Rodriguez v. Diego’s Restaurant, Inc.

The parties reached a settlement and on August 7, 2008, the Court conducted a fairness hearing pursuant to Lynn Food Stores v. United States, 679 F.2d 1350, 1352-53 (11th Cir.1982). On the same day, the Court issued an Order dismissing the case with prejudice and retaining jurisdiction to enforce the terms of the settlement until October 15, 2008. The defendants did not make the scheduled payment and on September 19, 2008, the plaintiff filed Plaintiff’s Motion for Final Default Judgment Against Defendants. Defendants moved to dismiss the case for lack of subject matter jurisdiction, despite the fact that they had stipulated on multiple occasions that FLSA jurisdiction had been met.

The Court acknowledged that the Eleventh Circuit has yet to address the issue head on of whether FLSA coverage is jurisdictional, stating, “[t]he issue of whether individual or enterprise coverage is jurisdictional or only a required element of the plaintiff’s claim has not been resolved in this Circuit. The Eleventh Circuit in Turcios v. Delicias Hispanas Corp., 275 Fed. Appx. 879, *2 (11th Cir. Apr. 29, 2008) found that “the question of enterprise coverage was intertwined with the merits of an FLSA claim.” In Turcios, the district court dismissed the plaintiff’s complaint for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). The plaintiff appealed the ruling. On appeal, the Eleventh Circuit reversed the district court holding that the lower court should have applied the Rule 56 summary judgment standard. Id. at *1. The Eleventh Circuit observed that the same operative facts determine whether the plaintiff can recover under the FLSA and the scope of the FLSA’s coverage. “In short, the sections of the FLSA that provide the substantive relief, § § 206 and 207, are interwined with and dependent on the section of the FLSA that defines the scope of the FLSA, § 203.” Id. at 2. The Eleventh Circuit acknowledged that the First Circuit in Chao v. Hotel Oasis, Inc., 493 F.3d 26, 33 (1st Cir.2007) concluded that enterprise coverage was not jurisdictional under the FLSA in light of the Supreme Court’s ruling in Arbaugh v. Y & H Corp., 546 U.S. 500 (2006). Id. at * 2 n. 5. Nonetheless, the Eleventh Circuit declined to decide the issue in Turcios because the parties did not dispute the jurisdictional nature of enterprise coverage. Id.”

After discussing the case law related to the issue from around the country, the Court concluded, “[i]n sum, the Court finds that the individual or enterprise coverage prongs are elements of the plaintiff’s claim and are not jurisdictional. Because these are elements of the plaintiff’s claim, the defendant was required to raise any attacks on these elements in a timely manner. “[T]he objection that a complaint ‘fail[s] to state a claim upon which relief can be granted,’ Rule 12(b)(6), may not be asserted post trial.” Here, the instant case settled on the eve of the calendar call. The Court held a fairness hearing, approved the settlement and dismissed the case on August 7, 2008. Fifty-five days after the case was dismissed, the defendants filed their motion to dismiss. Under these facts, any motion for failure to state a claim under Rule 12(b)(6) is untimely. Additionally, the defendants waived the right to assert any affirmative defenses to individual or enterprise coverage by stipulating that these elements were met. See Chao v. Hotel Oasis, Inc., 493 F.3d 26, 33 (1st Cir.2007) (finding no abuse of discretion in district court’s decision to hold the defendants to their stipulation that the $500,000 gross annual sales element had been met).”

In so doing, the Court joined the majority of Courts who have decided the issue.  While the question is still one that is open in some courts, more and more courts seem to be adopting the majority view that FLSA coverage is non-jurisdictional in nature.