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Felix Santos, et al v. Cuba Tropical

November 4, 2011


The opinion of the court was delivered by: Andrea M. Simonton United States Magistrate Judge


This matter is before the Court upon Defendants' Motion for Partial Summary Judgment (DE ## 70, 71). Plaintiffs have filed a Response (DE # 72), and Defendants have filed a Reply (DE ## 75, 81). The Honorable Patricia A. Seitz has referred this case to the undersigned Magistrate Judge for all further proceedings (DE # 62). On September 23, 2011, the undersigned held the Pretrial Conference, at which Edilberto Marban and Isaac Mamane appeared on behalf of Plaintiffs, and Carmen Rodriguez appeared on behalf of Defendants. The Court ruled on several pretrial matters at the Pretrial Conference and heard argument on Defendants' Motion (DE # 91).*fn1 Following the Pretrial Conference, the undersigned granted Defendants' Motion by Endorsed Order in advance of a detailed opinion explaining the basis for the ruling, due to the nearness of the trial date, in order to enable the parties to efficiently prepare for trial. The Endorsed Order stated that an opinion detailing the basis for this ruling would be filed separately (DE # 93). This Opinion follows.

I. Plaintiffs' Complaint;

Defendants' Answers and Affirmative Defenses Plaintiffs Felix Santos, Carlos Garcia and Jose A. Valdes Prieto have filed this one-count action seeking damages for unpaid overtime wages, as well as costs and attorneys' fees, from their former employer, corporate Defendant Cuba Tropical, Inc. ("Cuba Tropical"), and individual Defendant Jose L. Rodriguez, pursuant to the Fair Labor Standards Act, 29 U.S.C. §§ 201 to 219 ("FLSA") (DE # 17 at 1-2).*fn2 Plaintiffs contend that they were stock persons for Cuba Tropical, a supermarket supplier. They contend that although they regularly worked over 40 hours per week, they were not paid overtime. As to Defendant Rodriguez, Plaintiffs allege that he "has operational control over the Defendant corporation and is directly involved in decisions affecting employee compensation and hours worked by employees such as Plaintiffs" (DE # 17 at 3). Plaintiffs, accordingly, assert that Defendant Rodriguez is an "employer" under the FLSA, pursuant to 29 U.S.C. § 203(d). Defendants deny this allegation in their Answers and Affirmative Defenses (DE ## 25 at 2; 26 at 2). Defendant Rodriguez further specifies in his affirmative defenses that he does not qualify as an employer under the economic reality test and, therefore, cannot be held liable in this action (DE # 26 at 7-8). Plaintiffs seek to recover against both Defendants, jointly and severally (DE # 17 at 6).

II. Defendants' Motion for Partial Summary Judgment

Defendants have moved for partial summary judgment, seeking to dismiss all claims against Jose L. Rodriguez in his individual capacity (DE # 70 at 1).*fn3 Defendants claim that, in order for Defendant Rodriguez to be held liable in his individual capacity for the alleged FLSA violations, he must be considered an "employer" under the FLSA provisions. As the crux of their argument, Defendants cite Patel v. Wargo, which requires that a person found to be an employer "must either be involved in the day-today operation or have some direct responsibility for the supervision of the employee." 803 F.2d 632, 638 (11th Cir. 1986) (DE # 70 at 3).

Defendants assert that no evidence suggests that Defendant Rodriguez had any control over the corporate Defendant, let alone day-to-day operational control or direct responsibility for employee supervision (DE # 70 at 4). Specifically, Defendant Rodriguez has not been on the premises of Cuba Tropical's facility in four years, so he could not have had a hand in day-to-day operations (DE # 70 at 4). In his deposition, Defendant Rodriguez claims ignorance of any number of management areas of Cuba Tropical, including determining pay rates, the facility's operating hours, who manages the facility, categories of managers, duties of floor workers, insurance held by Cuba Tropical, or even who is running the company (DE # 70 at 4). He disclaims responsibility for day-today operations or delegation of authority to managers. Although Defendant Rodriguez is an acknowledged part owner of Cuba Tropical and could step in at any time to exercise greater control over Cuba Tropical, more is required to be considered an employer under Patel (DE # 70 at 5). Moreover, other evidence supports Defendant Rodriguez's claims. Specifically, Cuba Tropical's corporate representative, Fausto Alvarez, confirmed managers' control (as opposed to Defendant Rodriguez's) regarding employee hiring and wage-setting, and that Defendant Rodriguez does not visit the facility (DE # 70 at 5). In addition, Plaintiffs have testified that they had never met Defendant Rodriguez although they recognized his name as the man who signed their paychecks (DE ## 70 at 5-6; 72 at 2).*fn4

III. Plaintiffs' Response

In response, Plaintiffs argue that Defendant Rodriguez had ultimate financial and operational control of Plaintiffs' employment and, therefore, is an employer for FLSA purposes. He controls the "purse strings," guides company policies, authorizes FLSA compliance, "solves major problems," and ultimately determines wage levels (DE # 72 at 4-5). In supporting these assertions, Plaintiffs point to Defendant Rodriguez as the only signatory on Cuba Tropical's bank account (the "purse strings" argument), his authorization of the decision to use an employee leasing company (control over "major problems"), his hiring of the initial set of company managers (guidance of company policies), and his signing (or authorizing rubber stamp signing) of employees' paychecks (determination of employee wages). With regard to hiring managers, Plaintiffs rely upon Herman v. RSR Sec. Services Ltd., 172 F.3d 132, 140 (2d Cir. 1999), to argue that this fact is a strong indication of control (DE # 72 at 5). Finally, Plaintiffs assert that their application for employment was through Presidente Supermarket, another company purportedly more directly managed by Defendant Rodriguez (DE # 72 at 6). In support of this last assertion, Plaintiffs attach to their Response copies of Plaintiffs' applications, which appear to be on Presidente Supermarket forms (DE # 72-2).

Plaintiffs offer the following evidence in an effort to controvert Defendants' claims. As Plaintiffs note, Defendant Rodriguez is one of two owners of Cuba Tropical; his sister, the other part owner, lives fulltime in Chicago (DE # 72 at 2). Defendant Rodriguez admits to hiring managers to operate Cuba Tropical when it was initially created, and to continuing communication with Fausto Alvarez. Specifically, he states, in response to a question regarding whether he delegates authority to managers to run Cuba Tropical, "No, I don't -- you know, I don't give them orders. I don't tell them what to do. When the first company opened, you know, they'd -- people were hired to work at the company and that's about it." Then, in response to whether he ensures the company is running smoothly, he responds, "Usually [the managers] -- you know, they -- someone comes to me and tells me, you know, everything, you know, is doing well. I mean, we have a manager that -- you know, the books, we check the books, everything is fine. You know that is about it." (Both quotes from DE # 71-1 at 4). Relatedly, Plaintiffs cite Defendant Rodriguez's deposition testimony to support the contention that Defendant Rodriguez authorized other managers to run the day-to-day operations of Cuba Tropical, including the details of employee hiring and compensation. Finally, Plaintiffs note that Defendant Rodriguez is the only apparent signatory on Cuba Tropical's bank account, had ultimate control over a decision to use an employee leasing company (that Cuba Tropical used for a limited time), and held Plaintiffs' employment applications at Presidente Supermarket, which Defendant Rodriguez actively manages on a day-to-day basis (DE # 72 at 2-3).

IV. Defendants' Reply

In their Reply, Defendants point out that Plaintiffs fail to address the rule for employer liability stated in Patel, which was later reiterated in Alvarez Perez v. Sanford-Orlando Kennel Club, Inc., 515 F.3d 1150 (11th Cir. 2008); specifically, that an "employer" must be involved in "day-to-day operation or have some direct responsibility for the supervision of the employee." Defendants deflect Plaintiffs' argument regarding Defendant Rodriguez's ultimate control by pointing to the rule of Alvarez Perez that "unexercised authority is insufficient to establish liability as an employer." Id. at 1161. (DE # 75 at 1-2). Alvarez Perez, they continue, focuses not on the role a defendant could have played, had he exercised his authority, but on the actual role of the individual in relation to operational control (DE # 75 at 2).

Defendants continue by discrediting Plaintiffs' reliance on cases decided by other Circuit Courts of Appeals when there is controlling precedent in the Eleventh Circuit. Based on the controlling rule, looking to a person's authority, without considering their exercise of such authority in relation to operational control, misses the mark. In addition, Defendants suggest that relying on a test for employer liability that simply looks to whether a person had authority to sign checks would subject a wide range of heads of companies and other officers to FLSA liability who were not intended to be held liable under the law (DE # 75 at 2). Furthermore, in regard to check signing, while Plaintiffs dispute whether Defendant Rodriguez at some point signed checks personally, the only record evidence consists of copies of checks signed with a rubber stamp, and Defendant Rodriguez's testimony that he did not recall in the last eight years whether he ever personally signed checks (DE # 75 at 2-3). With regard to authority delegated to managers, aside from the deposition testimony quoted above regarding Defendant Rodriguez's role, Plaintiffs fail to provide any evidence of greater involvement or control, and Defendant Rodriguez has testified to almost total ignorance as to Cuba Tropical's management and exceedingly minimal contact with its managers (DE # 75 at 3). As to Plaintiffs' citing of the employee leasing company (as an example of Defendant Rodriguez's involvement in major operational issues), Defendants point out that company accountant, Fausto Alvarez, testified that he "told" Defendant Rodriguez of Mr. Alvarez's decision to use the leasing company (DE # 75 at 4). Finally, Defendants address the job applications filled out on forms of another company. On this point, Defendants cite Plaintiff Santos' own testimony that he was hired without filling out any paperwork, on site at the Cuba Tropical facility, by a Cuba Tropical manager. Furthermore, the other two Plaintiffs obtained their jobs through connection with Plaintiff Santos, and no record evidence, other than applications on another company's forms, suggest any alternate connection with Defendant Rodriguez, whatever it might be (DE # 75 at 4-5). In sum, Defendants conclude that Defendant Rodriguez's unexercised authority to control the business does not amount to employer liability pursuant to the FLSA under applicable Eleventh Circuit precedent (DE # 75 at 6).

V. Statement of Undisputed Material Facts

The undisputed material facts, viewed in the light most favorable to Plaintiffs, are as follows:

1. On December 6, 2010, Plaintiffs filed their Second Amended Complaint against Defendants alleging ...

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