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S.D.Fla.: Assistants At Medical Office Properly Allege Individual Coverage Under The FLSA, Based On Evidence Of Regular Communications With Out-Of-State Insurers, Patients And Vendors

Lopez v. Pereyra

Plaintiffs brought this action to recover unpaid overtime wages under the Fair Labor Standards Act (“FLSA”). Defendant was an obstetrics and gynecological doctor’s office located in Hollywood, Florida.  Plaintiff Carmen Lopez was a medical assistant in the Office from October 31, 2006 through January 23, 2009.  Plaintiff Dawn Serra was an administrative assistant in the Office from May 2, 2006 through May 1, 2009.  Plaintiffs alleged that the Office met the requirements of an enterprise under the FLSA and that each Plaintiff also qualified for individual coverage because they engaged in commerce.  Defendant moved for summary judgment arguing that the Office was not an enterprise as defined by the FLSA and Plaintiffs were not individually engaged in interstate commerce so as to trigger individual coverage.  The Court agreed that Defendant was not an enterprise engaged in commerce, based on its tax returns showing revenue of less than $500,000.00 per year.  However, the Court denied Defendant’s Motion as to individual coverage, holding that Plaintiffs’ allegations of regular communications with out-of-state insurers, out-of-state patients and out-of-state vendors, if true, satisfied the “engaged in commerce” test for individual coverage.

Discussing the applicability of individual coverage, the Court stated:

“For individual coverage to apply under FLSA, an employee must present evidence that he or she was (i) engaged in commerce or (ii) engaged in the production of goods for commerce. See Thome v. All Restoration Services, Inc., 448 F.3d 1264, 1265-1266 (11th Cir.2006).FN4 The Eleventh Circuit found that to “engage in commerce,” a plaintiff must “directly participat[e] in the actual movement of persons or things in interstate commerce.” Thome, 448 F.3d at 1266. When determining individual coverage, the character of the employee’s activities is determinative, not the nature of the employer’s business. Overstreet v. N. Shore Corp., 318 U.S. 494, 498 (1943).

FN4. The Department of Labor takes the position that the “[s]hipment of goods from another State direct to a customer located in the same State as the distributor who ordered the shipment, constitutes interstate commerce by virtue of which [ ] the distributor’s employees who procured the shipment … are covered by the FLSA as being engaged in interstate commerce.” Field Operations Handbook (FOH), Wage and Hour Division, U.S. Dep’t of Labor, § 11 i15 (1994). Although not entitled to Chevron deference, the Department of Labor’s Field Operations Handbook has been held to be persuasive and entitled to some weight in judicial interpretations of the FLSA. See Martin v. Occupational Safety and Health Review Comm’n, 499 U.S. 144, 157, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991); Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1275 (11th Cir.2008).

A key factor in determining if a plaintiff engaged in commerce for purposes of individual coverage under the FLSA is whether such activities were a “regular and recurrent” part of the plaintiff’s employment duties. 29 C.F.R. 776.10(b). The “employee’s interstate activity must be regular and recurrent and not simply isolated or sporadic for jurisdiction to exist.” Dent v. Giaimo, 606 F.Supp.2d 1357, 1360 (S.D.Fla.2009) (citing Scott v. K.W. Max Investments, Inc., 256 Fed. App’x 244, 247 (11th Cir.2007)); see also Curry v. High Springs Family Practice and Diagnosis Center, Inc., 2009 WL 3163221 (N.D.Fla. Sept.30, 2009) (granting summary judgment on FLSA claim by doctor’s assistant who performed primarily administrative functions and had only sporadic contact with out-of-state insurers).

The Court finds that there is a factual dispute regarding whether individual coverage applies to each Plaintiff. Defendants rely heavily on the Dent case where the court found no individual coverage for a medical assistant working in a local doctor’s office. Judge Ryskamp’s decision in Dent presents a similar, though distinguishable, factual scenario. Dent can be distinguished on two grounds, which ultimately require a different result.

First, Judge Ryskamp found that “although some patients may have been residents of other states, defendant was not engaged in interstate commerce if his contact with those patients was primarily local.” Dent, 606 F.Supp.2d at 1361. In Dent, “there [was] no evidence to suggest that defendant solicited business from patients while they were out of state or that any contract with out of state patients was regular or recurrent.” Id. Conversely, the Declaration of Carmen Lopez states that “[o]n a weekly basis I … made telephone calls to patients located in Santo Domingo and other states.”

Second, in Dent, “although the plaintiff averred that her job duties included contacting out of state insurance companies she did not allege how much of her time was spent conducting these activities.” 606 F.Supp.2d at 1361 (emphasis in original). Therefore, the court reasoned that “[i]t could be that [other individuals in the office] conducted the majority of those activities and that plaintiff only occasionally contacted out of state insurance companies.” Id. Here, the Declaration of Dawn Serra states that she “used to telephone [ ] insurance companies outside of Florida to verify patient insurance coverage at least three (3) times each work day.” DE 38-2 ¶ 5. Further, Ms. Serra declares that her job duties “each work day” also included (i) “mailing twelve (12) to twenty five (25) billing and other insurance forms to insurance companies outside of Florida;” id. ¶ 6, and (ii) “opening mail containing checks and other documents from insurance companies outside of Florida.” Id. ¶ 7.

In addition, Defendants rely on Thorne to argue that “[w]ith respect to the supplies and equipment used by the [Office], Plaintiffs do not allege that the [Office] engaged in the sale of goods that came from other states.” DE 42 at 5. “Plaintiffs’ ‘activities were not rendered interstate commerce simply because [the Office], an ultimate consumer, purchased goods which had previously moved in interstate commerce.’ “ Id. (quoting Thome, 448 F.3d at 1267). This argument holds true with respect to medical supplies used by the Office such as syringes, latex gloves and surgical sutures. The same cannot be said with respect to products and medications for which the Office’s patients were the ultimate consumer. In this regard, Ms. Lopez states that she “regularly used the telephone to call businesses to order from outside of Florida birth control medications for patients, birth control devices for patients and bladder control devices for patients.” Id. ¶ 5. Ms. Lopez also attests that she used “the telephone weekly to call patient insurance companies outside of Florida to obtain authorization for medications that the insurance companies did not cover.” Id. ¶ 6.

Finally, Defendants argue that Plaintiffs’ Declarations are vague and rely on words such as “regularly.” Defendants claim that such statements are conclusory and fail to “state the frequency with any particularity.” DE 42 at 4. Defendants claim is not entirely accurate as each Declaration does contain certain specific statements regarding the frequency of employment activities. Moreover, Defendant has not provided the Court with any telephone records, invoices or patient information that would enable this Court to conclude that Plaintiffs did not engage in commerce on a “regular and recurrent” basis. Cf. Curry v. High Springs Family Practice and Diagnosis Center, Inc., 2009 WL 3163221 (N.D.Fla. Sept.30, 2009).

In Curry, the plaintiff relied on an affidavit describing the number of times she communicated with out-of-state insurers. Id. at *1. “In response, Defendants provided detailed billing records for all phone and facsimile lines at the walk-in-clinic from the relevant time period.” Id. Based on this evidence, the Court granted summary judgment in favor of defendants finding that plaintiff’s contact with out-of-state insurers was sporadic at best. Id. at *4. In this case, the parties have relied solely on conflicting declarations and, therefore, the Court can only decide this issue by making credibility determinations. “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions ….” Anderson, 477 U.S. at 255. Therefore, whether each Plaintiff qualifies for individual coverage is factually in dispute and must be decided by the trier of fact. Accordingly, Defendant’s Motion for Summary Judgment will be denied on the issue of individual coverage.”

N.D.Ind.: Employee Of Used Car Business, Who Purchased Cars From Other States At Auto Auctions, Subject To Individual Coverage Of FLSA

Kelley v. Stevens Auto Sales

Plaintiff sued Defendants alleging violations of the Fair Labor Standards Act, (FLSA) 29 U.S.C. § 201, et seq., and several Indiana statutes. This matter is before the Court on cross motions for summary judgment. Of interest, as discussed here, the Defendants argued that neither they, nor Plaintiff, individually was subject to FLSA coverage. The Court denied Defendants’ Motion, finding that Plaintiff could be entitled to individual coverage based on his duties while working for Defendants.

The following facts were relevant to the Court’s inquiry on the coverage issue:

“Defendant Dave Stevens is the president of Defendant Dave Stevens Auto Sales, Inc. (SAS). In 2007, SAS was in the business of selling used cars in Peru, Indiana. Plaintiff worked for SAS for part of that year as its only employee. His duties included traveling to Fort Wayne, Indiana, to buy used cars at auction establishments and reselling them to customers at the SAS sales lot in Peru. According to Defendant Stevens, some of the vehicles SAS purchased at the auctions were titled to owners from states other than Indiana. Stevens was Plaintiff’s boss; he determined how Plaintiff was compensated.”

Denying Defendants’ Motion as to the individual coverage issue the Court stated:

“The FLSA requires employers to pay a minimum wage if the employer is a covered enterprise or the employee is a covered individual within the meaning of the Act. 29 U.S.C. § 206(a). A covered enterprise is one that (1) “has employees engaged in commerce or the production of goods for commerce or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person” and (2) “is an enterprise whose annual gross volume of sales made or business done is not less than $500,000.” 29 U.S.C. § 203(s)(1)(A) (i-ii). If enterprise coverage applies, all of the enterprise’s employees are protected under the FLSA, even if they are not personally involved in interstate commerce. See Boekemeier v. Fourth Universalist Soc’y in the City of New York, 86 F.Supp.2d 280, 284 (S.D.N.Y.2000). The FLSA also protects individual employees who are “engaged in commerce or in the production of goods for commerce,” 29 U.S.C. § 207(a)(1), regardless of whether their employers qualify as covered enterprises. See, e.g., Marshall v. Whitehead, 463 F.Supp. 1329, 1341 (M.D.Fla.1978).

Plaintiff concedes that SAS is not a covered enterprise, but maintains that he qualifies for individual coverage because he was engaged in interstate commerce when he worked for SAS. To determine whether an employee is engaged in interstate commerce in this context, the focus is on what the employee actually does. It is not enough that the employee’s activities affect or indirectly relate to interstate commerce: they must be “actually in or so clearly related to the movement of the commerce as to be a part of it.”   McLeod v. Threlkeld, 319 U.S. 491, 497 (1943). For example, handlers of goods for a wholesaler who moves them interstate are engaged in interstate commerce, while those employees who handle goods after acquisition by a merchant for local distribution are not. Id. At 494, (citin g Walling v. Jacksonville Paper Co., 317 U.S. 564 (1943); Higgins v. Carr Bros. Co., 317 U.S. 572 (1942)). An interruption in the movement of goods that have traveled interstate does not remove them from interstate commerce simply because they do not again cross state lines; they remain in interstate commerce until they reach the customers for whom they are intended. Jacksonville Paper Co., 317 U.S. at 335.

Neither party has directed the Court to cases in any jurisdiction with facts similar to those presented here, nor has the Court’s independent research uncovered any. However, applying the general principals discussed above, the Court must deny Defendants’ motion for summary judgment. The Court concludes that buying vehicles titled to out-of-state owners at auction, for resale to the ultimate consumer, constitutes engaging in interstate commerce, even if the vehicles did not cross a state line again after the purchase. Plaintiff has designated enough evidence that he engaged in interstate commerce as an employee of SAS to create a question of fact for trial. Moreover, the Court must also deny Plaintiff’s motion for summary judgment on the issue of whether he is a covered employee, because the evidence does not establish as a matter of law that at all times relevant to his claim he was engaged in interstate commerce.”

S.D.Fla.: Telephone Calls, Faxes, Mailings And Other Regular Communications With Out Of State Vendors And Customers Does Not Constitute “Engaging In Interstate Commerce”

Dent v. Giaimo

Plaintiff filed this lawsuit under the Fair Labor Standards Act (FLSA). Starting on July 8, 2006, plaintiff worked as a medical assistant for defendant. Her duties included checking patients in and out of their appointments, verifying insurance coverage, answering the phone, filing, faxing and other clerical duties. She alleges that she often worked over forty hours per week. She also alleges that defendant’s annual gross sales volume exceeds $500,000.00. At issue in this case is whether defendant engaged in interstate commerce.

In another bewildering decision, the District Courts of Florida continue to narrow the scope of the FLSA’s coverage, contra to the Department of Labor’s enforcement policies and virtually all other Circuit and District Courts.

Discussing Enterprise Coverage first, the Court stated:

“As an initial matter, plaintiff cites cases that hold that the second prong of the enterprise coverage test is determinative. She argues that since defendant conceded that his business grossed at least $500,000 per year that this Court should simply deny the motion in its entirety and rely exclusively on the second prong of the test. This Court disagrees. Simply because some judges have recognized that business with annual gross sales volume exceeding $500,000 often also engage in interstate commerce, does not mean that all such business are engaged in interstate commerce. The statute requires that a business meet both prongs of the test before jurisdiction rests in the federal courts.

This Court now turns to the first prong of the test and holds that plaintiff failed to show that defendant had two or more employees regularly and recurrently engaged in commerce, or had two or more employees regularly and recurrently handling, selling, or otherwise working on goods or materials that were moved in or produced for commerce by any person. Plaintiff averred that she was engaged in interstate commerce through long distance phone calls and facsimiles as well as processing patient’s credit card payments. She says that while employed, defendant and an office manager, Ms. Erb, were also employed. Plaintiff, however, did not state that defendant or Ms. Erb engaged in the same type of alleged interstate activity. Plaintiff then states that the company periodically hired other full time employees who engaged in the same activity as plaintiff. Plaintiff, however, failed to provide the frequency with which defendant employed others to engage in the same type of office work that plaintiff alleges she preformed. Moreover, plaintiff failed to allege what percentage of that employee’s time was spent performing the alleged interstate activity.”

Next the Court turned to the issue of whether the Plaintiff was subject to the Individual Coverage of the FLSA:

“In support of a possible claim for individual coverage, plaintiff averred that about 70% of defendant’s patients are not Florida residents, that she regularly used the telephone, internet and facsimile machine to contact out of state insurance companies, and that she processed patients’ credit card payments.

In regards to the fact that some of defendant’s patients were not full time Florida residents, this Court finds the ultimate-consumer doctrine instructive. That doctrine states that goods are no longer in the stream of commerce once obtained by the ultimate consumer thereof. 29 U.S.C. § 203(I); Thorne, at 1267. This Court holds that although some patients may have been residents of other states, defendant was not engaged in interstate commerce if his contact with those patients was primarily local. Defendant averred that he only works within Florida. Defendant is licensed in Florida and other states but his license is “inactive” everywhere except Florida. There is no evidence to suggest that defendant solicited business from patients while they were out of state or that any contact with out of state patients was regular or recurrent.

This Court also holds that plaintiff’s use of the telephone or facsimile machines to make long distance phone calls or use of the internet and credit cards is insufficient to establish jurisdiction. To be considered “engaged in interstate commerce” a business must use a credit card specifically to transact business in interstate commerce. Here, defendant has submitted sufficient evidence to show that his practice is a local enterprise “and the items used in the business proliferated this goal of local service.” Polycarpe v. E & S Landscaping Servs, Inc., 572 F.Supp.2d 1318, 1321-22 (S.D.Fla.2008). This also appears to be the case in regards to internet usage. Pierre C. Bien-Aime v. Nanak’s Landscaping, Inc., 2008 WL 3892160 (S.D.Fla. August 12, 2008). “The fact that the Defendant Company provided services of an exclusively local nature is dispositive. Polycarpe at 1322.

In regards to telephone and facsimile usage, although plaintiff averred that her job duties included contacting out of state insurance companies she did not allege how much of her time was spent conducting these activities. It could be that defendant or Ms. Erb conducted the majority of those activities and that plaintiff only occasionally contacted out of state insurance companies.”

The Court held that Plaintiff failed to show that she regularly and recurrently engaged in interstate commerce.

Defense and Plaintiff attorney’s alike, who regularly handle FLSA cases are scratching their heads with this decision, which, on its face, found issues of fact which should have led to a denial of Defendant’s Summary Judgment Motion.  Nonetheless, the Court, pointing out all the factual issues, seemingly applied both an incorrect Summary Judgment standard, and an incorrect reading of the FLSA’s coverage provisions (both Enterprise and Individual) and dismissed what appears to be a perfectly valid case, at least at the Summary Judgment stage.

Of additional concern, a review of the docket reveals that the Court ignored well-settled law and refused to allow the Plaintiff (non-movant) time to conduct limited discovery on the issue of coverage, prior to ruling on Defendant’s Motion, which was filed at the inception of the lawsuit and prior to any discovery.