant if, say, an employer only hires foreign nationals from abroad or if many employees in the region are foreign nationals. What’s more, it appears FLSA coverage.- applies equally to all persons, whether citizen or undocumented alien. See Contreras v. Corinthian Vigor Ins. Brokerage, Inc.,
Next, there is Dean’s argument that she engaged in the production of goods for commerce. (Opposition at 10.) Her “meals ... sustain international travelers,” further aspects of commerce, and therefore are “produced ‘for’ commerce....” (Id. at 11.) This does not qualify as engaging in the production of goods for commerce. Such engagement occurs only where an employee’s “work is closely related and directly essential to the production ...” See Thorne,
The regulations further support this conclusion. They indicate that orders for goods that are filled in-state with the expectation or hope that they are used instate is not the production of goods for commerce. See 29 C.F.R. § 776.21(c)(1), (d). Here, Dean’s meals apparently were ordered in Saipan, prepared in Saipan, and consumed in Saipan. There is no evidence indicating that her meals were, say, marketed as food for flights, which could create a legitimate expectation of foreign use.
Arguing to the contrary, Dean claims that some customers must have at least digested their meals outside Saipan. (Opposition at 10.) This digested food, she contends, constitutes the movement of “goods ... in an altered form” in interstate commerce. (Id.); see also 29 C.F.R. § 776.21(a).
For this argument to have merit, digested food must be a good. It is not. Goods are “wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof, but does not include goods after their delivery into the actual physical possession of the ultimate consumer .... ” 29 U.S.C. § 203(i). Digested food eludes the affirmative definition and fits the negative definition: It is a product in possession of the ultimate consumer.
2. Enterprise Coverage
An alternative basis for FLSA’s overtime and minimum wage provisions is enterprise coverage. See 29 U.S.C. §§ 206(a), 207(a). Among other things, this requires proving that the business had annual gross sales of at least $500,000. See 29 U.S.C. § 20S(r)(l), (s)(l)(A)(ii). Dean alleges the existence of enterprise coverage. (See First Amended Complaint at ¶ 10; Opposition at 12.)
Contesting this allegation, Pacific Bellwether has submitted its tax returns— which show annual sales of less than $500,000 (ECF No. 7-1 at 1-3) — and argues that this conclusively establishes the non-existence of enterprise coverage. (Reply at 6-7; see also Motion at 5-6.) Dean disagrees. Businesses may underreport their tax obligations, and she wishes to see if that is the case here. (See ECF No. 16 at 3.) But because the summary judgment motion was brought so early in the litigation, she has not yet had this opportunity. Accordingly, Dean now cross-moves for the Court to provide her sufficient time to conduct discovery. (See Opposition at 12-13.)
This rule has been applied in contexts similar to here. Where the plaintiff lacked sufficient opportunity to conduct discovery on the defendant-business’ gross sales— even when the defendant provides its tax returns- — courts often grant the plaintiff more time to conduct discovery. See Pearson v. Su Ok Sin, No. 07-61913-CIV,
Here, the Court grants Dean additional time for discovery for two reasons. First, the summary judgment motion comes early in the litigation. Dean filed the original complaint in August 2013 (ECF No. 1), and Pacific Bellwether filed the summary judgment motion two months later (ECF No. 7), before even a case management conference. Thus, Dean lacked a realistic opportunity for discovery. Second, Dean has filed evidence suggesting that this discovery may be fruitful. Her affidavit declares that Pacific Bellwether’s gross sales may exceed $500,000. (Dean Declaration at 3-4 (claiming knowledge of gross sales through discussions with other employees and estimating annual gross sales of “around $474,500 to $584,000”)).'
Pacific Bellwether’s contrary argument largely rests on two cases. (See Reply at 6); see also Lopez v. Top Chef Inv., Inc., No. 07-21598-CIV,
That case meaningfully differs from here. The Court is not ruling on whether Dean’s affidavit alone gets her to trial. It is ruling on whether she gets to discovery. Given the Ninth Circuit’s standard on Rule 56(d) motions, she should.
The second case, Russell, directly addresses the issue of dismissals before discovery. That court held that the defendant-restaurant’s tax returns and affidavits submitted with the motion to dismiss conclusively established that its annual gross sales did not exceed $500,000. See Russell,
The Court declines to follow Russell. This Court cannot definitively know discovery would be fruitless. Cf. Sapperstein v. Hager,
Finally, following Russell may result in dismissing meritorious FLSA claims. Imagine an unscrupulous restaurant looking to save money. It underpays employees — in violation of FLSA — and underre-ports its tax obligations (assume it reports annual gross sales of $400,000 rather than the actual amount of $550,000). Now suppose a dishwasher sued the restaurant under FLSA. Russell permits the restaurant to immediately move for summary judgment, file its fraudulent tax returns and owners’ declarations, and prevail. If another underpaid employee then sues under FLSA, the same result occurs and the restaurant again escapes liability. Repeat for every aggrieved employee. In effect, Russell grants unscrupulous employers immunity from FLSA.
In sum, Dean deserves discovery on the issue of enterprise coverage. Accordingly, the Court denies, without prejudice, the summary judgment motion on the FLSA overtime and minimum wage claims.
B. Retaliation Claim
In addition to her claims for minimum wage and overtime violations, Dean also brings a FLSA claim for unlawful retaliation. {See Complaint at 6); see also 29 U.S.C. § 215(a)(3). Under the retaliation provision, it is “unlawful for any person to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter” 28 U.S.C. § 215(a)(3); Lambert v. Ackerley,
Note that, unlike the minimum wage and overtime provisions, the retaliation provi
FLSA retaliation claims do not have a commerce requirement. Its text applies to “persons” without any mention of commerce. 29 U.S.C. § 215(a). If Congress intended the requirement to apply, it could have explicitly said so, just as it did with overtime and minimum wage claims. Further evidence for this conclusion comes from the statutory text itself. The retaliation provision applies not only to employee complaints arising “under” FLSA, but also to those complaints “related to ” FLSA. See 29 U.S.C. § 215(a)(3) (emphasis added).
For similar reasons, three circuits follow the rule that unlawful retaliation claims do not have a commerce requirement. See Sapperstein,
To be sure, one district court found the commerce requirement applies to retaliation claims. See Lamont v. Frank Soup Bowl, Inc., No. 99 Civ. 12482(JSM),
This Court declines to interpret a clear statute in a manner contrary to that clear meaning based on divinations of congressional intent. Even if we were to engage in such divinations, the statute’s plain meaning — the omission of the commerce requirement — itself indicates a legislative intent to not apply the requirement to retaliation claims. Cf. Caminetti v. United States,
y. CONCLUSION
Based on the foregoing reasons, Defendant’s motion for summary judgment is denied.
Notes
. Pacific Bellwether argues that Dean was not authorized to develop recipes or use the Internet, so she cannot use these activities to satisfy the commerce requirement. (See Motion at 1011.) But Dean provides evidence that she was authorized, and the nonmovant’s evidence controls on a summary judgment motion.
If Dean’s conduct truly is unauthorized, however, the commerce requirement may not be satisfied. Various sources suggest that the commerce nexus must be satisfied through official duties, not unauthorized conduct. See 29 C.F.R. § 776.10(b) (commerce nexus satisfied where employee uses communication channels “as a regular and recurrent part of his duties ” (emphasis added)); Kitchings v. Florida United Methodist Children's Home, Inc.,
. See also 29 C.F.R. § 776.10(b) (“This does not mean that any use by an employee of the mails and other channels of communication is sufficient to establish coverage. But if the employee, as a regular and recurrent part of his duties, uses such instrumentalities in obtaining or communicating information ... he comes within the scope of the Act.... ”); Dent v. Giaimo,
. See Boekemeier,