Costello et al
Filing
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Magistrate Judge Katherine A. Robertson: MEMORANDUM AND ORDER entered re: Defendants' 31 Motion for Summary Judgment. For the foregoing reasons, Defendants Motion for Summary Judgment - (Dkt. No. 31) isALLOWED in part. Judgment shall enter for Defendants on Count I. The Court declines to exercise Supplemental Jurisdiction over Plaintiffs remaining State Law Claims (Counts II-IV), which are DISMISSED, without prejudice. The Clerk shall enter Judgment in accordance with this Order and close the case. (Finn, Mary)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
NICHOLAS COSTELLO,
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Plaintiff,
v.
Civil Action No. 3:17-cv-30184-KAR
MOLARI, INC., and GAIL MOLARI, )
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Defendants.
MEMORANDUM AND ORDER ON DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT
(Dkt. No. 31)
ROBERTSON, M.J.
I.
INTRODUCTION
Plaintiff Nicholas Costello (“Plaintiff”) brings his wage and hour claims under federal
and state law against Defendants Molari, Inc. (“Molari”) and Gail Molari (collectively,
“Defendants”). Defendants seek summary judgment against Plaintiff, arguing, inter alia, that
Plaintiff has not shown that Defendants were “engaged in commerce” within the meaning of the
Fair Labor Standards Act, 29 U.S.C. § 203(b), (s) (“FLSA”). Plaintiff’s FLSA claim, Count I in
the complaint, is the only federal claim he asserts. The parties have consented to this court’s
jurisdiction (Dkt. No 11). See 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Because the court agrees
that Plaintiff has not shown that Defendants are covered by the FLSA, the court grants
Defendants’ summary judgment motion as to Count I of the complaint and dismisses the pendent
state law claims in Counts II-IV without prejudice.
II.
RELEVANT FACTS
The following facts are drawn from Defendants’ and Plaintiff’s separate Statements of
Facts (Dkt. Nos. 33, 36) and documents referenced therein. Molari is a temporary employment
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agency (Molari Dep. 9:22-24 – 10:1-21, Dkt. No. 33-27 at 4-5), which, at the relevant time,
employed some 150 people as home health aides, personal care assistants, homemakers, and
companions (Molari Dep. 16:10-24). The company had an in-house staff that ran the business,
and a field staff comprised of the employees who worked in Molari’s employment services
business or its health care department (Sime Dep. 17:7-24, Dkt. No. 33-17 at 6). Molari has its
sole office in Pittsfield, Massachusetts (Sime Aff. ¶ 3, Dkt. No. 33-16 at 1). The company
operates and markets its services exclusively in Massachusetts. All of the company’s clients are
in Massachusetts, and it derives all its revenue from these Massachusetts clients (Sime Aff. ¶¶ 916). Plaintiffs do not dispute these facts (Dkt. No. 36 at 4-5, ¶¶ 18-26).
In February 2014, Plaintiff was hired by Molari as a staffing coordinator/recruiter (Dkt.
No. 33 at 1, ¶¶ 2-3; Dkt. No. 36 at 1, ¶¶ 2-3). About six months into his job, Plaintiff transferred
into a different position in the health care division. The parties dispute whether, in this position,
Plaintiff functioned primarily as a supervisor or did little more than arrange the schedules of
Molari’s field staff. On October 28, 2016, Plaintiff resigned his employment with Defendants
(Costello Dep. 18:17-18, Dkt. No. 33-7 at 6). On December 29, 2017, Plaintiff filed this action
(Dkt. No. 1). In paragraphs 12 and 13 of his complaint, respectively, Plaintiff alleged that
“Defendants were at all relevant times an ‘enterprise engaged in commerce or in the production
of goods for commerce’ as defined in defined in 29 U.S.C. § 203(s)” and that “Plaintiff was at all
relevant times an employee ‘engaged in commerce or in the production of goods for commerce’
as defined in 29 U.S.C. § 207(a)” (Dkt. No. 1 at 2, ¶¶ 12, 13). In their answer (Dkt. No. 6 at 2)
and their amended answer (Dkt. No. 9 at 2), in response to these allegations, Defendants objected
to the use of the term “relevant period” on the grounds that the term had not been identified or
defined with any specificity and “[a]dmit[ted] to the remainder.”
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III.
DISCUSSION
A. Standard of Review
The court shall grant summary judgment when “‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P. 56(c)). “A ‘genuine’ issue is
one that could be resolved in favor of either party, and a ‘material fact’ is one that has the potential of
affecting the outcome of the case.” Calero-Cerezo v. U.S. Dep’t of Justice, 355 F.3d 6, 19 (1st Cir.
2004). The initial burden rests with the moving party to apprise the court “‘of the basis for its motion,
and [to] identify[] those portions of [the record] which it believes demonstrate the absence of a genuine
issue of material fact.’” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir.
2000) (quoting Celotex Corp., 477 U.S. at 323). “Once the moving party has properly supported [its]
motion for summary judgment, the burden shifts to the nonmoving party, with respect to each issue on
which [it] has the burden of proof, to demonstrate that a trier of fact reasonably could find in [its] favor.”
DeNovellis v. Shalala, 124 F.3d 298, 306 (1st Cir. 1997).
B. Defendants’ Summary Judgment Motion
1. FLSA Claim
“Pursuant to § 16(b) of the FLSA, any employer who violates the overtime compensation or
minimum wage provisions of sections 6 or 7 is liable to the employee or employees affected in the
amount of their unpaid minimum wages or overtime compensation, plus an additional equal amount as
liquidated damages.” Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 674 (1st Cir. 1998)
(citing 29 U.S.C. § 216(b)).
In order for the [defendant’s] commercial activities to be subject to the Fair Labor
Standards Act, two conditions must be satisfied. First, the [defendant’s] businesses
must constitute an “[e]nterprise engaged in commerce or in the production of
goods for commerce.” 29 U.S.C. § 203(s). Second, the associates must be
“employees” within the meaning of the Act.
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Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 295 (1985).
“The burden is on the employee to prove a sufficient nexus to interstate commerce as an
essential element of the claim.” Martinez v. Petrenko, 792 F.3d 173, 175 (1st Cir. 2015) (citing
Chao v. Hotel Oasis, Inc., 493 F.3d 26, 32-33 & n.6 (1st Cir. 2007)). “A plaintiff can establish
this nexus either by showing that they, as an employee, engaged in interstate commerce
(‘individual coverage’) or that their employer has other employees engaging in interstate
commerce and has annual gross sales of at least $ 500,000 (‘enterprise coverage’).” Brown v.
J&W Grading, Inc., 390 F. Supp. 3d 337, 348 (D.P.R. 2019) (citing Martinez, 792 F.3d at 175)
(emphasis in original); see also Sam Li v. Fu Hing Main Rest., Inc., CIVIL ACTION NO. 1:17cv-10670-MPK, 2018 WL 3682488, at *3 (D. Mass. Aug. 2, 2018). “In this context, the term
‘commerce’ means ‘trade, commerce, transportation, transmission, or communication among the
several States or between any State and any place outside thereof.’” Culver-Taylor v. Foster,
Case No. 5:17-CV-289-LC/MJF, 2019 WL 1430402, at *4 (N.D. Fla. Feb. 22, 2019), report and
recommendation adopted, Case No. 5:17CV289/MCR/MJF, 2019 WL 1430418 (N.D. Fla. Mar.
30, 2019) (citing 29 U.S.C. § 203(b)). “If enterprise coverage applies, all of the enterprise’s
employees are protected under the FLSA, even if they are not personally involved in interstate
commerce.” Cruz v. Bos. Litig. Sols., Civil Action No. 13-11127-LTS, 2016 WL 3568254, at *5
(D. Mass. May 24, 2016). To show that enterprise coverage exists, Plaintiff must point to
evidence that the employer had “employees engaged in commerce or in the production of goods
for commerce, or . . . has employees handling, selling, or otherwise working on goods or
materials that have been moved in or produced for commerce by any person,” and there must be
evidence that the employer had gross volume sales “not less than $500,000 (exclusive of excise
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taxes at the retail level that are separately stated).” 29 U.S.C.A. § 203(s)(1)(A)(i), (ii). See
Donovan v. Agnew, 712 F.2d 1509, 1516 (1st Cir. 1983) (remanding the appeal of a summary
judgment decision where the plaintiff’s allegations that the defendant employer had gross
volume sales over the limit were “insufficiently supported”). As to the alternative theory of
coverage, “the First Circuit offers no ‘road map’ as to how employees can show individual
coverage.” Brown, 390 F. Supp. 3d at 353 (quoting Martinez, 792 F.3d at 175). In Brown,
another session of this court looked to the Department of Labor (“DOL”) regulations interpreting
the reach of the FLSA’s wage and hour laws, noting that the DOL regulations:
offer the following considerations:
“One practical consideration to be asked is whether, without the particular
service, interstate or foreign commerce would be impeded, impaired or abated;
others are whether the service … makes it possible for existing instrumentalities
of commerce to accomplish the movement of such commerce effectively and to
free it from burdens or obstructions.”
Id. (quoting 29 C.F.R. § 776.9).
As noted above, Plaintiff alleged in the complaint that “Defendants were at all relevant
times an ‘enterprise engaged in commerce or in the production of goods for commerce’ as
defined in 29 U.S.C. § 203(s)” and that he “was at all relevant times an employee ‘engaged in
commerce or in the production of goods for commerce’ as defined in 29 U.S.C. § 207(a)” (Dkt.
No. 1 at 2, ¶¶ 12, 13). In response to each of these allegations, Defendants responded: “The
defendants object to the use of the term ‘Relevant Period’ which has neither been identified nor
defined with any specificity within the Plaintiffs [sic] Complaint. Admit the remainder” (Am.
Answer ¶¶ 12, 13 at 2). Plaintiff resists summary judgment for Defendants on the basis of these
responses to the allegations of FLSA coverage in Plaintiff’s Complaint, contending that
Defendants admitted to being covered by the FLSA in their amended answer to the complaint
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and are bound by these admissions (Dkt. No. 35 at 3-4).
“Generally speaking, ‘[a] party’s assertion of fact in a pleading is a judicial admission by
which it normally is bound throughout the course of the proceeding.’” Lima v. Holder, 758 F.3d
72, 79 (1st Cir. 2014) (quoting Schott Motorcycle Supply, Inc. v. Am. Honda Motor Co., Inc.,
976 F.2d 58, 61 (1st Cir.1992)); Pruco Life Ins. Co. v. Wilmington Trust Co., 721 F.3d 1, 11 (1st
Cir. 2013).
Judicial admissions are formal concessions in the pleadings, or stipulations by a
party or its counsel, that are binding upon the party making them. They may not
be controverted at trial or on appeal. Indeed, they are “not evidence at all but
rather have the effect of withdrawing a fact from contention.”
Keller v. United States, 58 F.3d 1194, 1199 n.8 (7th Cir. 1995) (quoting Michael H. Graham,
Federal Practice and Procedure: Evidence § 6726 (Interim Edition); citing J.W. Strong,
McCormick on Evidence § 254, at 142 (1992)); see also Harrington v. City of Nashua, 610 F.3d
24, 31 (1st Cir. 2010) (“Ordinarily, a pleading admitting a fact alleged in an antecedent pleading
is treated as a binding judicial admission, removing the fact from contention for the duration of
the litigation.”); Soo Line R. Co. v. St. Louis S.W. Ry. Co., 125 F.3d 481, 483 (7th Cir. 1997)
(stating that a “party is bound by what it states in its pleadings”). Accordingly, a party’s
response in its answer “can be an appropriate basis for granting summary judgment.” In re
Carney, 258 F.3d 415, 420 (5th Cir. 2001) (citing Fed. R. Civ. P. 56(c)). Nonetheless, “there are
limits to what parties can admit, see, e.g., Whitfield v. Mun’y of Farjado, 564 F.3d 40, 44 (1st
Cir. 2009), so it is important to parse the particular admission in each case.” Harrington, 610
F.3d at 31. “The Court is not obligated to accept as binding judicial admissions statements that
are ‘legal conclusions’ or that are ‘unclear.’” AES Puerto Rico, L.P. v. Trujillo-Panisse, 133 F.
Supp. 3d 409, 427 (D.P.R. 2015) (quoting Harrington, 610 F.3d at 31); see also Debnam v.
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FedEx Home Delivery, 766 F.3d 93, 97 n.4 (1st Cir. 2014) (stating that “precedent indicat[es]
that ‘legal conclusions are rarely considered to be binding judicial admissions’” (quoting
Harrington, 610 F.3d at 31)).
Plaintiff’s contention is supported by the decision in Lopez v. Reliable Clean-Up &
Supports Servs., Civil Action No. 3:16-CV-2595-D, 2018 WL 3609271 (N.D. Tex. July 27,
2018). The plaintiffs’ relevant allegations in Lopez were very similar to Plaintiff’s allegations in
the instant case: the Lopez plaintiffs alleged that during all of the relevant time period,
“‘Defendants have been an enterprise engaged in commerce or in the production of goods for
commerce within the meaning of Section 3(s)(1) of the FLSA[.]’” Id. at *13. The defendants
admitted these allegations. See id. Having denied the defendants’ motion for leave to amend
their answer, see id. at *4-6, the court stated that it could consider the defendants’ admission of
enterprise coverage as factual support at the summary judgment stage and held, in light of the
admissions in the answer, that “defendants ha[d] failed to demonstrate the absence of evidence
that [the defendant company] was engaged in commerce subject to the FLSA.” Id. at *13.
Defendants’ response to this contention is unpersuasive. They argue that their answer
was not a clear admission of FLSA coverage because they objected to Plaintiff’s use of the term
“relevant period” as ambiguous. But Defendants’ objection to the allegations in these
paragraphs was specific. They objected “to the use of the term ‘Relevant Period’” (which was
not, in fact, the phrase used in the complaint) on the grounds that the relevant period had not
been identified or defined with specificity in the complaint and admitted “the remainder” of
paragraphs 12 and 13. The remaining – and crucial – allegations in these paragraphs were the
allegations that Defendants were engaged in interstate commerce within the meaning of the
FLSA and therefore subject to its provisions. An answer denying a certain allegation in a
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complaint “will not be construed to be a general denial of all its allegations.” McNutt v. Fid. &
Deposit Co. of Md., 293 F. 367, 369 (1st Cir. 1923). Objections to the use of an allegedly
undefined term about a time period cannot reasonably be construed as an objection that also
encompassed Plaintiff’s plainly phrased allegations of enterprise and individual FLSA coverage.
Nonetheless, in light of the First Circuit’s pronouncements, the court is not persuaded
that it should adopt the Lopez court’s reasoning. The First Circuit wrote in Harrington that “a
court is not obliged to accept a proposition of law simply because one party elects not to contest
it.” Harrington, 610 F.3d at 31 (citing Comm’l Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d
327, 336 (6th Cir. 2007); In re Teleglobe Commc’ns Corp., 493 F.3d 345, 377 (3d Cir. 2007)).
Plaintiff’s allegations in paragraphs 12 and 13 are conclusory allegations that track the legal
standards for FLSA coverage. When a court reads a complaint, “‘conclusory allegations that
merely parrot the relevant legal standard are disregarded.’” Martinez, 792 F.3d at 179 (quoting
Manning v. Bos. Med. Ctr. Corp., 725 F.3d 34, 43 (1st Cir. 2013)). Indeed, in Martinez, the First
Circuit treated the plaintiff’s allegation that his employer was a “covered employer” under the
FLSA as a conclusory allegation that should be disregarded. Id. (quoting Manning, 725 F.3d at
43).
Here, Plaintiff did not plead any factual allegations tending to show that Molari’s
business crossed state lines such that the criteria for enterprise coverage would be satisfied. He
did not allege that Molari assigned temporary staff members to any business outside of
Massachusetts, recruited temporary employees or sought any business from outside of
Massachusetts, or assigned a health aide, personal care assistant, homemaker, or companion to
provide services to any individual who resided outside of Massachusetts, nor did he allege that
Defendants’ services are of a kind that necessarily involve interstate commerce. The same is
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true as to individual coverage under the FLSA. Plaintiff did not plead facts about his own
activities that would support a conclusion that without the services he performed for Molari,
interstate commerce would be impeded. Had Defendants’ amended answer contained
admissions to factual allegations of this nature, those admissions would be binding. Plaintiff’s
allegations, however, simply track the language of the FLSA and repeat the legal standard for
determining whether an employer is a covered entity. See Welch v. Laney, 57 F.3d 1004, 1011
(11th Cir. 1995) (stating that whether a defendant is an “employer” pursuant to 29 U.S.C. §
203(d) is a question of law); Donovan v. Weber, 723 F.2d 1388, 1391–92 (8th Cir. 1984) (stating
that the existence of enterprise coverage under the FLSA is a question of law). First Circuit
precedent suggests that Defendant’s admissions to those allegations should not be treated as
binding, see Harrington, 631 F.3d at 31, and that those admissions, on their own, are an
insufficient basis for finding FLSA coverage.
Defendants have submitted evidence in support of their summary judgment motion
tending to show that they are not engaged in interstate commerce. Plaintiff, who has the burden
of proof on this point, has not pointed to evidence in the record that would raise a dispute of
material fact on this essential element of Plaintiff’s case. See Martinez, 792 F.3d at 175. For
this reason, the court will grant summary judgment for Defendants on Plaintiff’s FLSA claim.
2. State Law Claims
Plaintiff’s state law claims in Counts II-IV are pending in this court as a result of the exercise of
supplemental jurisdiction pursuant to 28 U.S.C. § 1367. See Wilber v. Curtis, 872 F.3d 15, 23 (1st Cir.
2017). “[T]he Supreme Court has instructed that ‘in the usual case in which all federal-law claims
are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction
doctrine – judicial economy, convenience, fairness, and comity – will point toward declining to
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exercise jurisdiction over the remaining state-law claims.’” Id. (quoting Carnegie–Mellon Univ.
v. Cohill, 484 U.S. 343, 350 n.7 (1988); citing 28 U.S.C. § 1367(c)(3)). The First Circuit has
repeatedly held that it can be an abuse of discretion for a federal district court to retain
jurisdiction over pendent state law claims that remain in a case after a court has determined that
judgment should enter on the sole federal claim that has been asserted. Id.; see also, e.g., Best
Auto Repair Shop, Inc. v. Universal Ins. Grp., 875 F.3d 733, 737 (1st Cir. 2017). The parties
vigorously dispute Defendants’ liability on the state law claims (Dkt. No. 32 at 7-20; Dkt. No. 35
at 4-20; Dkt. No. 37 at 2-5). Those disputes extend to the applicability of exemptions under the
state wage and hour laws. These are “substantial question[s] of state law that [are] better
addressed by the state courts.” Wilber, 872 F.3d at 23. “Accordingly, the [c]ourt sees no reason
to exercise supplemental jurisdiction over the [remaining state law] claim[s] in this matter, and
Count[s II-IV] will therefore be dismissed.” LeClair v. Mass. Bay Transp. Auth., 300 F. Supp.
3d 318, 327 (D. Mass. 2018).
IV.
CONCLUSION
For the foregoing reasons, Defendants’ Motion for Summary Judgment (Dkt. No. 31) is
ALLOWED in part. Judgment shall enter for Defendants on Count I. The court declines to exercise
supplemental jurisdiction over Plaintiff’s remaining state law claims (Counts II-IV), which are dismissed
without prejudice. The Clerk shall enter judgment in accordance with this order and close the case.
It is so ordered.
Dated: November 20, 2019
/s/ Katherine A. Robertson
KATHERINE A. ROBERTSON
U.S. MAGISTRATE JUDGE
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