Reiseck v. Universal Communications of Miami, Inc. et al

Filing 85

OPINION: that for the foregoing reasons, the motions of defendants Bernstein and Lurie are granted. The motion of defendants Blue Horizon and Ruderman are denied. Defendant Gollan's motion is also denied. This opinion resolves docket items numbers 12, 56, 66, and 7l. (Signed by Judge Thomas P. Griesa on 8/23/2012) (pl)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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LYNORE REISECK,
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Plaintiff,
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– against –
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UNIVERSAL COMMUNICATIONS OF
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MIAMI, et al.,
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Defendants.
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06 Civ. 0777 (TPG)
OPINION

Plaintiff Lynore Reiseck claims that her employer, Universal
Communications of Miami, Inc. (“Universal”), and several co-defendants
wrongfully withheld compensation from her. Before the court are motions for
summary judgment from defendants Blue Horizon Media, Inc., Carl Ruderman,
Geoffrey Lurie, and David Bernstein. These motions solely concern the question
of whether these defendants qualify as employers of plaintiff for purposes of the
Fair Labor Standards Act and state law. Defendant Douglas Gollan has also
submitted a motion for summary judgment, in which he argues that plaintiff
falls under the “outside salesperson” exemption to the FLSA and is thus not
entitled to overtime compensation.
The motions of defendants Bernstein and Lurie are granted. All other
motions are denied.

Background
In September 2002, Universal hired Reiseck as a Regional Director of
Sales in its New York City office. In this capacity, Reiseck was responsible for
selling advertising in the northeastern United States and Canada for Elite
Traveler, a magazine published by Universal. Advertising sales make up the
majority of Universal’s revenue from Elite Traveler, because Universal
distributes the magazine to readers free of charge.
As compensation for her advertising sales work, Universal paid Reiseck a
$75,000 salary plus commissions, bonuses, and additional incentives. Her
commissions were calculated according to a written plan, which provided that
the commission would amount to 5% to 10% of net sales, depending on the
amount of the sale. In 2003, plaintiff earned about $150,000. Universal did
not, however, provide her with any overtime compensation.
Reiseck left Universal in February 2004, following a dispute with her
employers over her plan to reside in Florida on weekends. In May 2004, she
filed a lawsuit in his court against defendants Universal; Blue Horizon,
Universal’s parent company; Douglas Gollan, her supervisor at Universal; Carl
Ruderman, Universal’s Chairman and majority owner; Geoffrey Lurie,
Universal’s Vice-Chairman and an officer of Blue Horizon; and David Bernstein,
Universal’s Chief Financial Officer. Reiseck alleged that defendants
discriminated against her based on sex and recreational activities in violation
of New York state and city law, withheld overtime pay in violation of the FLSA

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and New York state law, and withheld commissions in violation of New York
state law.
After the completion of discovery, Defendants moved for summary
judgment on all of Reiseck’s claims. Reiseck cross-moved for partial summary
judgment on her overtime claims. This court granted Defendants’ motion for
summary judgment and denied Reiseck’s cross-motion for partial summary
judgment.
With regard to Reiseck’s overtime claims, this court held that she fell
within the “administrative employee” exemption to the FLSA and New York
law. 1 Reiseck v. Universal Commc’ns of Miami, No. 06 Civ. 0777, 2009 WL
812258, at *4-5 (S.D.N.Y. Mar. 26, 2009), vacated in part and remanded, 591
F.3d 101, 104 108 (2d Cir. 2010) (citing 29 U.S.C. § 213(a)(1)). On January 11,
2010, the Court of Appeals for the Second Circuit held that this court erred in
finding that Reiseck fell within this administrative employee exemption.
Reiseck, 591 F.3d at 108. The Second Circuit held that Reiseck was not an
administrative employee, because, according to the Secretary of Labor’s
interpretive regulations, she was a salesperson.
Accordingly, the Second Circuit vacated this court’s judgment insofar as
it granted summary judgment for Defendants on the issue of overtime pay
under the FLSA and New York law. Id. The Second Circuit then remanded the
case to this court to consider Defendants’ other arguments that Reiseck is
exempt from the overtime pay provisions, namely that she was an “outside
New York law applies the same exemptions as the FLSA. Compare 29 U.S.C. § 270, with N.Y.
Comp. Codes R. & Regs., tit. 12, § 142-3.2.
1

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salesperson” pursuant to 29 U.S.C. § 213(a)(1), or a “commissioned
salesperson” pursuant to 29 U.S.C. § 207(i). Id.
On May 18, 2011, this court granted plaintiff summary judgment with
regard to the “commissioned salesperson” exemption. See Reiseck v. Universal
Commc’ns of Miami, No. 06 Civ. 0777, 2011 U.S. Dist. LEXIS 54276, at *2
(S.D.N.Y. May 18, 2011). The court held that the exemption was not applicable
because “Universal was not a retail or service establishment.” Id. The court,
however, withheld summary judgment with regard to the “outside salesperson”
exemption, because contested issues of material fact precluded the court from
ascertaining the applicability of the exemption. See id. at *1-2.
The Present Motions
Defendants Blue Horizon, Ruderman, Bernstein, and Lurie sought leave
to renew the argument that they are not employers under the FLSA or state law
and so cannot be held liable for failing to pay any overtime due to plaintiff.
Leave was granted, and defendants now move for summary judgment on this
issue.
Defendant Gollan has also submitted a summary judgment motion
attempting to relitigate the court’s decision to deny summary judgment as to
the applicability of the “outside salesperson” exemption. The court has already
decided that issue and will not do so again. Gollan’s motion is denied. The
following discussion concerns only the motions of Blue Horizon, Ruderman,
Bernstein, and Lurie.

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Discussion
Summary judgment may be granted if there is no genuine issue as to any
material fact, such that the movant is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a). A fact is material only if it “might affect the outcome of
the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). A dispute is genuine if “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Id. In
assessing a summary judgment motion, the court must draw all justifiable
inferences in favor of the non-movant. Id. at 255.
To survive summary judgment, however, the non-moving party must
come forward with “specific facts showing that there is a genuine issue for
trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.
11 (1986). Conclusory allegations, conjecture, and speculation are insufficient
to create a genuine issue of fact. Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d
Cir. 1998). Further, the “mere existence of a scintilla of evidence” supporting
the non-moving party’s case is insufficient to defeat summary judgment.
Anderson, 477 U.S. at 252.
The Definition of “Employer” in the FLSA
To be held liable under the FLSA, a person must be an "employer," which
§ 3(d) of the statute defines as "any person acting directly or indirectly in the
interest of an employer in relation to an employee." 29 U.S.C. § 203(d). 2 The

Courts use the same definition for “employer” for both New York state labor law and FLSA
claims. See Chu Chung v. New Silver Palace Rest., Inc., 272 F. Supp. 2d 314, 319 (S.D.N.Y.
2003). Thus the court addresses the state law and FLSA claims in tandem.
2

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Second Circuit has held that this language is to be interpreted broadly to
expand the scope of the FLSA’s protections to the greatest possible extent. See
Carter v. Dutchess Community College, 735 F.2d 8, 12 (2d Cir. 1984).
Courts asked to determine whether a particular individual is an
“employer” look to the power the individual possessed over the worker in
question with an eye to the economic reality presented by the facts of each
case. See Herman v. RSR Sec. Servs., 172 F.3d 132, 139 (2d Cir. 1999). The socalled “economic reality” test has developed to facilitate this inquiry. In
applying this test, the court is to ask "whether the alleged employer (1) had the
power to hire and fire the employees, (2) supervised and controlled employee
work schedules or conditions of employment, (3) determined the rate and
method of payment, and (4) maintained employment records." Carter, 735
F.2d at 12 (internal quotation omitted). No single factor is determinative, and
the factors are not exhaustive. Rather, the court is to look to the totality of the
circumstances and assess all relevant evidence bearing on the critical question
of the degree of control of the alleged employer over the worker. Herman, 172
F.3d at 139.
Furthermore, an alleged employer need not constantly exercise such
control. “Control may be restricted, or exercised only occasionally, without
removing the employment relationship from the protections of the FLSA….” Id.
Officers and owners that do not directly supervise workers may nonetheless be
deemed employers under the FLSA where "the individual has overall
operational control of the corporation, possesses an ownership interest in it,
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controls significant functions of the business, or determines the employees'
salaries and makes hiring decisions." Ansoumana v. Gristede's Operating
Corp., 255 F. Supp. 2d 184, 192 (S.D.N.Y. 2003)
Given the extensive and fact-intensive nature of the inquiries just
detailed, it is perhaps unsurprising that this question is rarely amenable to
summary judgment. Barfield v. New York City Health and Hosps. Corp., 537
F.3d 132, 143-44 (2d Cir. 2008). However, when the facts of the case
unambiguously indicate that a given individual does not exercise meaningful
control over the plaintiff-worker, a court may find that the individual is not an
employer on summary judgment. See, e.g., Copantitla v. Fiskardo Estiatorio,
Inc., 788 F. Supp. 2d 253, 309-311 (S.D.N.Y. 2011) (holding that an owner and
sole shareholder of a defendant company is not also an employer due to her
lack of operational control over the day-to-day business of the company).
The court begins its analysis with corporate defendant Blue Horizons, as
its motions raises issues of fact and law that are distinct from those raised by
the individual defendants.
Blue Horizon
Defendant Blue Horizon argues that it was not plaintiff’s “employer”
because she was employed by a different entity, Universal, and Blue Horizon
exercised no functional control over plaintiff. Plaintiff counters that Blue
Horizon and Universal constitute a single employer under the FLSA, since the
two companies, while superficially distinct, are in fact an integrated enterprise.
“Under the doctrine of limited liability, a parent is liable for the acts of its
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subsidiary only under extraordinary circumstances. The doctrine therefore
creates a strong presumption that a parent is not the employer of its
subsidiary's employees.” Balut v. Loral Elec. Sys., 988 F. Supp. 339, 344
(S.D.N.Y. 1997) (internal quotations and citations omitted). To overcome this
presumption and “prevail in an employment action against a defendant who is
not the plaintiff's direct employer, the plaintiff must establish that the
defendant is part of an integrated enterprise with the employer, thus making
one liable for the illegal acts of the other.” Parker v. Columbia Pictures Indus.,
204 F.3d 326, 341 (2d Cir. 2000).
Four factors are relevant to this inquiry: "(1) interrelation of operations,
(2) centralized control of labor relations, (3) common management, and (4)
common ownership or financial control." Cook v. Arrowsmith Shelburne, Inv.,
69 F.3d 1235, 1240 (2d Cir. 1995). “Although no one factor is
determinative…and, indeed, all four factors are not required,…control of labor
relations is the central concern….” Murray v. Miner, 74 F.3d 402, 404 (2d Cir.
1996) (internal citations omitted). “That criterion has been distilled further into
the following question: ‘What entity made the final decisions regarding
employment matters related to the person claiming discrimination?’” Duffy v.
Drake Beam Morin, No. 96 Civ. 5606, 1998 U.S. Dist. LEXIS 7215, at *11-12
(S.D.N.Y. May 15, 1998). “With respect to interrelation of operations…courts
consider whether the parent was involved directly in the subsidiary's daily
business decisions; whether the two entities shared employees, services,
records, or equipment; and whether the entities commingled assets or finances
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to any extent.” Ennis v. Tyco Int'l Ltd., No. 02 Civ. 9070, 2004 U.S. Dist. LEXIS
4329, at *11 (S.D.N.Y. Mar. 18, 2004). “[C]ommon management and common
ownership, "are less important as they represent ordinary aspects of the
parent-subsidiary relationship" and "'the mere existence of common
management and ownership [is] not sufficient to justify treating a parent
corporation and its subsidiary as a single employer.'" Schade v. Coty, Inc., No.
00 Civ. 1568, 2001 U.S. Dist. LEXIS 8440, at *29-30 (S.D.N.Y. June 20, 2001).
Lastly, it is particularly hard for a plaintiff to prove that a party acted as her
employer “where, as here, the plaintiff attempts to show not that a subsidiary
is integrated with its parent, but rather, that several seemingly independent
corporations should be considered as one.” Regan v. In the Heat of the Nite,
Inc., No. 93 Civ. 862, 1995 U.S. Dist. LEXIS 9682, at *6 (S.D.N.Y. July 12,
1995)
It is undisputed that Ruderman owns both Universal and Blue Horizon,
and that the upper management of both companies is largely identical.
Moreover, both companies have their offices in the same building. Indeed, Blue
Horizon leases the space that Universal occupies, and Universal occupies that
space pursuant to an informal arrangement rather than a formal sublease.
Blue Horizon also manages the payroll for Universal, sorts and delivers mail for
Universal, and provides other forms of administrative support to Universal.
Furthermore, during the time period at issue, many officers of Blue Horizon
simultaneously served as officers of Universal, including defendants Bernstein
and Lurie. Lastly Bernstein has testified that Universal personnel files are
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maintained in Blue Horizon’s offices. These facts are sufficient to deny Blue
Horizon’s motion for summary judgment. See Regan, 1995 U.S. Dist. LEXIS
9682, at *9-10 (denying summary judgment as to defendant companies alleged
to constitute an integrated enterprise, due to the 1) overlap of employees
between the companies; 2) their shared maintenance of employee records; and
3) domination of the companies by their common owner and principle
shareholder).
There remain issues for trial concerning the degree of interrelationship of
the companies and the degree of centralization of labor relations between the
companies. For example, Gollon, plaintiff’s immediate supervisor and the
central actor in the events giving rise to this suit, was employed by Universal
alone and indisputably exercised the most authority over employment
decisions at Universal. All told, it appears that Universal exercised considerable
independent control over its daily affairs and hiring practices, but that many
other aspects of its operations—including its payroll and personnel
administration—were undertaken by Blue Horizons. A reasonable jury could
find that the considerable integration of the two companies casts doubt on
Universal’s alleged independence, so Blue Horizon’s motion for summary
judgment is denied.
Ruderman
Defendant Carl Ruderman owns Universal and Blue Horizon and serves
as the chairman of the publication for which plaintiff worked. Defendant Gollan
reports to Ruderman, but the evidence establishes that Ruderman delegates
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broad authority to Gollan to run the daily affairs of Universal. Indeed, during
the period in dispute, Ruderman spent a sizeable percentage of the year on his
boat.
But Ruderman oversees certain aspects of the business at Universal. He
testified that he pays close attention to the bottom-line profit of the company,
which is driven largely by advertising revenue generated by salespeople like
plaintiff. He also testified that he knows about the standard compensation and
commissions packages offered to salespeople. He further testified that when he
visits the New York offices of his companies, he often drops by Universal’s
offices to discuss the state of business with salespeople. He also has a practice
of giving bonuses to high-performing salespeople. In fact, the evidence
establishes that in 2003, Ruderman gave plaintiff a watch for her efforts.
Thus it appears that Ruderman has ultimate managerial authority over
Universal and that he exercised this authority over plaintiff directly but
sporadically. Factual issues exist as to whether defendant maintained
sufficient control over plaintiff to qualify as her employer under the FLSA.
Accordingly, Ruderman’s motion for summary judgment is denied.
Bernstein
Defendant Bernstein is the Chief Financial Officer of both Blue Horizon
and Universal. The evidence establishes that he heads the accounting
department that manages the financial affairs and payroll of the various
companies owned by defendant Ruderman. In this capacity, Bernstein
manages a staff that processes payroll, calculates commissions due to
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salespeople like plaintiff, secures the benefits’ packages for company employees
and maintains company personnel files.
The evidence does not establish that Bernstein was instrumental in the
decision to hire plaintiff or in establishing the terms of her compensation. Nor
does it appear that Bernstein exercised any day-to-day control over plaintiff.
Rather, the evidence suggests that Bernstein was a financial administrator
with no operational control over plaintiff.
Plaintiff argues that material issues of fact exist as to whether Bernstein
is an “employer” under the broad definition of that term found in the FLSA.
First, plaintiff notes that the department headed by Bernstein was responsible
for calculating the commissions due to plaintiff. In this capacity, Bernstein and
his staff communicated directly with plaintiff regarding the amount of her
commissions. Gollan testified in deposition that he may even have had a
personal meeting with Bernstein regarding the amount of commissions due to
plaintiff after her departure. These commissions comprised a sizeable
percentage of plaintiff’s total compensation. There is no evidence, however, that
this role afforded Bernstein any meaningful control over the terms of plaintiff’s
compensation. Rather, the evidence establishes that Bernstein and his
department paid out commissions in accordance with the terms established by
Gollan. In short, Bernstein merely processed the payments due to plaintiff.
This is insufficient to establish that Bernstein was an employer under the
FLSA.
Plaintiff, however, argues that there exist triable issues regarding extent
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of Bernstein’s involvement in plaintiff’s hiring and firing. While Gollan was
primarily responsible for the decisions to hire and fire plaintiff, he testified that
he “probably” had discussions with co-workers about plaintiff’s hiring, though
he could only specifically recall discussing the matter with a non-party
individual. Gollan further testified that the co-workers he “would have talked to
potentially” regarding the termination of plaintiff included Bernstein. Standing
alone, this testimony is clearly insufficient to counter Bernstein’s unequivocal
denial of a personal role in plaintiff’s hiring and firing. Gollan also attested to a
document containing a “transitional plan” to govern the final days of plaintiff’s
employment. Gollan states that he recognized Bernstein’s handwritten initials
on this document. This evidence establishes that Bernstein was aware that
plaintiff was leaving Universal. It does not, however, establish that Bernstein
influenced the transitional plan. Indeed, it suggests that Bernstein was notified
of the plan after it was made.
In summary, it is clear beyond any real question that Bernstein is
entitled to summary judgment.
Lurie
During the period in dispute, defendant Geoffrey Lurie served as the vice
chairman of both Universal and Blue Horizon. 3 Lurie testified that his role in
the companies was “essentially strategic” and that he had no input on the daily
affairs of Universal or the hiring practices of the company, other than the
hiring of senior management employees. The evidence establishes that Lurie
3

Lurie left the companies in 2009.

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knew that plaintiff was hired and that he learned that she would leave
Universal. In addition, Lurie testified to have conversations with GoHan in
"general terms" about the performance of salespeople. This appears to be the
extent of Lurie's involvement with plaintiff.
Plaintiff introduces no evidence to suggest that Lurie exerted any direct
control over her. Indeed, it is unclear whether Lurie interacted with plaintiff at
alL Instead, plaintiff points to Lurie's senior role in the company and the bare
possibility that GoHan may have sought Lurie's input before hiring and firing
plaintiff. Plaintiff's conjecture is insufficient to defeat Lurie's unequivocal
testimony. Accordingly, Lurie's motion for summary judgment is granted.

Conclusion
For the foregoing reasons, the motions of defendants Bernstein and Lurie
are granted. The motion of defendants Blue Horizon and Ruderman are denied.
Defendant Gollan's motion is also denied. This opinion resolves docket items
numbers 12, 56, 66, and 7l.

Dated: New York, New York
August 23, 2012

~p~
thomas P. Griesa
U.S.D.J.

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