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11-4035-cv

Irizarry v. Catsimatidis

UNI TED STATES COURT OF APPEALS1FOR THE SECOND CI RCUI T2

34August Ter m, 20125

6( Ar gued: December 13, 2012 Deci ded: J ul y 9, 2013)7

8Docket No. 11- 4035- cv9

1011

BOBBY I RI ZARRY, RUBEN MORA, J OSELI TO AROCHO, J OSEPH CREMA,12ALFRED CROKER, FRANK DELEON, MARI O DI PRETA, WI LLI AM HELWI G,13

ROBERT MI SURACA, ROBERT PASTORI NO, VI CTOR PHELPS, DANI EL14 SALEGNA, GI LBERTO SANTI AGO,1516

Plaintiffs-Appellees,1718

CARLOS TORRES, on behal f of hi msel f and al l ot her s s i mi l ar l y19si t uat ed, LEWI S CHEWNI NG,20

21Plaintiffs-Counter-Defendants-Appellees ,22

23RAYMOND ALLEN, LLANOS BLAS, NABI L ELFI KY, MOHAMMED DABASH,24

CARLOS MARTI NEZ, LUI S MORALES, STEVE GROSSMAN, FRANKLYN25 COLLADO, DAVI D ADLER, DI NO A. ZAI NO, PATRI CK LABELLA, ROBERT26MASTRONI COLA, ANTHONY BROOKS, VI CTOR BENNETT, CANDI DO MOREL,27

J OSE MARTI NEZ, WAYNE HENDRI CKS, HAROLD HORN, TROY MI LLER,28OUSMANE DI ATTA, ELLI OT STONE, TI NA RODRI GUEZ, GABRI EL29KARAMANI AN, BRI AN HOMOLA, ANNA GARRETT, NELSON BETANCOURT,30

J OSE DELACRUZ, YURI LAMARCHE, MI CHAEL GROSECLOSE, RODOLFO31DELEMOS, PI O MOREL, ABI GAI L CLAUDI O, MALI CK DI OUF, DAVI D32OTTO, ALEJ ANDRO MORALES, VI CTOR DI AZ, PAUL PETROSI NO,33EDUARDO GONZALEZ, J R. , J OSE BONI LLA- REYES, VI NCENT PEREZ,34MARTI N GONZALEZ, CALVI N ADAMS, WI LLI AM FRI TZ, KATHERI NE35

HALPERN, CHRI STI AN TEJ ADA, EDWARD STOKES, PLI NI O MEDI NA,36 TOWANA STARKS, LAWSON HOPKI NS, RUBEN M. ALEMAN, EUGENE37RYBACKI , EARL CROSS, MANOLO HI RALDO, ROBERT HAI RSTON,38

39Plaintiffs,40

41

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12

3- v . -4

5

J OHN CATSI MATI DI S,67Defendant-Appellant.8

9GRI STEDE S OPERATI NG CORP. , GRI STEDE S FOODS NY, I NC. ,10NAMDOR, I NC. , GRI STEDE S FOODS, I NC. , CI TY PRODUCE OPERATI NG11CORP. ,12

13Defendants-Counter-Claimants ,14

15GALLO BALSECA, J AMES MONOS,16

17Defendants. *18

1920

2122

Bef or e:23WESLEY AND HALL, Circuit Judges, GOLDBERG, Judge.**24

2526

27

A cl ass of cur r ent and f or mer empl oyees of Gr i st ede s28 super mar ket s sued several corporate and i ndi vi dual29def endant s f or al l eged vi ol at i ons of t he Fai r Labor30Standards Act and t he New Yor k Labor Law. The Uni t ed St at es31Di st r i ct Cour t f or t he Sout her n Di st r i ct of New Yor k32( Cr ot t y, J.) gr ant ed par t i al summar y j udgment f or t he33pl ai nt i f f s, concl udi ng t hat J ohn Cat si mat i di s, t he owner ,34pr esi dent , and CEO of Gr i st ede s, was t he pl ai nt i f f s35empl oyer under bot h l aws. Catsi mat i di s appeal s, and we36AFFI RM I N PART, VACATE I N PART, AND REMAND.37

38

*The Cl er k of Cour t i s di r ect ed t o amend t he capt i on asl i st ed above.

**The Honorabl e Ri char d W. Gol dber g, of t he Uni t ed St at esCour t of I nt er nat i onal Tr ade, si t t i ng by desi gnat i on.

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12

J ONATHAN D. HACKER ( Wal t er Del l i nger , Br i anne J .3Gorod, J oanna Nai r n, on the brief), O Mel veny4& Myers LLP, Washi ngt on, D. C. for Appellant.5

6 DEEPAK GUPTA, Gupt a Beck PLLC, Washi ngt on, D. C.7( Gr egor y A. Beck, J onat han E. Tayl or , Gupt a8Beck PLLC, Washi ngt on, D. C. ; Adam T. Kl ei n,9

J ust i n M. Swar t z, Mol l y A. Br ooks, Out t en &10Gol den LLP, New York, NY, on the brief) for11Appellees.12

13RACHEL GOLDBERG, At t orney, Of f i ce of t he Sol i ci t or14

( M. Pat r i ci a Smi t h, Sol i ci t or of Labor ,15J enni f er S. Br and, Associ at e Sol i ci t or , Paul16

L. Fr i eden, Counsel f or Appel l at e Li t i gat i on,17 on the brief) , for Amicus Curiae Secretary of18Labor.19

20Tsedeye Gebresel assi e, Cat her i ne K. Ruckel shaus,21

Nat i onal Empl oyment Law Pr oj ect , New Yor k, NY,22for Amicus Curiae Make The Road New York,23Brandworkers International, Restaurant24Opportunities Center New York, Chinese Staff25and Workers Association, National Mobilization26Against Sweatshops, National Employment Law27

Project, Legal Aid Society of New York, Urban28 Justice Center, Asian American Legal Defense29and Education Fund.30

3132

33WESLEY, Circuit Judge.34

35Af t er t he f ai l ur e of a set t l ement i n a wage- and- hour36

case br ought by a gr oup of empl oyees of Gr i st ede s37

super mar ket s, t he pl ai nt i f f empl oyees moved f or par t i al38

summary j udgment on t he i ssue of whet her J ohn Cat si mat i di s,39

t he chai r man and CEO of Gr i st ede s Foods, I nc. , coul d be40

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hel d per sonal l y l i abl e f or damages. The case t ur ns on1

whether Catsi mat i di s i s an empl oyer under t he Fai r Labor2

St andards Act ( FLSA) , 29 U. S. C. 203( d) , and t he New York3

Labor Law ( NYLL) , N. Y. Lab. Law 190( 3) , 651( 6) . The4

Uni t ed St at es Di st r i ct Cour t f or t he Sout her n Di st r i ct of5

New Yor k ( Cr ot t y, J.) gr ant ed par t i al summary j udgment f or6

t he pl ai nt i f f s on t he i ssue, est abl i shi ng t hat Cat si mat i di s7

woul d be hel d j oi nt l y and sever al l y l i abl e f or damages al ong8

wi t h t he cor por at e def endant s. See Torres v. Gristedes9

Operating Corp., No. 04 Ci v. 3316( PAC) , 2011 WL 457179210

( S. D. N. Y. Sept . 9, 2011) ( Torres III) . Cat si mat i di s11

appeal s. We af f i r m t he di st r i ct cour t s deci si on so f ar as12

i t est abl i shed t hat Cat si mat i di s was an empl oyer under t he13

FLSA; we vacat e and r emand t he gr ant of par t i al summary14

j udgment on pl ai nt i f f s NYLL cl ai ms.15

Background16

Cat si mat i di s i s t he chai r man, pr esi dent , and CEO of17

Gr i st ede s Foods, I nc. , whi ch operates between 30 and 3518

st ores i n t he New Yor k Ci t y met r o area and has appr oxi mat el y19

1700 empl oyees. Al t hough a ser i es of mergers and20

acqui si t i ons has compl i cat ed t he quest i on of whi ch compani es21

ar e r esponsi bl e f or t he Gr i st ede s busi ness and22

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super mar ket s, t he part i es have not made corpor at e st r uct ur e1

t he f ocus of t hi s case. They essent i al l y agr ee t hat2

Cat si mat i di s i s t he owner and cor por at e head of al l3

i mpl i cat ed compani es, but t hey di sput e t he manner and degr ee4

of hi s cont r ol over t he st or es and empl oyees.5

I n 2004, a gr oup of t hen- cur r ent and f ormer empl oyees6

of Gr i st ede s supermar ket s sued sever al compani es i nvol ved7

i n oper at i ng t he st or es. The empl oyees al so sued t hr ee8

i ndi vi dual def endant s: Cat si mat i di s, Gr i st ede s Di st r i ct9

Manager J ames Monos, and Gr i st ede s Vi ce Pr esi dent Gal l o10

Bal seca. The di st r i ct cour t cer t i f i ed a cl ass composed of11

[ a] l l per sons empl oyed by def endants as Depar t ment Managers12

or Co- Managers who were not pai d pr oper over t i me premi um13

compensat i on f or al l hour s t hat t hey wor ked i n excess of14

f or t y i n a workweek any t i me bet ween Apr i l 30, 1998 and the15

dat e of f i nal j udgment i n t hi s mat t er ( t he cl ass per i od ) . 16

Torres v. Gristede's Operating Corp., No. 04 Ci v. 3316( PAC) ,17

2006 WL 2819730, at *11 ( S. D. N. Y. Sept . 29, 2006) ( Torres18

I) ( quot at i on mar ks omi t t ed) . I n t hi s deci si on, t he cour t19

not ed t hat t he par t i es di sput ed t he dut i es of co- manager s20

and depart ment manager s, t hough t he scope of pl ai nt i f f s21

dut i es ar e not at i ssue i n t hi s appeal .22

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Af t er t wo- and- a- hal f year s of l i t i gat i on, t he di str i ct1

cour t gr ant ed summar y j udgment f or t he pl ai nt i f f s on t hei r2

FLSA and NYLL cl ai ms, whi ch concerned r educt i on of hour s,3

wi t hhol di ng of over t i me, mi scl assi f i cat i on as exempt4

empl oyees, and r et al i at i on. See Torres v. Gristede's5

Operating Corp., 628 F. Supp. 2d 447, 461- 63, 475 ( S. D. N. Y.6

2008) ( Torres II) . The cour t hel d t hat pl ai nt i f f s wer e7

ent i t l ed t o l i qui dat ed damages, t he amount of whi ch woul d be8

det er mi ned i n f ut ur e pr oceedi ngs. Id. at 462 n. 14, 465.9

Pl ai nt i f f s r eser ved t he r i ght t o move separ at el y f or a10

det er mi nat i on t hat t he i ndi vi dual def endant s wer e11

i ndi vi dual l y l i abl e as j oi nt empl oyer s. Id. at 453 n. 2.12

Fol l owi ng t he summar y j udgment order , t he par t i es13

r eached a set t l ement agr eement , whi ch t he di st r i ct cour t14

appr oved. The cor por at e def endant s l at er def aul t ed on t hei r15

payment obl i gat i ons under t he agr eement . Def endants sought16

t o modi f y t he set t l ement , but t he di st r i ct cour t deni ed17

t hei r r equest . Pl ai nt i f f s t hen moved f or par t i al summar y18

j udgment on Cat si mat i di s s personal l i abi l i t y as an19

empl oyer .20

The di st r i ct cour t grant ed t he mot i on f or r easons bot h21

st at ed on t he r ecor d at t he concl usi on of or al ar gument on22

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t he mot i on, see Speci al App x at 43- 46, and memor i al i zed i n1

a wr i t t en deci si on, see Torres III. The r easons i ncl uded2

t he f act t hat Cat si mat i di s hi r ed manager i al empl oyees, 3

s i gned al l paychecks t o t he cl ass members, had t he power4

t o cl ose or sel l Gr i st ede s st or es, and r out i nel y5

r evi ew[ ed] f i nanci al r epor t s, wor k[ ed] at hi s of f i ce i n6

Gr i st ede s cor por at e of f i ce and gener al l y pr esi de[ d] over7

t he day t o day operat i ons of t he company. Torres III, 20118

WL 4571792, at *2. Accor di ng t o t he di st r i ct cour t , [ f ] or9

t he pur poses of appl yi ng t he t ot al ci r cumst ances t est , i t10

does not mat t er t hat Mr . Catsi mat i di s has del egated powers11

t o ot her s[ ; w] hat i s cr i t i cal i s t hat Mr . Cat si mat i di s has12

t hose powers t o del egate. Id. ( ci t at i on omi t t ed) . The13

cour t concl uded t hat [ t ] her e i s no ar ea of Gr i st ede s whi ch14

i s not subj ect t o [ Cat si mat i di s s] cont r ol , whet her [ or not ]15

he chooses t o exer ci se i t , and t hat , t her ef or e,16

Cat si mat i di s had oper at i onal cont r ol and, as such, [ ] may17

be hel d t o be an empl oyer . Id. at *3. 118

1I n i t s or al r ul i ng and accompanyi ng or der , t he di st r i ctcour t gr ant ed summar y j udgment f i ndi ng Cat si mat i di s i ndi vi dual l yl i abl e as an empl oyer under t he NYLL, but t he cour t di d notexpl ai n i t s r easons beyond what mi ght be i nf er r ed f r om i t sdi scussi on set t i ng f or t h i t s r easoni ng i n t he FLSA cont ext . SeeTorres III, 2011 WL 4571792, at *1; Speci al App x at 46- 47.

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Discussion21

I. Definition of employer under the FLSA2

The Supreme Court has r ecogni zed t hat broad cover age3

[ under t he FLSA] i s essent i al t o accompl i sh t he [ st at ut e s]4

goal of out l awi ng f r om i nt erst ate commerce goods pr oduced5

under condi t i ons t hat f al l bel ow mi ni mum st andar ds of6

decency. Tony & Susan Alamo Found. v. Sec'y of Labor, 4717

U. S. 290, 296 ( 1985) . Accor di ngl y, t he Cour t has8

consi st ent l y const r ued t he Act l i ber al l y t o appl y t o t he9

f ur t hest r eaches consi st ent wi t h congr essi onal di r ect i on. 10

Id. ( quot at i on marks omi t t ed) . The common l aw agency t est11

was f ound t oo r est r i ct i ve t o encompass t he br oader12

def i ni t i on of t he empl oyment r el at i onshi p cont ai ned i n t he13

[ FLSA] . Frankel v. Bally, Inc., 987 F. 2d 86, 89 ( 2d Ci r .14

1993) . I nst ead, t he st at ut e def i nes t he ver b empl oy15

2We r evi ew an awar d of summar y j udgment de novo, and wewi l l uphol d t he j udgment onl y i f t he evi dence, vi ewed i n t hel i ght most f avor abl e t o t he par t y agai nst whom i t i s ent er ed,demonst r ates t hat t her e ar e no genui ne i ssues of mat er i al f actand t hat t he j udgment was war r ant ed as a mat t er of l aw. Barfield v. NYC Health & Hosps. Corp., 537 F. 3d 132, 140 ( 2d Ci r .

2008) ( ci t i ng Fed R. Ci v. P. 56( c) ; Celotex Corp. v. Catrett, 477U. S. 317, 322- 23 ( 1986) ) . The nonmovi ng part y must set f or t hspeci f i c f act s showi ng t hat t her e i s a genui ne i ssue f or t r i al ,and t hi s Cour t must vi ew t he evi dence i n t he l i ght most f avor abl et o the nonmovi ng par t y and dr aw al l r easonabl e i nf er ences i n i t sf avor . Rubens v. Mason, 527 F. 3d 252, 254 ( 2d Ci r . 2008)( i nt er nal quot at i on mar ks and ci t at i on omi t t ed) .

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economi c r eal i t y r at her t han t echni cal concept s. Id.1

( quot i ng Goldberg v. Whitaker House Coop., Inc., 366 U. S.2

28, 33 ( 1961) ) . The economi c r eal i t y t est appl i es equal l y3

t o whet her wor ker s ar e empl oyees and t o whet her manager s or4

owner s ar e empl oyers. See Herman v. RSR Sec. Servs. Ltd.,5

172 F. 3d 132, 139 ( 2d Ci r . 1999) .6

[ T] he det er mi nat i on of t he [empl oyment ] r el at i onshi p7

does not depend on such i sol ated f act or s as where wor k i s8

done or how compensat i on i s di vi ded but r at her upon t he9

ci r cumst ances of t he whol e act i vi t y. Rutherford, 331 U. S.10

at 730. Some ear l y cases concerned manager i al ef f or t s t o11

di st ance t hemsel ves f r om wor ker s i n an appar ent ef f or t t o12

escape t he FLSA s coverage. For exampl e, i n Goldberg, t he13

Supr eme Cour t consi dered whet her a manuf act ur i ng cooperat i ve14

was an empl oyer of homewor ker members who cr eat ed15

kni t t ed and embr oi dered goods i n t hei r homes and were pai d16

by t he mont h on a r ate- per - dozen basi s. 366 U. S. at 28- 29.17

The Cour t concl uded t hat t hi s const i t ut ed an empl oyer -18

empl oyee rel at i onshi p because management s aut hor i t y made19

t he devi ce of t he cooper at i ve t oo t r anspar ent t o sur vi ve20

t he st at ut or y def i ni t i on of empl oy and t he Regul at i ons21

governi ng homewor k. Id. at 33. I n short , i f t he22

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economi c real i t y r at her t han t echni cal concept s i s t o be1

t he t est of empl oyment , t hese homeworkers ar e empl oyees. 2

Id. ( i nt er nal ci t at i ons omi t t ed) . Si mi l ar l y, t he Cour t3

not ed i n Rutherfordt hat [ w] her e t he wor k done, i n i t s4

essence, f ol l ows t he usual pat h of an empl oyee, put t i ng on5

an i ndependent cont r act or l abel does not t ake t he wor ker6

f r om t he pr ot ect i on of t he Act . 331 U. S. at 729.7

The Second Ci r cui t has t r eat ed empl oyment f or FLSA8

pur poses as a f l exi bl e concept t o be determi ned on a case-9

by- case basi s by revi ew of t he t ot al i t y of t he10

ci r cumst ances; we have i dent i f i ed di f f er ent set s of11

r el evant f act or s based on t he f act ual chal l enges posed by12

par t i cul ar cases. Barfield, 537 F. 3d at 141- 42.13

I n Carter v. Dutchess Community College, 735 F. 2d 8 ( 2d14

Ci r . 1984) , we i dent i f i ed f act or s t hat ar e l i kel y t o be15

r el evant t o t he quest i on of whet her a def endant i s an16

empl oyer . I n t hat case, pr i son i nmat es t eachi ng cl asses17

i n a pr ogr am t hat was managed by a col l ege cl ai med t he18

col l ege was t hei r empl oyer . The di st r i ct cour t r ej ect ed19

t hi s asser t i on because t he col l ege had onl y qual i f i ed20

cont r ol over t he i nmat e i nst r uct or s; t he Depar t ment of21

Cor r ect i onal Ser vi ces al ways mai nt ai ned ul t i mat e cont r ol . 22

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Inc. , 840 F. 2d 1054, 1058- 59 ( 2d Ci r . 1988) ) , and t o assess1

whet her an ent i t y t hat l acked f or mal cont r ol never t hel ess2

exer ci sed f unct i onal cont r ol over a wor ker , id. ( ci t i ng3

Zheng v. Liberty Apparel Co., 355 F. 3d 61, 72 ( 2d Ci r .4

2003) ) . 3 None of t he f actors used i n any of t hese cases,5

however , compr i se a r i gi d r ul e f or t he i dent i f i cat i on of an6

FLSA empl oyer . Id. To t he cont r ar y, . . . t hey pr ovi de7

a nonexcl usi ve and over l appi ng set of f act or s t o ensur e8

t hat t he economi c r eal i t i es t est mandat ed by t he Supr eme9

Cour t i s suf f i ci ent l y compr ehensi ve and f l exi bl e t o gi ve10

3 I n Zheng, t he cour t consi dered whether a garmentmanuf act ur er t hat cont r act ed out t he l ast phase of i t s pr oduct i onpr ocess t o wor ker s i ncl udi ng the pl ai nt i f f s was an empl oyer under t he FLSA. I t concl uded t hat t he r el evant f act or s i n suchan i nst ance were

( 1) whether [ t he manuf act ur er] s pr emi ses and equi pment wereused f or t he pl ai nt i f f s wor k; ( 2) whet her t he Cont r act orCor por at i ons had a busi ness t hat coul d or di d shi f t as auni t f r om one put at i ve j oi nt empl oyer t o anot her ; ( 3) t heext ent t o whi ch pl ai nt i f f s per f or med a di scret e l i ne- j obt hat was i nt egr al t o [ t he manuf act ur er ] s process ofpr oduct i on; ( 4) whet her r esponsi bi l i t y under t he cont r act scoul d pass f r om one subcont r act or t o anot her wi t houtmat er i al changes; ( 5) t he degr ee t o whi ch t he [ manuf actur er ]or [ i t s] agent s super vi sed pl ai nt i f f s wor k; and ( 6) whet herpl ai nt i f f s wor ked excl usi vel y or pr edomi nant l y f or [ t he

manuf actur er ] .

Zheng, 355 F. 3d at 72. These f act or s hi ghl i ght t he f l exi bl e andcompr ehensi ve nat ur e of t he economi c real i t i es t est i ndet er mi ni ng when an ent i t y i s an empl oyer ( i n t hi s case,whether t he manuf act ur er was a j oi nt empl oyer al ong wi t hanot her cor por at i on) but ar e not di r ect l y i mpl i cat ed her e.

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pr oper ef f ect t o t he br oad l anguage of t he FLSA. Id.1

( quot i ng Zheng, 355 F. 3d at 75- 76) .2

a. Individual liability3

None of t he cases above deal t speci f i cal l y wi t h t he4

quest i on we conf r ont her e: whet her an i ndi vi dual wi t hi n a5

company t hat undi sput edl y empl oys a wor ker i s personal l y6

l i abl e f or damages as t hat wor ker s empl oyer . The onl y7

case f r om our Ci r cui t t o conf r ont t he quest i on squar el y i s8

RSR, 172 F. 3d 132. RSR pr ovi ded guar ds, pr e- empl oyment9

scr eeni ng, and ot her secur i t y ser vi ces. I t was sued f or10

FLSA vi ol at i ons wi t h r egar d t o i t s secur i t y guar ds. I t s11

chai r man of t he boar d, Por t noy, was f ound by t he di st r i ct12

cour t af t er a bench t r i al t o be an empl oyer under t he13

st at ut e. We af f i r med, i n a deci si on t hat bot h appl i ed t he14

f our - f act or t est f r om Carterand not ed ot her f act or s bear i ng15

upon t he over ar chi ng concer n [ of ] whet her t he al l eged16

empl oyer possessed t he power t o cont r ol t he worker s i n17

quest i on. Id. at 139.18

As backgr ound, we noted t hat [ a] l t hough Por t noy19

exer ci sed br oad aut hor i t y over RSR oper at i ons . . . , he was20

not di r ect l y i nvol ved i n t he dai l y super vi si on of t he21

secur i t y guar ds. Id. at 136. Nonet hel ess, because he was22

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t he onl y pr i nci pal who had bank credi t , he exer ci sed1

f i nanci al cont r ol over t he company. Id. Thus, he had2

aut hor i t y over t he oper at i ons manager , who di r ect l y3

super vi sed t he guards. Id. Por t noy kept hi msel f appr i sed4

of RSR oper at i ons by r ecei vi ng per i odi c r epor t s [ i ncl udi ng]5

wor k or der s, memos, i nvest i gat i on r epor t s, and i nvoi ces6

concer ni ng t he busi ness oper at i ons, as wel l as weekl y7

t i mesheet s of [ a manager s] dut i es. Id. at 137. He al so8

r ef er r ed a f ew i ndi vi dual s t o RSR as pot ent i al secur i t y9

guar d empl oyees, assi gned guar ds t o cover speci f i c10

cl i ent s, somet i mes set t he r at es cl i ent s wer e char ged f or11

t hose servi ces, gave [ a manager ] i nst r uct i ons about guar d12

operat i ons, and f orwar ded compl ai nt s about guards t o a13

manager . Id.14

Por t noy al so si gned payrol l checks on at l east t hr ee15

occasi ons and est abl i shed a payment syst em by whi ch16

cl i ent s who want ed undercover operat i ves woul d pay17

Por t noy s separ at e l abor - r el at i ons f i r m. Id. Addi t i onal l y,18

Por t noy r epr esent ed hi msel f t o out si de par t i es as bei ng19

t he boss of RSR by al l owi ng hi s name t o be used i n20

sal es l i t er at ur e, by r epr esent i ng t o pot ent i al cl i ent s t hat21

he was a pr i nci pal wi t h cont r ol over company oper at i ons . .22

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. and by gi vi ng [ a manager ] i nst r uct i ons wi t h r espect t o [ ]1

cl i ent s secur i t y needs. Id.2

We det er mi ned t hat at l east t hr ee of t he f our Carter3

f act or s appl i ed. Fi r st , Por t noy had hi r ed empl oyees, and4

al t hough t hi s i nvol ved mai nl y manager i al st af f , t he f act5

t hat he hi r ed i ndi vi dual s who wer e i n char ge of t he guar ds6

[ was] a st r ong i ndi cat i on of cont r ol . Id. at 140. Second,7

Por t noy had, on occasi on, super vi sed and cont r ol l ed8

empl oyee work schedul es and t he condi t i ons of empl oyment . 9

Id. Thi r d, he had par t i ci pat e[ d] i n t he met hod of10

pay[ i ng] t he guar ds, even t hough he was not i nvol ved i n11

det er mi ni ng t hei r sal ar i es, because he had pr evi ousl y12

or der ed a st op t o t he i l l egal pay pr act i ce of i ncl udi ng13

secur i t y guards on 1099 f or ms as i ndependent cont r act ors, 14

and he had t he aut hor i t y t o si gn paychecks t hr oughout t he15

r el evant per i od. Id. Al t hough t here was no evi dence t hat16

Por t noy had been i nvol ved i n mai nt ai ni ng empl oyment r ecor ds,17

we conf i r med t hat t he f act t hat t hi s f our t h f act or i s not18

met i s not di sposi t i ve. Id. The economi c r eal i t y t est19

encompasses t he t ot al i t y of ci r cumst ances, no one of whi ch20

i s excl usi ve. Id. at 139. I n sum, we det ermi ned t hat21

Por t noy was not onl y a 50 percent st ockowner ; he had di r ect22

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i nvol vement wi t h t he secur i t y guar d oper at i ons f r om t i me t o1

t i me and was gener al l y i nvol ved wi t h al l of RSR s2

oper at i ons. Id. at 141.3

RSR al so hi ghl i ght ed t wo l egal quest i ons r el evant her e.4

The f i r st concer ns t he scope of an i ndi vi dual s author i t y or5

oper at i onal cont r ol over a company at what l evel of a6

cor por at e hi er ar chy, and i n what r el at i onshi p wi t h pl ai nt i f f7

empl oyees, must an i ndi vi dual possess power i n order t o be8

cover ed by t he FLSA? The second i nqui r y, r el ated but9

di st i nct , concer ns hypot het i cal ver sus act ual power : t o what10

ext ent and wi t h what f r equency must an i ndi vi dual act ual l y11

use t he power he or she possesses over empl oyees t o be12

consi der ed an empl oyer ?13

i. Operational control14

I n addi t i on t o appl yi ng t he Cartertest , RSR noted t he15

di st r i ct cour t s r ecogni t i on t hat Por t noy exer ci sed di r ect16

aut hor i t y over t he t wo persons most r esponsi bl e f or managi ng17

t he secur i t y guar ds, as wel l as t he f act t hat [ b] ecause18

[ Por t noy] cont r ol l ed t he company f i nanci al l y, i t was no i dl e19

t hr eat when he t est i f i ed t hat he could have di ssol ved t he20

company i f [ one of t he managers] had not f ol l owed hi s21

di r ect i ons. Id. at 140 ( emphasi s added) . Accordi ngl y, we22

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mean deci si ons about i ndi vi dual st or e- l evel oper at i ons,1

cl ose t o, i f not act ual l y i ncl udi ng, t he par t i cul ar wor ki ng2

condi t i ons and compensat i on pr act i ces of t he empl oyees3

t hemsel ves. Pl ai nt i f f s count er t hat many cases have f ound4

i ndi vi dual s wi t h oper at i onal cont r ol on a mor e gener al5

l evel t o be empl oyer s. Appel l ees Br . at 28- 31.6

Most ci r cui t s t o conf r ont t hi s i ssue have acknowl edged7

and pl ai nt i f f s do not di sput e t hat a company owner ,8

pr esi dent , or st ockhol der must have at l east some degr ee of9

i nvol vement i n t he way t he company i nt eract s wi t h empl oyees10

t o be a FLSA empl oyer . Many cases r el y on Wirtz v. Pure11

Ice Co., 322 F. 2d 259, 262 ( 8t h Ci r . 1963) , f or t hi s12

pr oposi t i on. I n Wirtz, t he cour t concl uded t hat t he13

i ndi vi dual def endant was not an empl oyer even though he was14

t he cont r ol l i ng st ockhol der and domi nat i ng f i gur e because15

al t hough he coul d have t aken over and supervi sed t he16

r el at i onshi p bet ween t he cor por at i on and i t s empl oyees had17

he deci ded t o do so, he di d not . Id. ( quotat i on mar ks18

omi t t ed) . The def endant vi si t ed t he f aci l i t y at i ssue a f ew19

t i mes per year but had not hi ng t o do wi t h t he hi r i ng of t he20

empl oyees or f i xi ng t hei r wages or hour s, and he l ef t t he21

mat t er of compl i ance wi t h t he Fai r Labor St andar ds Act up t o22

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t he var i ous managers of t he busi nesses i n whi ch he had an1

i nt erest . Id. at 262- 63. The cour t not ed, however , t hat2

i f i t wer e t o consi der a combi nat i on of st ock owner shi p,3

management , di r ect i on and t he r i ght t o hi r e and f i r e4

empl oyees, t hen a cont r ary concl usi on woul d be wel l5

suppor t ed. Id. at 263.6

I n RSR, we ci t ed t hr ee cases wi t h hol di ngs i n7

accor dance wi t h Wirtz i n r esol vi ng t he oper at i onal cont r ol 8

i ssue. Fi r st , i n Donovan v. Sabine Irrigation Co., 695 F. 2d9

190, 194- 95 ( 5t h Ci r . 1983) , t he Fi f t h Ci r cui t det er mi ned10

t hat an i ndi vi dual wi t hout an i nt er est i n t he empl oyer11

cor por at i on coul d be hel d l i abl e i f he ef f ect i vel y12

domi nat es i t s admi ni st r at i on or ot her wi se act s, or has t he13

power t o act , on behal f of t he cor por at i on vi s- a- vi s i t s14

empl oyees or i f he l acked t hat power but i ndependent l y15

exer ci sed cont r ol over t he wor k si t uat i on. The Sabine16

cour t f ound t he i ndi vi dual def endant l i abl e because he17

i ndi r ect l y cont r ol l ed many mat t er s t r adi t i onal l y handl ed by18

an empl oyer i n r el at i on t o an empl oyee ( such as payrol l ,19

i nsur ance, and i ncome t ax mat t er s) , not i ng al so t hat t he20

def endant s f i nanci al gymnast i cs di r ect l y af f ect ed Sabi ne s21

empl oyees by maki ng i t possi bl e f or Sabi ne t o meet i t s22

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payrol l and keep i t s empl oyees suppl i ed wi t h t he equi pment1

and mat er i al s necessar y t o per f or m t hei r j obs. Id. at 195.2

( quot at i on mar ks omi t t ed) .3

Second, i n Dole v. Elliott Travel & Tours, Inc., 9424

F. 2d 962, 966 ( 6t h Ci r . 1991) , t he Si xt h Ci r cui t was unmoved5

by t he pr ot est at i ons of an i ndi vi dual def endant who6

t est i f i ed t hat he made maj or cor por at e deci si ons but di d7

not have day- t o- day cont r ol of speci f i c oper at i ons. The8

cour t f ound t hat t he def endant s r esponsi bi l i t i es, whi ch9

i ncl uded det er mi ni ng empl oyee sal ar i es, const i t ut ed10

oper at i onal cont r ol of significant aspects of t he11

cor por at i on s day t o day f unct i ons. Id. ( quot at i on mar ks12

omi t t ed) ( emphasi s i n or i gi nal ) .13

Fi nal l y, i n Donovan v. Agnew, 712 F. 2d 1509, 1511 ( 1st14

Ci r . 1983) , t he Fi r st Ci r cui t i mposed l i abi l i t y on15

i ndi vi dual def endant s who toget her wer e Pr esi dent ,16

Tr easur er , Secr et ar y and sol e members of t he Board of t he17

def endant company. One of t he def endant s had been18

per sonal l y i nvol ved i n deci si ons about l ayof f s and empl oyee19

over t i me hour s, id., and t he def endant s t ogether had20

oper at i onal cont r ol of si gni f i cant aspect s of t he21

cor por at i on' s day t o day f unct i ons, i ncl udi ng compensat i on22

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of empl oyees, and [ ] per sonal l y made deci si ons t o cont i nue1

oper at i ons despi t e f i nanci al adver si t y dur i ng t he per i od of2

nonpayment , id. at 1514.3

Pl ai nt i f f s i n our case pl ace par t i cul ar emphasi s on t he4

st at ement by t he Agnewcour t t hat [ t ] he over whel mi ng wei ght5

of aut hor i t y i s t hat a cor por at e of f i cer wi t h oper at i onal6

cont r ol of a cor por at i on s cover ed ent er pr i se i s an empl oyer7

al ong wi t h t he cor por at i on, j oi nt l y and sever al l y l i abl e8

under t he FLSA f or unpai d wages. 4

Id. at 1511. Al t hough9

t hi s appears t o suggest t hat any amount of cor porate cont r ol10

i s suf f i ci ent t o establ i sh FLSA l i abi l i t y, t he Fi r st Ci r cui t11

war ned agai nst t aki ng t he FLSA s cover age t oo f ar , not i ng12

t hat t he Act s br oadl y i ncl usi ve def i ni t i on of empl oyer 13

coul d, i f [ t ] aken l i t er al l y and appl i ed i n t hi s cont ext [ , ]14

. . . make any super vi sor y empl oyee, even t hose wi t hout any15

4 Thi s l anguage was ci t ed by our Ci r cui t i n a caseconcerni ng t he meani ng of t he word empl oyer i n t he cont ext oft he Empl oyee Ret i r ement I ncome Secur i t y Act ( ERI SA) , i n whi chwe not ed that [ i ] n FLSA cases, cour t s have consi st ent l y hel dt hat a cor por at e of f i cer wi t h oper at i onal cont r ol who i s di r ect l yr esponsi bl e f or a f ai l ur e t o pay st at ut or i l y r equi r ed wages i s an empl oyer al ong wi t h t he cor por at i on, j oi nt l y and sever al l y

l i abl e f or t he shor t f al l . Leddy v. Standard Drywall, Inc. , 875F. 2d 383, 387 ( 2d Ci r . 1989) ( ci t i ng Agnew, 712 F. 2d at 1511) .Because Leddydi d not r equi r e or cont ai n any act ual anal ysi s oft he FLSA, however , t hi s st at ement does not const i t ut e a hol di ngt hat l i abi l i t y on t he basi s of oper at i onal cont r ol r equi r es ani ndi vi dual t o have been di r ect l y r esponsi bl e f or FLSA vi ol at i ons.

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cont r ol over t he cor por at i on s payr ol l , per sonal l y l i abl e1

f or t he unpai d or def i ci ent wages of ot her empl oyees. Id.2

at 1513.3

Dr awi ng on t hi s l anguage, t he Fi r st Ci r cui t l at er4

concl uded t hat i ndi vi dual s who had exer ci sed some degr ee of5

super vi sory cont r ol over t he wor ker s and been r esponsi bl e6

f or over seei ng var i ous admi ni st r at i ve aspect s of t he7

busi ness but had not demonst r at ed ot her i mpor t ant8

char act er i st i cs i n par t i cul ar , t he per sonal9

r esponsi bi l i t y f or maki ng deci si ons about t he conduct of t he10

busi ness t hat cont r i but ed t o t he vi ol at i ons of t he Act 11

wer e not per sonal l y l i abl e under t he FLSA. Baystate12

Alternative Staffing, Inc. v. Herman, 163 F. 3d 668, 678 ( 1st13

Ci r . 1998) . The cour t r ej ect ed an expansi ve appl i cat i on of14

t he def i ni t i on of an empl oyer t hat woul d f i nd t hat t he15

si gni f i cant f act or i n t he per sonal l i abi l i t y det er mi nat i on16

i s si mpl y the exer ci se of cont r ol by a cor por at e of f i cer or17

cor por at e empl oyee over t he wor k si t uat i on. Id. at 679.18

No ot her deci si on has gone as f ar as Baystate; most cour t s19

have endeavor ed t o st r i ke a bal ance bet ween uphol di ng t he20

br oad r emedi al goal s of t he st at ut e and ensur i ng t hat a21

l i abl e i ndi vi dual has some r el at i onshi p wi t h pl ai nt i f f22

empl oyees wor k si t uat i on.23

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t hr eshol d f or i ndi vi dual l i abi l i t y t han f or cor por at e1

empl oyer st atus.2

The f undament al concer n i n t he i ni t i al cases const r ui ng3

t he FLSA was pr event i ng a busi ness ent i t y f r om causi ng4

wor ker s t o engage i n wor k wi t hout t he pr ot ect i ons of t he5

st at ut e. I t was an economi c r eal i t y t hat t he homewor k6

cooper at i ve i n Goldbergf unct i oned as t he wor ker s empl oyer7

because i t pai d t hem t o creat e cl ot hi ng, even i f t he8

compensat i on st r uct ur e t echni cal l y ci r cumvent ed agency- l aw9

concept s of f ormal empl oyment . See Goldberg, 366 U. S. at 3110

( st at i ng t hat t he Cour t woul d be r emi ss . . . i f we11

const r ued t he Act l oosel y so as t o permi t t hi s homewor k t o12

be done i n ways not permi ssi bl e under t he Regul at i ons) ; see13

also United States v. Rosenwasser, 323 U. S. 360, 363 ( 1945)14

( A wor ker i s as much an empl oyee when pai d by t he pi ece as15

he i s when pai d by t he hour . ) . Thi s concer n i s not as16

pr essi ng when consi der i ng t he l i abi l i t y f or damages of an17

i ndi vi dual wi t hi n a company t hat i t sel f i s undi sput edl y t he18

pl ai nt i f f s empl oyer .19

Even i n t he i ndi vi dual - l i abi l i t y cont ext , however , t he20

r emedi al nat ur e of t he [ FLSA] . . . war r ant s an expansi ve21

i nt er pr et at i on of i t s pr ovi si ons so t hat t hey wi l l have t he22

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wi dest possi bl e i mpact i n t he nat i onal economy. RSR, 1721

F. 3dat 139 ( quot i ng Carter, 735 F. 2d at 12) . Not hi ng i n2

RSR, or i n t he FLSA i t sel f , r equi r es an i ndi vi dual t o have3

been per sonal l y compl i ci t i n FLSA vi ol at i ons; t he br oad4

r emedi al pur poses behi nd the st at ut e counsel agai nst such a5

r equi r ement . The st at ut e pr ovi des an empt y guarant ee absent6

a f i nanci al i ncent i ve f or i ndi vi dual s wi t h cont r ol , even i n7

t he f or m of del egat ed aut hor i t y, t o compl y wi t h t he l aw, and8

cour t s have cont i nual l y emphasi zed t he ext r aor di nar i l y9

gener ous i nt er pr et at i on t he st at ut e i s t o be gi ven. Nor i s10

onl y evi dence i ndi cat i ng [ an i ndi vi dual s] di r ect cont r ol11

over t he [ pl ai nt i f f empl oyees] [ t o] be consi der ed. RSR,12

172 F. 3d at 140. I nst ead, evi dence showi ng [ an13

i ndi vi dual s] aut hor i t y over management , super vi si on, and14

over si ght of [ a company s] af f ai r s i n gener al i s r el evant15

t o t he t ot al i t y of t he ci r cumst ances i n det er mi ni ng [ t he16

i ndi vi dual s] oper at i onal cont r ol of [ t he company s]17

empl oyment of [ t he pl ai nt i f f empl oyees] . Id.18

A per son exer ci ses oper at i onal cont r ol over empl oyees19

i f hi s or her r ol e wi t hi n t he company, and t he deci si ons i t20

ent ai l s, di r ect l y af f ect t he nat ur e or condi t i ons of t he21

empl oyees empl oyment . Al t hough t hi s does not mean t hat t he22

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i ndi vi dual empl oyer must be r esponsi bl e f or managi ng1

pl ai nt i f f empl oyees or , i ndeed, t hat he or she must have2

di r ect l y come i nt o cont act wi t h t he pl ai nt i f f s, t hei r3

wor kpl aces, or t hei r schedul es t he r el at i onshi p bet ween4

t he i ndi vi dual s oper at i onal f unct i on and t he pl ai nt i f f s5

empl oyment must be cl oser i n degr ee t han si mpl e but - f or6

causat i on. Al t hough t he answer i n any par t i cul ar case wi l l7

depend, of cour se, on t he t ot al i t y of t he ci r cumst ances, t he8

anal yses i n t he cases di scussed above, as wel l as t he9

r esponsi bi l i t i es enumer at ed i n t he Carterf actor s, pr ovi de10

gui dance f or cour t s det er mi ni ng when an i ndi vi dual s act i ons11

r i se t o t hi s l evel .12

ii. Potential power13

I n RSR, we not ed t hat oper at i onal cont r ol need not be14

exer ci sed const ant l y f or an i ndi vi dual t o be l i abl e under15

t he FLSA:16

[ Empl oyer ] st at us does not r equi r e cont i nuous17moni t or i ng of empl oyees, l ooki ng over t hei r18shoul der s at al l t i mes, or any sor t of absol ut e19cont r ol of one s empl oyees. Cont r ol may be20r est r i ct ed, or exer ci sed onl y occasi onal l y,21wi t hout r emovi ng t he empl oyment r el at i onshi p f r om22

t he pr ot ect i ons of t he FLSA, si nce such23 l i mi t at i ons on cont r ol do not di mi ni sh t he24si gni f i cance of i t s exi st ence.25

26172 F. 3d at 139 ( quot at i on mar ks and al t er at i on omi t t ed) .27

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The di st r i ct cour t i n t hi s case appears t o have r el i ed on1

t hi s l anguage i n st at i ng t hat [ w] hat i s cr i t i cal i s t hat2

Mr . Cat si mat i di s has [ cer t ai n] power s t o del egat e and t hat3

[ t ] her e i s no ar ea of Gr i st ede s whi ch i s not subj ect t o4

hi s cont r ol , whet her [ or not ] he chooses t o exer ci se i t . 5

Torres III, 2011 WL 4571792 at *2- 3. The part i es al so6

di sput e the i mpor t ance of evi dence i ndi cat i ng t hat7

Cat si mat i di s onl y r ar el y exer ci sed much of t he power he8

possessed.9

Empl oyer power t hat i s r est r i ct ed or exer ci sed onl y10

occasi onal l y does not mean never exer ci sed. I n Donovan11

v. Janitorial Services, Inc., 672 F. 2d 528, 531 ( 5t h Ci r .12

1982) , t he Fi f t h Ci r cui t not ed t hat t he company owner s13

consi der abl e i nvest ment i n t he company gi ves hi m ul t i mat e,14

i f l at ent , aut hor i t y over i t s af f ai r s, and t he f act t hat he15

had exer ci sed t hat aut hor i t y onl y occasi onal l y, t hr ough16

f i r i ng one empl oyee, r epr i mandi ng ot her s, and engagi ng i n17

some di r ect super vi si on of J ohnson Di sposal dr i ver s, does18

not di mi ni sh t he si gni f i cance of i t s exi st ence. I n19

Superior Care, t hi s cour t not ed t hat al t hough20

r epr esent at i ves of t he def endant busi ness, a nur se- st af f i ng21

company, vi si t ed j ob si t es onl y i nf r equent l y, t he company22

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had unequi vocal l y expr essed t he r i ght t o super vi se t he1

nur ses work, and t he nur ses were wel l aware t hat t hey were2

subj ect t o such checks as wel l as t o r egul ar r evi ew of t hei r3

nur si ng not es. 840 F. 2d at 1060. An empl oyer does not4

need t o l ook over hi s wor ker s shoul der s ever y day i n or der5

t o exer ci se cont r ol . Id. Si mi l ar l y, i n Carter, we6

r ej ect ed t he pr oposi t i on that t he communi t y col l ege was not7

empl oyi ng pr i son i nmat es sol el y because t he pr i son had8

ul t i mat e cont r ol over t he pr i soner s, r easoni ng t hat t he9

communi t y col l ege al so made deci si ons t hat af f ect ed t he10

pr i soner s wor k. 735 F. 2d at 13- 14.11

The El event h Ci r cui t has squar el y hel d t hat even when a12

def endant coul d have pl ayed a gr eat er r ol e i n t he day- t o-13

day oper at i ons of t he [ ] f aci l i t y i f he had desi r ed, . . .14

unexer ci sed aut hor i t y i s i nsuf f i ci ent t o establ i sh l i abi l i t y15

as an empl oyer . Alvarez Perez v. Sanford-Orlando Kennel16

Club, Inc., 515 F. 3d 1150, 1161 ( 11t h Ci r . 2008) . The17

Alvarez cour t f ound t hat an of f i cer i n a company t hat owned18

a kennel cl ub was not an empl oyer , i n par t because even19

t hough he mi ght have had t he aut hor i t y t o do so, he had not20

t aken par t i n t he day- t o- day oper at i ons of t he f aci l i t y, had21

not been i nvol ved i n t he super vi si on or hi r i ng and f i r i ng of22

empl oyees, and had not det ermi ned t hei r compensat i on. Id.23

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Unl i ke Alvarez, RSR does not st at e unambi guousl y t hat1

unexer ci sed aut hor i t y i s i nsuf f i ci ent t o est abl i sh FLSA2

l i abi l i t y, and we see no need t o do so her e i n l i ght of t he3

evi dence of t he aut hor i t y t hat Cat si mat i di s didexer ci se.4

Nonet hel ess, al l of t he cases di scussed i ndi cat e t hat t he5

mani f est at i on of , or , at t he l east , a cl ear del i neat i on of6

an i ndi vi dual s power over empl oyees i s an i mpor t ant and7

t el l i ng f act or i n t he economi c r eal i t y t est . Owner shi p,8

or a st ake i n a company, i s i nsuf f i ci ent t o est abl i sh t hat9

an i ndi vi dual i s an empl oyer wi t hout some i nvol vement i n10

t he company s empl oyment of t he empl oyees.11

II. Catsimatidis as employer12

Usi ng t hi s economi c r eal i t y t est , we must deci de13

whet her [ Cat si mat i di s] i s an empl oyer under t he FLSA. See14

RSR, 172 F. 3d at 140. I s t her e evi dence showi ng hi s15

aut hor i t y over management , supervi si on, and over si ght of16

[ Gr i stede s] af f ai r s i n gener al , see id., as wel l as17

evi dence under t he Carterf r amework or any ot her f act ors18

t hat r ef l ect Cat si mat i di s s exer ci se of di r ect cont r ol over19

t he pl ai nt i f f empl oyees?20

21

22

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a. Catsimatidiss overall authority1

Cat si mat i di s i s t he chai r man, pr esi dent , and CEO of2

Gr i st ede s Foods, I nc. J oi nt App x 1016. 5 He does not3

r epor t t o anyone el se at Gr i st ede s. Id. at 1794.4

Cat si mat i di s per sonal l y owns t he bui l di ng i n whi ch5

Gr i st ede s headquar t er s i s l ocat ed. Id. at 1789- 90. Hi s6

of f i ce i s i n t hat bui l di ng, shar ed wi t h Char l es Cr i scuol o,7

Gr i st ede s COO. Id. at 1793- 94. Cat i si mat i di s was usual l y8

t her e f or par t of t he day, at l east [ f our ] days a week. 9

Id. at 1334. The human r esour ces and payr ol l depar t ment i s10

l ocat ed i n t he same bui l di ng. Id. at 1794- 5. Regar di ng hi s11

dut i es, Cat si mat i di s t est i f i ed: I do t he banki ng. I do t he12

r eal est at e. I do t he f i nanci al . . . . I come up wi t h13

concept s f or mer chandi si ng. . . . I m t her e ever y day i f14

t her e i s a pr obl em, i ncl udi ng pr obl ems wi t h bui l di ngs,15

pr obl ems wi t h t he Depart ment of Consumer Af f ai r s,16

gover nment al r el at i ons, and [ p] r obl ems wi t h vendor s,17

r el at i onshi ps wi t h vendor s, i t t akes up most of t he t i me. 18

Id. at 1800- 01.19

20

5Al t hough Cat si mat i di s s and ot her empl oyees f unct i onswi t hi n Gr i st ede s appear t o have shi f t ed dur i ng t he l engt hypendency of t hi s l awsui t , al l r ef er ences ar e t o t he per i odr el evant t o t he case.

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A ser i es of subor di nat e manager s r epor t ed to1

Cat si mat i di s but di d not appear t o have an ext ensi ve amount2

of i nt er act i on wi t h hi m. Cat si mat i di s spoke t o Cr i scuol o3

every day because t hey shar ed an of f i ce. Id. at 1797.4

Cat si mat i di s t est i f ed t hat Vi ce Pr esi dent Gal l o Bal seca5

r uns oper at i ons and was i n t he st or es ever y day, and6

t hat t he di st r i ct manager s r epor t ed t o Bal seca. Id. at7

1796. Bal seca r epor t ed t o Cr i scuol o, but Cat si mat i di s8

r ar el y spoke di r ect l y t o Bal seca. Id. at 1794, 1797.9

Cat si mat i di s t est i f i ed t hat t he company s di r ect or of10

secur i t y r epor t s t o t he chi ef oper at i ng of f i cer on a day-11

t o- day basi s, but i f t her e i s somet hi ng he t hi nks I shoul d12

know about , he woul d cal l and t el l me. Id. at 1809.13

Cat si mat i di s occasi onal l y sat i n on mer chandi si ng and14

operat i ons meet i ngs. Id. at 1799.15

Cat si mat i di s st ayed appr i sed of how Gr i st ede s was16

doi ng, r evi ewi ng t he over al l pr of i t and l oss st at ement s as17

wel l as t he sal es t o pur chases st at ement s of par t i cul ar18

st or es. He r ecei ved weekl y gr oss mar gi n r epor t s f r om al l19

t he per i shabl e depar t ment s and a compr ehensi ve P[ r of i t ]20

and L[ oss] r epor t on a quar t er l y basi s t hat he st udi ed i n21

dept h and somet i mes used t o make gener al r ecommendat i ons.22

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Id. at 1849. As Execut i ve Di r ect or of Human Resour ces and1

Asset Pr ot ect i on Renee Fl or es st at ed, i f t her e i s a st or e2

t hat buys mor e t han t hey sel l , and i t s a consi st ent t hi ng,3

he may say, You know what , you mi ght want t o t ake a l ook at4

t hat , because t hey r e buyi ng mor e t han t hey r e sel l i ng. 5

Id. at 1450- 51.6

Cat si mat i di s t est i f i ed t hat he made bi g pi ct ur e7

mer chandi si ng deci si ons, l i ke do we, f or t he next si x8

mont hs, push Coca- Col a or push Pepsi - Col a? and t he9

deci si ons on havi ng phar maci es i n t he st or es. Id. at 1815.10

He t est i f i ed t hat af t er maki ng t hi s sor t of deci si on, he11

woul d t el l Cr i scuol o or yel l i t out when t hey have t he12

[ mer chandi si ng meet i ng] i n t hei r shar ed of f i ce. Id. at13

1816. He mi ght al so yel l out t o go out and do more sal es. 14

Id. at 1817.15

I n gener al , empl oyees agr eed, as Execut i ve Vi ce16

Pr esi dent Rober t Zor n t est i f i ed, t hat Cat si mat i di s has17

what ever pr i vi l eges an owner of a company has t o make18

ul t i mate deci si ons as t o how t he company i s r un, and t hat19

t here was no r eason t o bel i eve t hat i f he chose t o make a20

deci si on anybody t here has t he power t o over r i de hi m. 21

Id. at 1329. They al so agr eed t hat Cat si mat i di s has t he22

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power t o shut down a st or e or sel l a st or e i f he f el t1

t hat was t he appr opr i at e t hi ng t o do. Id. at 1370. 62

b. Involvement with stores3

Al t hough Cat si mat i di s di d not exer ci se manager i al4

cont r ol i n st or es on t he day- t o- day l evel of a manager , t he5

evi dence demonst r at es t hat he exer ci sed i nf l uence i n6

speci f i c st or es on mul t i pl e occasi ons. For exampl e, he made7

suggest i ons r egar di ng how pr oduct s are di spl ayed i n st or es.8

I n gener al , he t est i f i ed t hat he f ocused on dr i v[ i ng]9

sal es, dr i v[ i ng] pr oduct , get [ t i ng] mor e sal es out of t he10

st ores t hr ough t echni ques such as buyi ng a Coca- Col a at11

[ t he] r i ght pr i ce, and [ ] put [ t i ng] i t on a f r ont end12

di spl ay at t he r i ght pr i ce. Id. at 1819.13

6At or al ar gument and i n i t s wr i t t en deci si on, t he di st r i ctcour t pl aced subst ant i al r el i ance on an af f i davi t t hatCat si mat i di s submi t t ed i n a separ at e l awsui t , a t r ademar k act i onbr ought by Tr ader J oe s Company af t er i t f ound out about aGr i st ede s pl an t o re- open a f or mer Gr i st ede s st or e under t hename Gr i st ede s Tr ader J ohn s. The di st r i ct cour t emphasi zedt hat t he af f i davi t , whi ch di scussed t he pr ocess by whi chCat si mat i di s had come up wi t h t he i dea, i ndi cat ed t hatCat si mat i di s has t he power t o set pr i ces f or goods of f er ed f orsal e, sel ect t he decor f or t he st or es, and cont r ol anyst or e s si gnage and adver t i si ng. Torres III, 2011 WL 4571792,at *1. Al t hough t he par t i es di sput e t he si gni f i cance and

admi ssi bi l i t y of t he af f i davi t , i t i s not necessar y t o ourdeci si on. The af f i davi t i ndi cat es t hat Cat si mat i di s had t hepower t o open a new st ore t hat was gener al l y i nt ended to of f eri t ems at pr i ces mat er i al l y l ower t han compar abl e i t ems i n ourot her Gr i st ede[ ] s st or es. J oi nt App x 3752. Thi s onl yunder scor es t he i mpl i cat i on of t he evi dence we have al r eadydi scussed: t hat Cat si mat i di s possessed t he abi l i t y t o cont r olGr i st ede s oper at i ons at a hi gh l evel .

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Cat si mat i di s t est i f i ed speci f i cal l y t hat when [ he]1

used t o go ar ound t he st ores, [ he] used t o make comment s t o2

t he st or e manager s about di spl ays, t el l i ng t hem, f or3

exampl e, i f you put up t hi s pr oduct , you mi ght sel l $100 a4

week. Id. at 1828. He woul d make vi si t s t o f i ve or t en5

st or es on Sat ur day mor ni ngs, st ayi ng about t en mi nut es i n6

each one. Id. He r ef er r ed t o t hese as j ust [ ] goodwi l l7

vi si t [ s] , mer chandi si ng, sal es, what ar e we doi ng r i ght ,8

what are we doi ng wr ong, what can we do bet t er . Id. at9

1831- 32. Hi s deposi t i on al so cont ai ned t he f ol l owi ng10

exchange:11

Q: Why di d you want t o vi si t every st or e?1213

A: To check t he merchandi si ng.1415

Q: Can t t he st or e manager s t ake car e of t hat16

t hemsel ves?1718A: I f t he st or e manager s di d i t per f ect l y, t hen I19woul dn t have t o vi si t t he st or es.20

21Q: But you have a l evel of t r ust i n t he st or e manager s,22r i ght ?23

24A: You hope so, yes.25

26Q: Why do you t hi nk i t was necessary f or t he pr esi dent27

of t he company t o go around t o al l t hese st or es?2829A: For t he same r eason Sam Wal t on went and vi si t ed hi s30stores.31

32Q: What r eason i s t hat ?33

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1882. Cat si mat i di s comment ed t hat t he emai l s were hi s1

at t empt t o br i ng[ ] i t t o t hei r at t ent i on t hat t he2

depar t ment l ooked bad and t hat he woul d hope t he3

super vi sor or t he mer chandi ser s woul d f i x i t . Id. at 1883.4

Addi t i onal l y, Cat si mat i di s t est i f i ed t hat t he company s5

syst em aut omat i cal l y f or war ds hi m copi es of any consumer6

compl ai nt s, whi ch he t hen f or wards by emai l t o t he7

r esponsi bl e par t i es . . . wi t h a comment of What t he hel l8

i s happeni ng? Id. at 1821. For exampl e, he mi ght f orward9

a compl ai nt about a st or e bei ng di r t y, and he sent a10

compl ai nt about l i ds not f i t t i ng cof f ee cups t o t he del i11

di r ect or . Id. He t est i f i ed, I f i gur ed i f t hey t hi nk I12

know about t he pr obl em, t hey l l wor k har der t owar ds f i xi ng13

i t . Id. at 1822. When asked why t hi s was, he sai d, I14

guess t hey want t o keep t he boss happy, and I want t o keep15

t he consumers happy, and t hat one of my j obs i s how t o get16

t he consumer s i n our st or es, and how t o keep t hem i n our17

stor es. Id. at 1823. He has di r ect ed si mi l ar compl ai nt s18

t o st ore managers. Id. at 1825.19

Mi t chel l Moor e, a f or mer st or e manager , t est i f i ed t hat20

Cat si mat i di s asked hi m t o get i nvol ved wi t h a r eset at a21

par t i cul ar st or e, meani ng an ef f or t t o change t he st or e22

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ar ound, move i t ems ar ound t he st or e, al l ocat i on, br i ng i n1

new i t ems. Id. at 1418. Moor e al so t est i f i ed t hat2

Cat si mat i di s, whi l e wal ki ng t hr ough a st or e, mi ght want me3

t o change a di spl ay ar ound or t o make i t f ul l er or t o put a4

di f f er ent var i et y i n t her e, or t o put si gns on cer t ai n5

i t ems, gi ve t hem a good deal on i t i f he want ed Moor e t o6

push a par t i cul ar i t em. Id. at 1421- 22. Zor n sai d t hat7

he had seen Catsi mat i di s go t o st or es f or gr and openi ngs or8

r eopeni ngs, wal k up and down t he ai sl es . . . ask[ ]9

quest i ons about you know, he sees a pr oduct t hat i s new10

and asks, you know you know, who we buy t hat f r om and, you11

know, comment s on t he st ore decor , al t hough Zorn not ed t hat12

Cat si mat i di s was t her e mor e i n a PR capaci t y t han a13

management t ype capaci t y. Id. at 1352- 53.14

c. The Carterfactors15

The f i r st el ement of t he Cartert est consi der s whet her16

t he i ndi vi dual def endant had t he power t o hi r e and f i r e17

empl oyees. Barfield, 537 F. 3d at 142 ( quotat i on marks18

omi t t ed) . The evi dence demonst r at es t hat Cat si mat i di s19

possesses, but r ar el y exer ci ses, t he power t o hi r e or f i r e20

anyone he chooses. He t est i f i ed, I guess I can f i r e t he21

peopl e t hat di r ect l y r epor t t o me, whi ch he sai d woul d22

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i ncl ude onl y maybe f our or f i ve empl oyees such as t he COO1

and CFO. J oi nt App x 1863. He t est i f i ed i n 2005 t hat he2

coul d not r emember havi ng f i r ed anyone i n f i ve or si x year s.3

Id. at 1862. I n RSR, we emphasi zed t hat t he hi r i ng and4

f i r i ng of i ndi vi dual s who wer e i n char ge of [ t he pl ai nt i f f5

empl oyees] i s a st r ong i ndi cat i on of cont r ol . RSR, 1726

F. 3d at 140.7

Zor n t est i f i ed t hat Cat si mat i di s had hi r ed hi m and8

obvi ousl y woul d have t he aut hor i t y t o hi r e and f i r e9

ot her s, but he doesn t get i nvol ved i n t hat . J oi nt App x10

1338. For exampl e, when Zorn was i nvol ved i n l et t i ng go11

l ong- t i me empl oyees f or var i ous r easons, he l et12

Cat si mat i di s know as a cour t esy and f i r ed t he empl oyees13

even i f Cat si mat i di s wasn t happy about i t . Id. at 1343.14

On one occasi on when both Zorn and Cat si mat i di s i nt ervi ewed15

a pot ent i al manager , Cat si mat i di s was i n f avor of i t but he16

l ef t t he deci si on t o Zor n. Id. at 1342. Cat si mat i di s17

pr omot ed Debor ah Cl usan f r om di r ect or of payr ol l t o di r ect or18

of payr ol l and human r esour ces. Id. at 476. He promot ed19

Moor e t o st or e manager f r om ni ght manager . Moor e t est i f i ed20

t hat Cat si mat i di s came t o speak wi t h me, asked me what my21

backgr ound was, . . . and t hen t he next day t he vi ce22

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pr esi dent cal l ed me, and t ol d me t hat I woul d be st ar t i ng i n1

t he St or e 504 t he next day. Id. at 1412, 1415. Moor e,2

l i ke ot her empl oyees, i ndi cat ed t hat he vi ew[ ed] Mr .3

Cat si mat i di s as [ hi s] boss and t hat Cat si mat i di s woul d have4

t he power t o f i r e a st or e empl oyee. Id. at 1425- 26.5

The second Carterf act or asks whet her t he i ndi vi dual6

def endant supervi sed and cont r ol l ed empl oyee work schedul es7

or condi t i ons of empl oyment . Barfield, 537 F. 3d at 1428

( quot at i on mar ks omi t t ed) . Pl ai nt i f f s over st at e t he9

i mpor t ance of t he t wo pi eces of evi dence on whi ch t hey rel y10

f or t hi s f actor . Al t hough t hey st at e i n t hei r br i ef t hat11

Cat si mat i di s sai d he has handl ed compl ai nt s f r om Gr i st ede s12

wor ker s uni on r epr esent at i ves ever y week f or as l ong as I13

coul d r emember , Appel l ees Br . at 39, t hi s14

mi schar act er i zes Cat si mat i di s s t est i mony; he st at ed t hat he15

had not been per sonal l y i nvol ved i n uni on negot i at i ons or16

di scussi ons of pr obl ems, see J oi nt App x 1802- 03, 1812,17

1876. Pl ai nt i f f s al so asser t t hat Cat si mat i di s aut hor i zed18

an appl i cat i on f or wage subsi di es and t ax credi t s on behal f19

of Gr i st ede s empl oyees. Appel l ees Br . at 39. The20

evi dence r ef l ect s onl y t hat Cat si mat i di s si gned t he21

appl i cat i on f or t ax credi t s t o whi ch Gr i st ede s was ent i t l ed22

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f or empl oyi ng peopl e comi ng of f of Soci al Ser vi ces, of f of1

wel f ar e. J oi nt App x at 482- 83. Mor eover , pl ai nt i f f s do2

not i ndi cat e how t hi s af f ect ed t hei r wor k schedul es or3

condi t i ons of empl oyment . Al t hough Cat si mat i di s s4

i nvol vement i n t he company and t he st ores as di scussed above5

demonst r at es some exer ci se of oper at i onal cont r ol , i t does6

not appear t o r el at e cl osel y t o t hi s f act or of t he7

Cartertest .8

The t hi r d f act or asks whet her t he i ndi vi dual def endant9

det ermi ned the rat e and met hod of payment . Barfield, 53710

F. 3d at 142 ( quot at i on mar ks omi t t ed) . The di st r i ct cour t11

and pl ai nt i f f s emphasi ze t he f act t hat Cat si mat i di s s12

el ect r oni c si gnat ur e appear s on paychecks. Thi s l i ke al l13

f actor s i s not di sposi t i ve. See Gray, 673 F. 3d at 354.14

Nonet hel ess, we hel d i n RSR t hat [ t ] he key quest i on i s15

whether [ t he def endant ] had t he aut hor i t y t o si gn paychecks16

t hr oughout t he rel evant per i od, and he di d. RSR, 172 F. 3d17

at 140.18

RSR al so f ocused on t he f act t hat t he def endant19

cont r ol l ed t he company f i nanci al l y. Id. I t i s cl ear t hat20

Cat si mat i di s possessed a si mi l ar degr ee of cont r ol . He21

t est i f i ed t hat he keeps t r ack of payr ol l as a l i ne i t em22

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on account i ng and a par t of pr of i t and l oss, t o know what1

per cent age of Gr i st ede s sal es and expenses payrol l2

compr i ses, but he does not get i nvol ved wi t h i ndi vi dual3

sal ar i es or schedul es. J oi nt App x at 1834- 35. Al t hough he4

di d not speak t o hi s managers about peopl e get t i ng pai d, 5

id. at 1834, he knew t hat empl oyees wer e pai d on t i me6

[ b] ecause t he uni ons woul d have come down on us r eal har d7

i f t here was a pr obl em. Id. at 1852. Cat si mat i di s8

expl ai ned t hat he mi ght al so l ear n about a pr obl em [ i ] f I9

wal ked down t he ai sl e, and t he empl oyee saw me, t hey mi ght10

compl ai n, al t hough t he of f i ci al pr ocedur e f or such11

compl ai nt s i nvol ved t he empl oyees uni on and st ore manager .12

Id. at 1866- 67. Cat si mat i di s set up a meet i ng bet ween13

l ower- l evel managers and an out si de payr ol l company, id. at14

1452- 53, and al t hough he di d not know speci f i cal l y i f15

George Sant i ago i n t he st or e got a paycheck t hat week, hi s16

r ul es are i f somebody wor ks, t hey get pai d, id. at 469.17

The di st r i ct cour t al so not ed t hat Cat si mat i di s st at ed i n18

open Cour t i n t hi s proceedi ng t hat he coul d shut down t he19

busi ness, decl ar e bankrupt cy, as wel l as pr ovi de t he20

per sonal si gnat ur e necessar y f or a bank l et t er of cr edi t t o21

be i ssued i n f avor of Gr i st ede s, Torres III, 2011 WL22

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4571792, at *1, whi ch f ur t her demonst r ates t he ki nd of1

f i nanci al cont r ol emphasi zed i n RSR.2

The f ourt h Carterf act or asks whet her t he i ndi vi dual3

def endant mai nt ai ned empl oyment r ecords. Barfield, 5374

F. 3d at 142 ( quot at i on mar ks omi t t ed) . Pl ai nt i f f s of f er5

onl y t hat Cat si mat i di s wor ks i n t he same of f i ce wher e6

empl oyment r ecords are kept and pr omot ed t he payrol l7

di r ect or , Appel l ees Br . at 41, essent i al l y admi t t i ng t hat8

Cat si mat i di s di d not meet t hi s f act or . I n sum, t he evi dence9

much of i t Cat si mat i di s s own t est i mony i ndi cat es t hat10

Cat si mat i di s meet s t he f i r st and t hi r d Carterf actor s.11

d. Totality of the circumstances12

Ther e i s no quest i on t hat Gr i st ede s was t he13

pl ai nt i f f s empl oyer , and no quest i on t hat Cat si mat i di s had14

f unct i onal cont r ol over t he ent er pr i se as a whol e. Hi s15

i nvol vement i n t he company s dai l y oper at i ons mer i t s f ar16

mor e t han the symbol i c or cer emoni al char act er i zat i on he17

ur ges us t o appl y. Unl i ke t he def endant i n Wirtz, who18

vi si t ed hi s company s f aci l i t i es onl y a f ew t i mes a year ,19

Cat si mat i di s was act i ve i n r unni ng Gr i st ede s, i ncl udi ng20

cont act wi t h i ndi vi dual st or es, empl oyees, vendor s, and21

cust omer s. Cat si mat i di s deal t wi t h cust omer compl ai nt s, i n-22

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st or e di spl ays and mer chandi si ng, and t he pr omot i on of st or e1

personnel . That he may have done so onl y occasi onal l y2

does not mean t hat t hese act i ons are i r r el evant , see RSR,3

172 F. 3d at 139, especi al l y when consi der ed i n t he cont ext4

of hi s over al l cont r ol of t he company.5

Al t hough t her e i s no evi dence t hat he was r esponsi bl e6

f or t he FLSA vi ol at i ons or t hat he ever di r ect l y managed7

or ot her wi se i nt er act ed wi t h t he pl ai nt i f f s i n t hi s case 8

Cat si mat i di s sat i sf i ed t wo of t he Carterf act or s i n ways9

t hat we par t i cul ar l y emphasi zed i n RSR: t he hi r i ng of10

manager i al empl oyees, and over al l f i nanci al cont r ol of t he11

company. See id. at 136- 37, 140 ( f i ndi ng t hat t he12

i ndi vi dual def endant exer ci sed f i nanci al cont r ol over t he13

company and f r equent l y gave i nst r uct i ons t o subor di nat e14

managers) ; see also Donovan v. Grim Hotel Co., 747 F. 2d 966,15

972 ( 5t h Ci r . 1984) ( not i ng t hat t he i ndi vi dual def endant16

was t he t op man i n a hot el company who hel d [ t he17

hot el s ] pur se- st r i ngs and gui ded t hei r pol i ci es and t hat18

t he hot el s speaki ng pr agmat i cal l y, . . . f unct i oned f or t he19

pr of i t of hi s f ami l y) . Thi s i nvol vement meant t hat20

Cat si mat i di s possessed, and exer ci sed, oper at i onal cont r ol 21

over t he pl ai nt i f f s empl oyment i n much mor e t han a but -22

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f or sense. Hi s deci si ons af f ect ed not onl y Gr i st ede s1

bot t om l i ne but i ndi vi dual st or es, and t he per sonnel and2

pr oduct s t her ei n.3

We recogni ze t hat t he f act s her e make f or a cl ose case,4

but we ar e gui ded by t he pr i nci pl es behi nd t he l i qui dat ed5

damages provi si on of t he FLSA i n r esol vi ng t he i mpact of t he6

t ot al i t y of t he ci r cumst ances descr i bed her ei n. The Supr eme7

Cour t has noted t hat l i qui dated damages as aut hor i zed by8

t he FLSA are not penal t i es but r at her compensat ory damages9

f or t he r et ent i on of a wor kman s pay whi ch mi ght r esul t i n10

damages t oo obscur e and di f f i cul t of pr oof f or est i mat e11

ot her t han by l i qui dat ed damages. Republic Franklin Ins.12

Co. v. Albemarle County Sch. Bd., 670 F. 3d 563, 568 ( 4t h13

Ci r . 2012) ( quot i ng Brooklyn Sav. Bank v. ONeil, 324 U. S.14

697, 707 ( 1945) ) ; see also Marshall v. Brunner, 668 F. 2d15

748, 753 ( 3d Ci r . 1982) ( not i ng t hat l i qui dat ed damages ar e16

compensat or y, not puni t i ve i n nat ur e) .17

As counsel f or amicus curiae t he Secr et ar y of Labor18

expl ai ned at or al ar gument , t he pur pose of t he FLSA i s not19

t o puni sh an empl oyer but t o remunerat e aggr i eved empl oyees.20

Consi der ed i n t he cont ext of t he expansi ve i nt er pr et at i on21

t hat cour t s have af f or ded t he st at ut e, t hi s pol i cy r easoni ng22

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Al t hough we must be mi ndf ul , when consi der i ng an1

i ndi vi dual def endant , t o ascer t ai n t hat t he i ndi vi dual was2

engaged i n t he cul pabl e company s af f ai r s t o a degr ee t hat3

i t i s l ogi cal t o f i nd hi m l i abl e t o pl ai nt i f f empl oyees, we4

concl ude t hat t hi s st andard has been met here.5

Cat si mat i di s s act i ons and r esponsi bi l i t i es par t i cul ar l y6

as demonst r at ed by hi s act i ve exer ci se of over al l cont r ol7

over t he company, hi s ul t i mat e r esponsi bi l i t y f or t he8

pl ai nt i f f s wages, hi s super vi si on of manager i al empl oyees,9

and hi s act i ons i n i ndi vi dual st or es demonst r at e t hat he10

was an empl oyer f or pur poses of t he FLSA.11

III. New York Labor Law12

The NYLL def i nes empl oyer as any person . . .13

empl oyi ng any i ndi vi dual i n any occupat i on, i ndust r y, t r ade,14

busi ness or ser vi ce or any i ndi vi dual . . . act i ng as15

empl oyer . N. Y. Lab. Law. 190( 3) , 651( 6) . The16

def i ni t i on of empl oyed under t he NYLL i s t hat a per son i s17

per mi t t ed or suf f er ed t o wor k. Id. 2(7).18

The di st r i ct cour t grant ed par t i al summar y j udgment i n19

pl ai nt i f f s f avor on t hei r NYLL cl ai ms, but nei t her i t s or al20

nor i t s wr i t t en deci si on cont ai ned any subst ant i ve21

di scussi on of t he i ssue. Pl ai nt i f f s asser t t hat t he t est s22

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