Williams v. Johnny Kynard Logging Inc. et al
MEMORANDUM OPINION AND ORDER GRANTING IN PART and DENYING IN PART 30 MOTION for Summary Judgment as set out herein. Signed by Judge Virginia Emerson Hopkins on 5/10/2013. (JLC)
2013 May-10 PM 03:00
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SAMMIE L. WILLIAMS,
JOHNNY KYNARD LOGGING,
INC., et al.,
) Case No.: 2:11-CV-2138-VEH
MEMORANDUM OPINION AND ORDER
THIS CAUSE is before the court on Defendants’ Motion for Summary
Judgment (the “Motion”) (Doc. 30) filed on October 26, 2012. Plaintiff responded
on November 13, 2012. (Doc. 36.) Defendants replied on December 3, 2012. (Doc.
39.) The Motion is now ripe for disposition.
Defendants Johnny Kynard Logging, Inc. (“JKL”) and Double K Logging, LLC
When deciding a motion for summary judgment, the Court must view the evidence in
the light most favorable to the nonmoving party, and draw all reasonable inferences in that
party’s favor. See Optimun Techs., Inc. v. Henkel Consumer Adhesives, Inc., 496 F. 3d 1231,
1241 (11th Cir. 2007). Thus, this memorandum opinion states all disputed facts in the light most
favorable to the Plaintiff.
(“Double K”) are logging companies based in Hale County Alabama.2
companies use the same types of equipment—a cutter, a skidder, and a loader. Both
companies use contract haulers3 to transport their logs to a mill for processing. And,
both companies serve many of the same mills. While the companies employ separate
bookkeepers, JKL’s bookkeeper Michelle Montz does some work for Double K two
days a week. This work takes about ten minutes of her time. (Doc. 32-8 at 17.)
JKL and Double K do differ in some respects. For example, JKL is a clear
cutting operation. It cuts and hauls primarily “saw timber”—i.e., trees which will be
made into lumber. (Doc. 32-1 at 8–9.) At all relevant times, JKL employed more
than eight (8) people. Conversely, Double K is a thinning operation. It cuts and
hauls primarily “pulpwood”—i.e., trees which will not be made into lumber. (Id.)
The equipment Double K uses differs slights from the equipment JKL uses. (Doc. 32-
Defendant Johnny W. Kynard, III (Kynard”) is the sole owner of JKL and a 50% owner
of Double K. The sole basis for Williams’s claim against Kynard is that he is the alter ego of
Double K and JKL. (Doc. 1 at 3, ¶ 7) (“Defendant John W. Kynard, III (“Kynard”) is a resident
of Hale County, Alabama, [and] is the alter ego of Kynard Logging [and] Double K . . . .”)
The term contract hauler, while familiar to the parties, requires some explanation. Both
Double K and JKL own logging trucks and directly employ truck drivers. However, Double K
and JKL do not always have wood for their trucks to transport. As a result, the truck drivers can
experience significant downtime. To combat this problem, both Double K and JKL loan their
trucks to other companies on a contract basis. (Doc. 31 at 6, ¶ 7; Doc. 36 at 8, ¶ 18; Doc. 32-7 at
18.) A third party sets the contract rate, and Double K and JKL are paid for each load their
trucks deliver. (Doc. 32-7 at 4.) Because of this arrangement, Double K’s truck drivers often
haul wood for JKL and vice versa. (Doc. 31 at 6, ¶ 7; Doc. 36 at 8, ¶ 18.) However, these
drivers also haul wood for other companies.
7 at 25.) For example, the cutter has a different head, the skidder is smaller, and the
loader has a different delimber on the end. (Id.) Double K contends that it has never
employed more than eight (8) people.
JKL began operating around 1996, and is owned entirely by Defendant Johnny
Kynard (“Kynard”). Double K was formed in 2006, and owned equally by Kynard
and his long time friend Scott Kimbrel (“Kimbrel”). Kynard and Kimbrel have
known each other their entire lives. (Doc. 32-7 at 2.) Prior to forming Double K,
Kynard and Kimbrel partnered on a catfish farm. (Doc. 32-7 at 2.) After forming
Double K, Kynard and Kimbrel formed a wood chipping business called KimKy
Chipping. (Doc. 32-1 at 37.) As with Double K, Kynard and Kimbrel are fifty-fifty
partners in the catfish farm and Kimky Chipping. (Id.) Prior to forming Double K,
Kimbrel had little, if any, experience with the logging industry. (Doc. 32-5 at 30.)
In managing Double K, both Kynard and Kimbrel have authority to make dayto-day business decisions. (Doc. 32-1 at 43, 45.) For example, both men can hire and
fire employees, direct employee’s activities, and make market decisions for Double K.
(Doc. 32-1 at 6, 38, 43, 45.) Kimbrel and Kynard always back each other up on these
decisions. (Doc. 32-6 at 12.) Regarding major business decisions, Kimbrel and
Kynard always come to an agreement. (Doc. 32-6 at 12; Doc. 32-7 at 20.)
Double K does not have enough employees to qualify for a group health
insurance plan. (Doc. 36 at 9–10, ¶ 21.) Nonetheless, Double K provides health
insurance to its employees through JKL.
JKL represents to its insurer that
Double K’s employees are actually employed by JKL. JKL pays the premiums for
Double K’s employees, and Double K reimburses JKL for these expenses. (Doc. 36
at 9–10, ¶ 21.)
Plaintiff Sammie Williams (“Williams”) is a truck driver. From 2003 to June
2008, Williams drove a log truck for JKL. JKL paid him a weekly salary regardless
of how many hours he worked.
In June 2008, JKL sold three logging trucks, including the one driven by
Williams, to Double K. (Doc. 36 at 5, ¶ 6.) In July 2008, Kynard told Williams “I’m
going to put you on Double K, you know.” (Doc. 32-5 at 17–18.) Williams then
began driving for Double K. No one told Williams that he had been terminated from
JKL or that he had been hired by Double K. (Id.) Williams was not given a choice
in the matter. (Id.) Double K, like JKL, paid Williams a weekly salary regardless of
how many hours he worked. Williams drove for Double K until April 2010.
Williams now contends that Double K violated the overtime wage requirement
of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–219. He seeks unpaid
overtime wages and liquidated damages. Defendants counter that Williams’s claim
fails as a matter of law for numerous reasons. After reviewing the record and the
parties’ briefs, the court concludes that summary judgment is inappropriate on all but
one of the grounds raised by Defendants.
Summary judgment is proper only when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R .Civ. P.
56(a). “All reasonable doubts about the facts” and “all justifiable inferences” are
resolved in favor of the nonmoving party. See Fitzpatrick v. City of Atlanta, 2 F.3d
1112, 1115 (11th Cir. 1993).4 A dispute is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986). A fact is material if it
“might affect the outcome of the suit under the governing law . . . . Factual disputes
that are irrelevant or unnecessary will not be counted.” Id. The substantive law will
identify which facts are material and which are irrelevant. Id.
The summary judgment analysis varies somewhat depending on which party
bears the burden of proof at trial. See Fitzpatrick, 2 F.3d at 1115–17 (citing United
States v. Four Parcels of Real Property, 941 F.2d 1428 (11th Cir. 1991) (en banc)).
Rule 56 was amended in 2010. The Advisory Committee was careful to note, however,
that “[t]he standard for granting summary judgment remains unchanged.” Fed. R. Civ. P. 56
advisory committee’s note to 2010 amendments. Consequently, cases interpreting the previous
version of Rule 56 are equally applicable to the revised version.
If the moving party would bear the burden of proof on an issue, then it may meet its
burden on summary judgment only by presenting positive evidence demonstrating an
absence of a genuine issue of material fact—i.e., facts that would entitle it to a
directed verdict if not controverted at trial. Id. at 1115. Once the moving party
makes such a showing, the burden shifts to the nonmoving party to produce
significant, probative evidence demonstrating a genuine issue for trial. Id.
If the nonmoving party would bear the burden of proof on an issue at trial, then
the moving party can satisfy its initial burden on summary judgment in either of two
ways. Id. at 1115–16. First, the moving party may produce affirmative evidence
negating a material fact, thereby demonstrating that the nonmoving party will be
unable to prove its case at trial. Id. at 1116. If the moving party produces such
evidence, then the nonmoving party must respond with positive evidence sufficient
to defeat a motion for a directed verdict at trial. Id.
Second, the moving party may affirmatively show the absence of evidence in
the record to support a judgment for the nonmoving party on a material element. Id.
The moving party is not required to produce evidence negating its opponent’s claim,
but it must direct the court to the hole in the nonmoving party’s case. Id. at 1115–16.
If the moving party satisfies this burden, the nonmoving party may either point to
evidence in the record which would sustain a judgment at trial, or may come forward
with additional evidence which would also sustain a judgment. Id. at 1116–17. The
nonmoving party cannot simply rest on mere allegations; he must set forth evidence
of specific facts. Lewis v. Casey, 518 U.S. 343, 358, 116 S. Ct. 2174, 2183 (1996)
(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S. Ct. 2130, 2136–37
There is no dispute that the FLSA applies here. Under the FLSA, employers
must pay overtime wages to employees who are “employed” more than forty hours
per week. 29 U.S.C. § 207(a)(1); see also Dade Cnty. v. Alvarez, 124 F.3d 1380,
1384 (11th Cir. 1997). The term “employ” means “to suffer or permit to work.” 29
U.S.C. § 203(g); see also Reich v. Dep’t. of Conservation & Natural Res., State of
Ala., 28 F.3d 1076, 1082 (11th Cir. 1994). If an employee works more than forty
hours in a week, his employer must compensate him at one and a half times his
regular rate of pay. See 29 U.S.C. § 207(a)(1); 29 C.F.R. § 778.108; see also Walling
v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945)
Defendants’ Motion raises four reasons the FLSA’s overtime wage requirement
does not apply to them. First, Defendant JKL contends that Williams’s claim against
it is barred by the statute of limitations. Second, Defendant Double K contends that
it is exempt from the FLSA’s overtime wage requirement under 29 U.S.C. §
213(b)(28) (hereinafter the “forestry exemption”). Third, the Motion asserts that
Defendants Double K and JKL are not a single enterprise under the FLSA. Fourth,
the Motion asserts that Kynard is not the alter ego of Double K or JKL. The court
will address each in turn.
Statute of Limitations
The statute of limitations under the FLSA is usually two years. See 29 U.S.C.
§ 255(a). However, the statute extends to three years when a defendant commits a
willful violation. See id. An employer willfully violates the FLSA when it either (1)
knows its conduct violates the FLSA, or (2) recklessly disregards “the matter of
whether its conduct [is] prohibited by the FLSA.” McLaughlin v. Richland Shoe Co.,
486 U.S. 128, 129, 108 S. Ct. 1677, 1680 (1988) (citing Brock v. Richland Shoe Co.,
799 F.2d 80 (5th Cir. 1986)). Thus, the three year statute of limitations can apply
even when an employer does not know it is violating the statute. Allen v. Bd. of Educ.
for Bibb Cnty., 495 F.3d 1306, 1324 (11th Cir. 2007). If an employer acts recklessly
in determining its legal obligation, then it commits a willful violation of the FLSA.
The burden is on the employee to show his employer committed a willful
violation by a preponderance of the evidence. See Alvarez Perez v. Sanford-Orlando
Kennel Club, Inc., 515 F.3d 1150, 1162–63 (11th Cir. 2008). Additionally, the
question of willfulness is a mixed question of law and fact. See Allen, 495 F.3d at
1324. When this question involves issues of fact, it is inappropriate for summary
disposition. See Alvarez Perez, 515 F.3d at 1163; Pabst v. Okla. Gas & Elec. Co.,
228 F.3d 1128, 1137 (10th Cir. 2000); Fowler v. Land Mgmt. Groupe, Inc., 978 F.2d
158, 162 (4th Cir. 1992); Morrison v. Quality Trans. Servs., Inc., 474 F.Supp. 2d
1303, 1313 (S.D. Fla. 2007).
Williams last worked for JKL in June 2008. (Doc. 31 at 5, ¶ 4.) He filed this
lawsuit on June 18, 2011, almost three years later. Thus, if the two year statute of
limitations applies, Williams’s claim against JKL is time barred. Conversely, if the
three year statute of limitations applies, it is undisputed that JKL owes Williams at
least two weeks of overtime pay. (Doc. 32-6 at 7.)
Williams contends that Defendants knowingly violated the FLSA. Specifically,
he contends that JKL and Kynard learned of their obligations under the FLSA in May
or early June 2008. (Doc. 36 at 5, ¶ 2; at 18.) At that time, another employee of JKL
sued JKL for unpaid overtime wages. See Answer, Wade v. Johnny Kynard Logging,
Inc., et al., No. 2:08-CV-783-AKK (N.D. Ala. May 28, 2008), ECF No. 3. Williams
contends that this lawsuit prompted Kynard to sell Williams’s truck to Double K and
send him to drive for that company. (Doc. 36 at 5, ¶ 6; Doc. 32-5 at 17–18.) This
version of events does not support finding a willful violation of the FLSA. The FLSA
simply requires employers to pay certain employees overtime. It does not prohibit
transferring an employee from a covered entity to a non-covered entity to avoid
paying that employee overtime. Therefore, the act of transferring Williams to
Double K did not violate the FLSA.
However, if Double K was required to pay Williams overtime wages but did
not, that act would violate the FLSA. In addition to the above argument, Williams
contends that JKL and Double K are a single enterprise for purposes of the FLSA. See
Part III.C. infra. If JKL and Double K are a single enterprise, then Defendants were
required to pay Williams overtime wages during his employment with Double K. As
explained in Part III.C infra, there is a material issue of fact regarding whether JKL
and Double K are a single enterprise. Assuming a jury were to find that JKL and
Double K are a single enterprise, a jury could also find that these Defendants knew
JKL and Double K were a single enterprise, and, therefore, knew they were required
to pay Williams overtime wages. Because a reasonable jury could find facts which
establish a willful violation of the FLSA, summary judgment on this issue is
And, even if a reasonable jury could not find that the Defendants knowingly
violated the FLSA, it could certainly find that Defendants recklessly disregarded the
possibility that JKL and Double K are a single enterprise (and therefore required to
pay overtime wages under the FLSA). Because a reasonable jury could make this
finding, summary judgment is also inappropriate for this alternative reason.
A material issue of fact remains regarding whether Defendants JKL and Double
K willfully violated the FLSA. Therefore, these Defendants have not shown that
Williams’s claim against JKL is time barred as a matter of law. The Motion, as it
relates to this issue, is due to be DENIED WITHOUT PREJUDICE. After the jury
resolves the factual disputes related to these Defendants’ willfulness, JKL may
reassert its statute of limitations defense in accord with the jury’s findings.
Double K’s Entitlement to the Forestry Exemption
The FLSA, like most rules, contains exceptions and exemptions. See U.S.C.
§ 213. Relevant here, the forestry exemption provides that the FLSA’s general rule
on overtime wages:
shall not apply with respect to . . . any employee employed in planting
or tending trees, cruising, surveying, or felling timber, or in preparing
or transporting logs or other forestry products to the mill, processing
plant, railroad, or other transportation terminal, if the number of
employees employed by his employer in such forestry or lumbering
operations does not exceed eight.
29 U.S.C. § 213(b)(28) (emphasis added).
Double K asserts that it can claim the forestry exemption because it never
employed more than eight (8) people. See 29 U.S.C. § 213(b)(28). Exemptions
from the FLSA are narrowly construed against the employer. See Jeffery v.
Sarasota White Sox, Inc., 64 F.3d 590, 594 (11th Cir. 1995) An employer must
prove its entitlement to an exemption by clear and convincing evidence. See
Gregory v. First Title of Am., Inc., 555 F.3d 1300, 1302 (11th Cir. 2009) (citation
It is undisputed that Double K’s payroll records reflect that it never
employed more than eight (8) people. (Doc. 36 at 3, ¶ 6.) Rather than argue that
Double K actually employed more than eight (8) people, Williams contends that
Double K and JKL are a single enterprise under the FLSA. Still, when considered
in conjunction with Williams’s evidence that Kynard transferred him to Double K
for the express purpose of avoiding the overtime requirements of the FLSA, see
Part III.A supra, and consistent with the court’s findings regarding Williams’s
single enterprise argument, see Part III.C infra, the court concludes that Double
K’s payroll records do not establish its entitlement to the forestry exemption by
clear and convincing evidence. Therefore, Defendants’ Motion on this issue is
due to be DENIED.
Single Enterprise Theory
The FLSA’s overtime wage requirement applies to employers whose employees
are “employed in an enterprise engaged in commerce or in the production of goods
for commerce.” 29 U.S.C. § 207(a)(1) (emphasis added). The FLSA defines an
related activities performed (either through unified operation or common
control) by any person or persons for a common business purpose, and
includes all such activities whether performed in one or more
establishments or by one or more corporate or other organizational units.
29 U.S.C. § 203(r)(1). Thus, seemingly distinct businesses can constitute a single
enterprise under the FLSA. See Brennan v. Veterans Cleaning Serv., Inc., 482 F.2d
1362, 1366 (5th Cir. 1973).5 Here, the parties’ hotly dispute whether JKL and
Double K are a single enterprise. If they are, then Williams may count the employees
of JKL in computing whether Double K can claim the forestry exemption. And, it is
not seriously disputed that, if Williams can count the employees of JKL, Double K
cannot claim the forestry exemption.
A single enterprise exists when the following three elements are present: (1)
related activities, (2) unified operation or common control, and (3) a common
business purpose. See Donovan v. Easton Land & Dev. Inc., 723 F.2d 1549, 1551
(11th Cir. 1984).
The question of whether several businesses constitute an
“enterprise” is a question of law for the court. See Dunlop v. Ashy, 555 F.2d 1228,
1229 (5th Cir. 1977). The question is “to be resolved in each case on the basis of all
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the
Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed
down prior to October 1, 1981.
the particular facts . . . .” Dunlop, 555 F.2d at 1230 (citing Brennan v. Plaza Shoe
Store, Inc., 522 F.2d 843, 846 (8th Cir. 1975)). This court must liberally construe the
definition of “enterprise.” See Dunlop, 555 F.2d at 1234; Shultz v. Mack Farland &
Sons Roofing Co., 413 F.2d 1296, 1300 (5th Cir. 1969).
From the undisputed facts, the court concludes that Double K and JKL engage
in “related activities” and share a “common business purpose.” Thus, two elements
of a single enterprise are present. Regarding the third element, the court finds that a
genuine issue of fact remains regarding Kynard’s power to control Double K. If the
jury finds that Kynard controls Double K, then the third element of a single enterprise
is also present. Because a jury must determine the issue of Kynard’s control over
Double K, summary judgment is inappropriate.
The “related activities” prong asks if two or more businesses are “the same or
similar” or if they are “auxiliary and service activities” for one another. See id.
(citing S.Rep. No. 87-145 (1961), reprinted in 1961 U.S.C.C.A.N. 1620, 1660); see
also Brennan v. Veterans Cleaning Serv., Inc., 482 F.2d 1362, 1366 (5th Cir. 1973);
Wirtz v. Savannah Bank & Trust Co. of Savannah, 362 F.2d 857, 860 (5th Cir. 1966).
These inquiries are distinct. Two businesses are the “same or similar” when they
operate like “the individual retail or service stores in a chain.” See Brennan, 482 F.2d
at 1366. Alternatively, two business are “auxiliary and service activities” when they
involve “operational interdependence in fact.” See Donovan, 723 F.2d at 1551.
The court concludes that Double K and JKL engage in related activities. Both
companies cut trees. (Doc. 36 at 7–8, ¶ 13.) Both companies use the same type of
equipment—a cutter, a skidder, and a loader. (Doc. 36 at 8, ¶ 14; Doc. 32-7 at 25.)
Both companies use contract haulers to transport their wood. (Doc. 36 at 8–9,
¶ 17–18.) And, both companies often serve the same mills. (Doc. 36 to 7–8, ¶ 13.)
Defendants contend that Double K and JKL are not the “same or similar”
because Double K is a thinning operation and JKL is a clear cutting operation.
Kimbrel testified that there are variations between the equipment used by the two
(Doc. 32-7 at 25.) And, Kynard testified that the kind and size of the
trees differ between a thinning operation and a clear cut operation. (Doc. 32-1 at
8–9.) The court declines to draw such a fine distinction. Both Double K and JKL use
cutters, skidders, and loaders. And, a tree, whether hardwood or pine, whether saw
timber or pulpwood, is simply a resource—a raw material—that must be harvested
and transported to a mill for processing. Both Double K and JKL provide the
essential service of harvesting and transporting raw materials for the timber industry.
The work done by the employees of both companies appears, for all relevant
purposes, to be exactly the same. At the very least, the work of Double K and JKL
is similar enough that it is “related” for purposes of the FLSA.
Defendants rely on Donovan v. Easton Land & Development, Inc., where the
Eleventh Circuit held that the activities of two businesses—a lounge and a
hotel—were not related. 723 F.2d at 1551–52. Defendants’ reliance on Donovan is
In Donovan, the two businesses provided two different types of
services—the hotel provided lodging while the lounge provided food and drinks. Id.
at 1552. Additionally, the hotel served one clientele and the lounge served primarily
a different clientele. Id. Thus, the court found that the two businesses were not
operationally interdependent (and thus not related under the “auxiliary and service
activities” inquiry). Id. Additionally, the court found that the lounge and hotel were
not engaged in the “same or similar” activities because they were not providing “food
and shelter to the same customers.” Id. Donovan is distinguishable from this case
because both Double K and JKL provide the same service—i.e., harvesting and
hauling trees—to many of the same customers.
This case is more akin to Shultz v. Mack Farland & Sons Roofing Co., 413 F.2d
1296 (5th Cir. 1969). In Shultz, two separate roofing companies operated in different
parts of Florida. Id. The companies employed separate supervisors and crewmen.
Still, the former Fifth Circuit concluded, without much discussion, that the companies
were related. See id. at 1299–1301. Like the separate roofing companies in Shultz,
Double K and JKL are separate logging companies with separate work crews. And,
Double K and JKL are arguably more related than the roofing companies at issue in
Shultz because Double K and JKL serve mostly the same mills in the same area of
Alabama, while the roofing companies served different geographic regions. Shultz
is different from this case in one respect: the work crews in Shultz sometimes
However, this difference is immaterial to the “related
activities” inquiry. Instead, this fact is more relevant to the common control inquiry.
Because both Double K and JKL cut and haul trees to many of the same mills, their
activities are “related” for purposes of the FLSA.
Common Business Purpose
The “common business purpose” prong asks if two or more businesses share
a common objective or are operated as a single business entity. See 29 C.F.R.
§ 779.213. The term “common business purpose” is not “a narrow concept,” 29
C.F.R. § 779.212, and the existence of a common business purpose will
“ordinarily . . . be readily apparent from the facts.” 29 C.F.R. § 779.213. “The facts
may show that the activities are related to a single business objective . . . . In such
cases, it will follow that they are performed for a common business purpose.” Id. It
is clear, however, that “[m]ore than a common goal to make a profit” is required to
find a common business purpose. See Donovan, 723 F.2d at 1553. “Many of the
considerations relevant in determining the existence of related activities are pertinent
to determine the existence of a ‘common business purpose.’” Id.
The court concludes that Double K and JKL share a common business
purpose—i.e., harvesting timber for profit. Both operations cut and haul logs which
are often taken to the same mills. (Doc. 36 at 7–8, ¶ 13.) Both companies employ
contract haulers to move the logs. And, both companies use the same types of
equipment. Once again, Defendants contend that Double K is a thinning operation
and that JKL is a clear cut operation. This contention actually supports finding a
common business purpose. While thinning and clear cutting differ, they are both an
integral part of the forestry industry. And, by operating both a thinning operation and
a clear cutting operation, Double K and JKL can participate in both areas of this
Defendants point out that Double K and JKL keep separate books, separate
bank accounts, and do not intermingle profits. While these facts weigh against
finding a common business purpose, they are not determinative. Instead, the term
“common business purpose” clearly “encompasses activities . . . which are directed
to the same business objective or to similar objectives in which the [Defendants] have
an interest.” 29 C.F.R. § 779.213. Here, Double K and JKL have the same objective:
cutting and hauling as many trees as possible. The more trees the two companies cut
and deliver, the more money they can make. While the size and type of the tree may
differ between the two companies, the work is the same or very similar.
Additionally, Kynard wholly owns JKL, and has a fifty percent (50%)
ownership stake in Double K. By operating both companies, Kynard can participate
in both the thinning and clear cutting segments of the timber industry. Thus, Kynard
can increase his market exposure in the industry and, thereby, his profits.
Furthermore, the profits of Double K and JKL are intermingled in the sense that they
both will go into Kynard’s pocket.6 Finally, if the jury finds that Kynard controls
Double K (discussed in Part III.C.3 infra), this control would further support finding
a common business purpose. See Brennan v. Plaza Shoe Store, Inc., 522 F.2d 843,
848 (8th Cir. 1975).
Common Control or Unified Operations
The “common control or unified operations” prong asks whether two or more
businesses are either (1) under common control or (2) operated as a unified operation.
Common control means that a single entity has “the power to control the related
business operations.” Donovan, 723 F.2d at 1552. The Secretary of Labor, by
regulation, has further defined this term:
The word “control” may be defined as the act or fact of controlling;
Of course, Kynard’s share of Double K’s profits is limited to fifty percent (50%).
power or authority to control; directing or restraining domination.
“Control” thus includes the power or authority to control. In relation to
the performance of the described activities, the “control,” referred to in
the definition in section 3(r) includes the power to direct, restrict,
regulate, govern, or administer the performance of the activities.
“Common” control includes the sharing of control and it is not limited
to sole control or complete control by one person or corporation.
“Common” control therefore exists where the performance of the
described activities are controlled by one person or by a number of
persons, corporations, or other organizational units acting together. This
is clearly supported by the definition which specifically includes in the
“enterprise” all such activities whether performed by “one or more
corporate or other organizational units.”
29 C.F.R. § 779.221 (1970); see also 35 Fed. Reg. 5856, 5868–69 (April 9, 1970).
A controlling ownership interest is not required to find common control. Donovan,
723 F.2d at 1552.
Unified operation, on the other hand, means operating several business “so that
they are in effect a single business unit or an organized business system which is an
economic unit directed to the accomplishment of a common business purpose.”
Dunlop, 555 F.2d at 1232; see 29 C.F.R. § 779.220. Mutual cooperation among
several business is not enough. See id.; Donovan, 723 F.2d at 1552. Businesses
which keep separate books, do not intermingle funds, obtain separate insurance, order
supplies separately, do not interchange employees, and keep separate managers are
probably not a unified operation. See Donovan, 723 F.2d at 1552. Instead, a unified
operation will look or act like a single business entity. See 29 C.F.R. § 779.220. For
example, separate businesses may operate under a single trade name, construct
identical establishments, use identical equipment, sell the same goods or provide the
same services, and otherwise standardize their activities. Id.
Turning first to common control, it is undisputed that Kynard controls JKL.
In fact, as the sole owner of JKL, the law recognizes that Kynard can control JKL
whether or not he actually exercises this power. See Donovan, 723 F.2d at 1552.
However, the parties dispute whether Kynard “controlled” Double K for purposes of
It is also undisputed that Kynard owns a fifty percent (50%) interest in Double
K. Because Kynard lacks a majority ownership interest, the court must examine
whether Kynard exercised control of Double K in fact. Kynard testified that both he
and Kimbrel have authority to make day-to-day business decisions for Double K.
(Doc. 32-6 at 12.) For example, both Kynard and Kimbrel could hire or fire Double
K’s employees and otherwise direct their activities. (Doc. 32-1 at 6, 38, 43, 48.)
Kynard further testified that he and Kimbrel back each other up on these decisions.
(Doc. 32-6 at 12.) Finally, Kynard testified that he and Kimbrel always agree on all
major business decisions. (Id.) Kimbrel verified this arrangement. (Doc. 32-7 at 20.)
From this undisputed testimony, the court concludes that Kynard can, and does,
manage the day-to-day affairs of Double K. Additionally, the court concludes that
Kynard and Kimbrel defer to each others’ day-to-day management decisions. In other
words, if Kynard makes a decision, Kimbrel goes along with it, and vice versa. In
effect, then, Kynard’s day-to-day decisions are binding on Double K.
The court further concludes that there is at least a material issue of fact
regarding Kynard’s power to make major business decisions for Double K. While
Kynard lacked a controlling ownership interest, the regulations only require that he
exercise control over Double K in fact. See 29 C.F.R. § 779.221. Here, a reasonable
jury could infer that Kynard had the final say at Double K.
First, the case law recognizes that a family group can have control even though
no member of the family group owns a controlling ownership interest. See Reich v.
Bay, Inc., 23 F.3d 110, 115 (5th Cir. 1994); Donovan v. Sideris, 688 F.2d 74 (8th Cir.
1982). The law assumes that family members will work together for the benefit of
the family. Thus, the law aggregates the ownership interests of family members for
the purpose of testing common control unless the facts clearly show otherwise. See
id.; see also Brennan v. Plaza Shoe Store, Inc., 522 F.2d 843, 848–850 (8th Cir.
1975). While Kynard and Kimbrel are not family, they have known each other their
entire lives. (Doc. 32-7 at 2.) They have also jointly owned and operated several
other businesses. It is undisputed that they back each other up on all day-to-day
business decisions and “agree” on all major business decisions. From these facts, a
reasonable jury could infer that Kynard and Kimbrel work together like family
members in controlling Double K. In other words, Kynard can count on Kimbrel to
back him up on major business decisions, or Kynard can influence Kimbrel’s vote
such that Kynard is actually the one calling the shots at Double K. The regulations
are clear that a number of persons “acting together” can exercise common control
over an enterprise. See 29 C.F.R. § 779.221. Given the state of the record, a jury
must determine to what extent Kynard and Kimbrel were “acting together” in
managing Double K.
Furthermore, other facts suggest that Kynard holds significant leverage in his
relationship with Kimbrel. For example, Kynard has owned his own logging
company since 1996. Conversely, Kimbrel had little experience in the logging
business before starting Double K. (Doc. 32-5 at 6.) Thus, a reasonable jury could
infer that Kimbrel would naturally defer to Kynard’s management of Double K. More
important, Kynard provided health insurance to Double K’s employees through JKL.
(Doc. 36 at 9–10, ¶ 21.) In fact, Kynard represented to JKL’s insurance provider that
Double K’s employees were actually employed by JKL. (Id.) Because Kynard used
his wholly-owned company to provide health insurance to Double K’s employees, a
reasonable jury could infer that Kynard in fact controlled Double K.
Because Kynard and Kimbrel were close friends, and because Kynard had
substantial leverage in their business relationship, a reasonable jury could conclude
that Kynard called the shots at Double K. Put simply, even though Kynard owned
only fifty percent (50%) of Double K, he acted as if he owned fifty-one percent (51%)
or more. If a jury were to reach this conclusion, then Kynard has “the power to direct,
restrict, regulate, govern, or administer the performance of the activities” of
Double K, and “controls” Double K for purposes of the FLSA. 29 C.F.R. § 779.221.
Defendants argue that Kynard cannot control Double K because he lacks a
controlling ownership interest. To support this contention, Defendants cite Fazzie v.
RAMM of Central Fla., 2008 WL 203419 (M.D. Fla. Jan. 23, 2008). Fazzie is not
controlling. Further, it is distinguishable from this case. In Fazzie, two separately
incorporated entities—a drywall and metal framing business and a trucking
business—operated out of the same office space. A single person owned the framing
business and was a fifty percent (50%) owner and president of the trucking company.
See id. at *2. The Fazzie court held that the plaintiff had not established the existence
of a common control center for both companies. Yet, it appears the plaintiff in Fazzie
relied entirely on the single defendant’s common ownership interest in the two
companies. The Fazzie court’s opinion mentions no other facts which would show
that the person with the common ownership interest “controlled” the trucking
company. Thus, Fazzie does not say that an ownership interest of fifty percent (50%)
or less establishes the absence of control. Instead, Fazzie merely held that a fifty
percent (50%) ownership interest—alone—will not establish control.
As the Fazzie court recognized, the standard here is whether “there is a
common control center with the ultimate power to make binding policy decisions for
all units of the enterprise.” See id. at *5 (citing Dunlop, 555 F.2d at 1231). To
answer this question, the court must consider “all the particular facts” of each
individual case. Dunlop, 555 F.2d at 1230 (citation omitted). On the facts presented
here, a reasonable jury could conclude that Kynard controls Double K in fact.
Turning to the unified operations issue, Double K and JKL initially appear
operationally independent of one another. The companies keep separate books and
bank accounts, do not intermingle funds, and rarely go to the same property to cut
Williams contends, however, that Double K and JKL are a unified operation
because each company uses the other’s employees and trucks to move wood to the
mills, JKL covers Double K’s employees through its group health insurance plan,
JKL provides goods and services to Double K on an accounts payable basis, and JKL
lends its office employee, Michelle Montz, to Double K for two days a week without
reimbursement. The court is skeptical that these facts can demonstrate operational
interdependence. First, Double K’s and JKL’s use of contract haulers appears
common among logging companies. Second, even though JKL represents to its
health insurer that Double K’s employees are employed by JKL, this fact shows no
operational interdependence. Third, Williams provides no reason that lending goods
and services on an accounts payable basis demonstrates operational interdependence.
Fourth, the work that Michelle Montz did for Double K only took about ten (10)
minutes a day. (Doc. 32-8 at 17.)
Nonetheless, issues of fact remain regarding the relationship between Double K
and JKL; specifically, Kynard’s ability to direct the equipment and resources of
Double K and the way he directed the resources of both companies. If the jury finds
that Kynard can control Double K, the jury could also find facts demonstrating that
Kynard operated the two companies interdependently. Because the issue of unified
operation must be determined from the particular facts of each case, Dunlop, 555 F.2d
at 1230, the court will submit the above factual disputes to the jury. Once the jury
makes factual findings on Kynard’s control and operation of Double K, the court will
be in a better position to rule on the operational interdependence of Double K and
Viewing the facts in the light most favorable to Williams, the court concludes
that Double K and JKL engage in related activities performed under common control
or as a unified operation for a common business purpose. Therefore, the two
companies are, on this version of the facts, a single enterprise under the FLSA. For
that reason, Defendants’ Motion on this issue is due to be DENIED.
Finally, Defendants contend that Kynard is not the alter ego of Double K or
JKL. (Doc. 31 at 22.) Under an alter ego theory, a court may pierce the corporate
veil and impose personal liability on an individual defendant.
Auto-Owners Ins. Co., 429 So. 2d 1030, 1033 (Ala. 1983) (citation omitted). In
Alabama, a plaintiff can show that an individual defendant is the alter ego of a
corporate entity by proving that the individual created the corporate entity “to
promote injustice and protect the owner from payment of just obligations.” Id.
(quoting Tri-State Building Corp. v. Moore-Handley, Inc., 333 So.2d 840, 841
In his Response (Doc. 36), Williams asserts that the alter ego analysis is
subsumed in the common control analysis under the FLSA. (Doc. 36 at 17.)
However, as outlined above, the standard for common control under the FLSA differs
sharply from the standard for alter ego liability. Most significantly, the alter ego
standard requires a plaintiff to show that the defendant created the corporate entity
to promote injustice. See McKissick, 429 So. 2d at 1033.
In his Response, Williams admits that “there is no evidence that Double K was
formed for the purpose of evading the FLSA overtime requirements . . . .” (Doc. 36
at 17) (emphasis added). Williams nonetheless contends that, after Double K was
formed, Kynard used Double K to avoid paying Williams overtime wages. (Id.)
Even assuming that Williams’s allegation is true, it would not support piercing the
corporate veil here.
Additionally, because Plaintiff offers no argument why Kynard is the alter ego
of JKL, he has waived this issue. In any event, Plaintiff has no evidence to support
a finding that Kynard is the alter ego of JKL.
Therefore, Defendants’ Motion is due to be GRANTED on Williams’s alter
For the foregoing reasons, the Defendants’ Motion (Doc. 30) is DENIED IN
PART and GRANTED IN PART as follows:
Regarding Defendants’ statute of limitations defense, Defendants’
Motion is DENIED:
Regarding Double K’s entitlement to the forestry exemption,
Defendants’ Motion is DENIED;
Regarding Double K’s and JKL’s status as a single enterprise,
Defendants’ Motion is DENIED;
Regarding Kynard’s status as the alter ego of Double K or JKL,
Defendants’ Motion is GRANTED.
By separate order, the court will dismiss all claims against Johnny W. Kynard,
Additionally, the court will set a final pretrial conference by separate order.
DONE and ORDERED this the 10th day of May, 2013.
VIRGINIA EMERSON HOPKINS
United States District Judge
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