JACKSON et al v. ART OF LIFE INC. et al

Filing 67

FINDINGS OF FACT AND CONCLUSIONS OF LAW RE: JUDGMENT. SIGNED BY MAGISTRATE JUDGE JACOB P. HART ON 12/12/2011. 12/12/2011 ENTERED AND COPIES E-MAILED.(tomg, )

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

KEITH JACKSON, SR., et aI.

CIVIL ACTION

v.
ART OF LIFE, INC., et aL.

FINDINGS OF FACT AND. CONCLUSIONS OF LAW
JACOB P. HART
UNITED STATES J\.1AGISTRATE JUDGE

DATE:

(2/1')../11

In this action, plaintiffs Keith Jackson, Sr., Kevin Joe, David Whaley, Gregory Reaves,
Jr., and Aja Garlick (now Mrs. Reaves) allege overtime violations I1I1der the Fair Labor Standards
Act C'FLSA") (29 U.S.C. § 201, et seq.) against defendants Art of Life, Inc., Advanced Life
Support Ambulance, Inc., and Nick Broytman. A bench trial was held before the undersigned on
November 1, 2011.
As explained in the forthcoming findings offact and conclusions of law, which are set out
in a narrative form, I find in favor of plaintiffs and against all defendants in the total amol1l1t of
$105,078.62.

1.

The Trial Evidence

A.

Plaintiffs' Testimony
Art of Life, Inc. ("Art of Life") is a Pennsylvania corporation engaged in the business of

medical transportation, including both para-transit in vans, and emergency transportation in
ambulances. Trial Transcript ("Transcript") at 151-152. Defendant Nick Broytman owns 50%
of the stock of Art of Life, and his father owns the other 50%. Id. at 151. His father, however,
does not manage the company. Id. at 157. Daily business operations are conducted by Nick
Broytman, and, secondarily, by his general manager, Igor Makhnovetskiy. Id. at 157-158.

All five plaintiffs were para-transit van drivers for Art of Life. (Garlick remains
employed by Art of Llfe, but is on disability; the other plaintiffs are no longer employed by Art
of Life). Pretrial StipUlation at ~ ~ 1-2. Their duties were to transport elderly or infirm
individuals in the Philadelphia area to medical appointments, day programs, or other
destinations, and then to pick the individuals up and return them to their residences. rd. at , 3;
Transcript at 9 (Jackson's testimony); 64 (Whaley's testimony); 124 (Garlick's testimony).
The plaintiffs typically worked over 40 hours per week. Each plaintiff usually had a first
pickup around 5 or 6 a.m., and a last pickup around 3 p.m. Transcript at 13-15 (Jackson); 64-68
(V,'baley); 102-104 (Joe) and 125-126 (Garlick).' However, they had to arrive at the Art of Life
workplace well in advance of the fIrst pickup, in order to obtain the van and drive to the first
pickup site. rd. at 148-9 (Testimony ofIgor Makhnovetskiy).
Further, the plaintiffs did not clock out at Art of Life until several hours after their last
pickup, since they had to return the passengers to their residences, which could be far apart. rd.
at 150 (Makhnovetskiy's testimony). For example, Jackson testified that he was assigned to pick
up between ten and twelve individuals from a mental health program at 3:00 p.m., and take each
one home "to various locations around the city, West Philly, South Philly, North Philly,
Kensington, Northeast." Transcript at 9-10. After this, a plaintiff would drive back to Art of
Life, and clean the inside and outside of the van before leaving for the day. Id.

'Oregory Reaves had a throat illness on the day of mal, and did not testify. However, the parties stipulated
that,. had he tes:lfied, h,S testImony would have been substantially identical to thai of the other plaintiffs in the
slgmficant detalls. Traoscnp' at 138-139.

2

Plaintiffs testified that they were unable to take breaks during the day because they were
continuously picking up and dropping off clients at various locations in the area. Transcript at 10
(Jackson's testimony). Thus, plaintiffs generally worked 12-14 hours per day, for a five or six·
day week, which added up to 60 or 70 hours per week. Transcript at 15 (Jackson); 68-69
(Whaley); and 104-107 (Joe).
Each plaintifI testified at trial that he or she was paid hourly, at a rate between $10 and
$11.50. Transcript at 16-18 (Jackson); 71, 90 (Whaley); 108 (Joe); 129-130 (Garlick). Jackson,
Whaley and Joe all testified that Makhnovetskiy told them upon hiring that they would be paid
hourly, and what their hourly rate would be. Transcript at 16 (Jackson); 71 (Whaley); 108 (Joe).
Garlick testified that she was told her hourly wage by a scheduler/dispatcher named Ala.
Transcript at 129. Jackson testified that he was told by Makhnovetskiy that he could work all the
hours he liked, but that the company did not pay overtime. Transcript at 44. Garlick and Joe
also denied that they were paid overtime. Transcript at 109 (Joe); 130 (Garlick). Whaley did not
testify to this directly, but affirmed that he was claiming entitlement to unpaid overtime.
Transcript at 75.
Each plaintifT specifically denied that he or she was ever paid a salary or given the option
of receiving a salary. Transcript at 16 (Jackson); 72 (Whaley); 109·110 (Joe); 130 (Garlick).
Jackson, Whaley and Joe, however, testified that in February 2010 they were told they could
either switch to a nat weekly rate or have their hours cut to 30 or fewer per week. Transcript at
18 (Jackson); 71·72 (Whaley); 108-109 (Joe). Garlick had ceased working in January, 2008.
Transcript at 124.

3

B.

Plaintiffs' Exhibits
Plaintiffs have provided as trial exhibits spreadsheets for each plaintiff, setting forth six

categories of infonnation: the number of hours worked in each two-week pay period; the amount
of money paid for this period; the hourly rate during that pay period; the overtime rate for the
period; the number of hours over 40 worked during the period, representing overtime; and,
finally, the amount of unpaid overtime wages for that period. Plaintiffs' Exhibits 34-38. The
exhibits show that Keith Jackson is owed $8,188.89; Kevin Joe is owed $20,631.34; David
Whaley is owed $19,114.21; Gregory Reaves is owed $3,137.98; and Aja Garlick is owed
$1,466.89. Plaintiffs' Exhibits 34-38, respectively.
As discussed below, Defendants deny that Plaintiffs were paid hourly. However,
Defendants have not criticized the methodology employed in the creation of the spreadsheets.
For that reason, it is sufficient to explain briefly that Plaintiffs' Exhibits 34-38 are compilations
of infonnation drawn from Plaintiffs' earnings statements, and from the time cards provided by
Art of Life, when possible. Transcript at 19; Joint Exhibits 3·12.
In many instances, no time card was provided. When this was the case, Plaintiffs
estimated the hours worked by using records from LogistiCare 2 Transcript at 20-21; Joint
Exhibit 16. LogistiCare records do not show the time expended before the first pickup, or after
the last pickup. For that reason, Plaintiffs added three hours to those shown by LogistiCare for a
particular day: one hour to account for time spent in the morning, picking up the van and driving

2LogistiCare is a company that arranges with nursing care facilities to provide transportation services.
Transcript aI20-21, statement by Plaintiff's attorney Adam Lease. It contracted with Art of Life, among other
companies, to actually provide the transportation. ld. LogistiCare was the predominant source of work for Art of
Life. Id. Art of Life was required to provide LogistiCare with daily driving schedules which pennitted LogistiCare
to keep records showing, for a given day, each driver's first pickup time and last pickup time. Id.

4

to the first pickup location, and two hours after the last pickup, to account for time spent
returning passengers to their homes, and returning and cleaning the van at the end of the day.
Transcript at 23, 26.
Plaintiffs also focused at trial on examples pulled from their time cards, showing that
each plaintiff's pay, when divided by the number of hours worked, actually equaled the hourly
rate of pay to which the plaintiff had testified. Transcript at 49-59 (Jackson); 92-97 (Whaley),
Exhibits 3-7. For instance, Whaley was paid $1,240 for the period of August 26 to September 2,
2007. Id. at 93. He worked 124 hours in that time period. Id. at 92. Thus, he was paid $10 per
hour, as he had testified. For the period of October 21-28,2007, he worked 125 hours. rd. at 95.
He was paid $1,250, rd. at 96. Whaley testified that he was at some point given a pay raise to
$11 per hour. Id. at 71, 96. For the pay period between January 27 and February 3, 2008, he was
paid $1,386 for a 126-hour week, at a rate of $11 per hour Id. and 96. Similar/y, for the period
of February 10-17,2008, Vihaley was paid $1,391.50 for a 126.35-hour week, also at a rate of
$11 per hour. 96-97.
When counsel examined Joe on redirect, he began to show similar examples. However,
the Court stopped him: "I know what you're going to do because you've done it with the last two
witnesses ". Once you've done it once, I understand it." Transcript at 122. Nevertheless, the
Plaintiffs have attached as Exhibit A to their Proposed Findings of Fact and Conclusions of Law
similar examples for Joe, Garlick and Reaves. This information may be considered by the Court
because it is not new evidence. Rather, it is a series of calculations drawn from admitted
exhibits, i.e., the time cards and earning statements.

5

Also admitted into evidence was a letter from Art of Life written to Garlick during her
disability, inviting her to resume her employment "without loss of wages ($ll.00Ihour working a
36 hour minimum week per our records)." Plaintiffs' Exhibit 41.
C.

The Defense

I.

Broytman's Testimony
Nick Broytman was the sole witness for the defense. He agreed at trial that he is

personally responsible for administering the payroll at Art of Life. Transcript at 194. In other
litigation, Broytman has testified as the corporate designee having the most information about
payroll practices at Art of Life. Id. at 195.
Broytman testified that no plaintiff was ever paid hourly except for Garlick, who opted
after a few pay periods to convert to salary. Transcript at 175-176. Broytman stated that each
plaintiffwas told upon employment that he or she had the option of either working for an hourly
wage or for salary. [d. at 186. However, in order to keep overtime hours down, hourly workers
would ordinarily be limited to between 37 and 40 hours per week. Id. at 190.
Broytman testified that salaried workers also got overtime, calculated in a method
prescribed by the United States Department of Labor, but that this resulted in a lower overtime
rate than that which hourly employees would receive. Id. at 177. Therefore, the company saved
money. Id.
As discussed more fully below, exhibits submitted by the Defendants showing their
purported method of paying the plaintiffs salary plus overtime never corresponded to the gross
amount of pay the plaintiff actually received. Defendants' Exhibits 9-13. When asked to explain
this, Broytman stated:

6

We - at the time of our discussion about the salary, so we were asking them,
what's your desired or goal rate'? And they would say, okay, my desired rate is 10
or II or whatever. So we would be generous enough to - we would tell them that
we will try to bring the amount to the desired rate.
Transcript at 203. In response to additional questioning from the Court, Broytman repeated this
assertion. 3 rd. at 205.

In response to questioning from the Plaintiff's attorney, who called him as on cross,
Broytman also testified about Art ofUfe's contacts with the Department of Labor. Art ofUfe
was the subject of three Department of Labor investigations between 2004 and 2008. Transcript
at 168-171. The first investigation concerned a failure to pay overtime. Id. at 168. The second
investigation concerned, among other issues, "paying overtime under the guise of a fixed salary
for fluctuating hours."
2.

l\!. at 170, Plaintiffs' Exhibit 43.

Defendants' Exhibits
Uke Plaintiffs, Defendants submitted into evidence spreadsheets for each plaintiff,

purporting to show how Plaintiffs were actually paid. Defendants' Exhibits 9-13. These exhibits
were e-mailed to the plaintiffs' attomey the evening before trial. Transcript at 196. Some of the
data, such as the time estimates where a timecard was missing, was taken from Plaintiffs'
spreadsheets. rd. at 248. The spreadsheets presented a theory of compensation that was never
before asserted in the litigation. rd. at 255.
Defendants' spreadsheets showed the hours worked during a specific pay period. rd. The
next column set forth a salary, which tended to be about $1,000 per week. Id. Then, the

3"Again, because at the time of our discussions with the salary, so we asked them about the desired rate.
And they would say that, for example, 1 want to have $10. And then we would say, okay, we will try to bring that
amount to the desired rate. So - and we were generous enough to do that so we paid them actually more than they
were entitled." Transcript at 205.

7

spreadsheet showed some categories of information which were used to calculate overtime for a
salaried individual. These were "actual rate" (i.e., hours worked divided into the salary), half­
rate, overtime hours, and "overtime", i.e., overtime hours multiplied by the half-rate to obtain a
monetary figure. Id. Then the chart showed "calculated compensation", which was simply the
salary plus the figure in the "overtime" column. The next column was labeled "gross
compensation" and the last column was labeled "difference." Id.
In every pay period for every plaintiff (except for two of Garlick's) there was a significant
difference between the amount actually paid and the salary-plus-overtime calculation. Id.
Rarely, there was a small negative difference. Id. Almost always, there was extra money paid,
sometimes as little as $18, but usually between one and three hundred dollars. Id. As described
above, Broytrnan explained this constant discrepancy by stating that he asked each plaintiff for
his or her desired hourly rate, and then, out of "generosity", added extra money to that plaintiff's
check, in order to reach that rate. Transcript at 203 and 205.
The salary for some plaintiffs also changed for no explained reason in isolated pay
periods. Kevin Joe, for example, has salary listed as $910.00 for 31 straight pay periods.
Defendants' Exhibit 10. Then, his salary moves to $1,000 per week for six pay periods. N. For
the period ending September 14, 2008, however, his salary was only $640. Not the amount of his
paycheck: the amount in the column labeled "salary." Id. After this pay period, Joe's salary
remained at $1,000 per week for the rest of his employment with Art of Life - except for the pay
period ending February 14,2010, where it was again $644, for one pay period only. N.

8

The figures in Garlick's "salary" column also changed markedly between pay periods.
Exhibit D-13. Broytman said: "It is normal to fluctuate the salary. It depends on the amount of
hours." Transcript at 211.
Defendants are aware that their spread sheets do not demonstrate that the Plaintiffs' pay
equaled a salary plus overtime. Their explanation is that, as a result of Art of Life's "agreement
to provide additional discretionary sums each pay period", for the "vast majority" of the
Plaintiffs' employment, they were paid "in an amount substantially in excess of the amount ...
owed." Defendants' Proposed Findings of Fact and Conclusions of Law at' 54,71,80,88,96.
Defendants also relied upon the Plaintiffs' eamings statements, copies of which had been
given to Plaintiffs as pay stubs. Joint Exhibits 8-12. Upon cross-examination, each plaintiff
admitted that the pay stubs did not appear to represent payment by the hour. Transcript at 42-43
(Jackson); 84 (Whaley); 120-121 (Joe); 135-136 (Garlick). Plaintiffs also conceded that they did
not understand their pay stubs. Transcript at 42 (Jackson); 81,87 (Whaley); 120-121 (Joe); 136
(Garlick). Jackson, Whaley and Joe testified that they never questioned their employer about the
confusing pay stubs. Id. at 47-48 (Jackson); 84 (Whaley); 121 (Joe). Garlick testified that she
asked Makhnovetskiy and Broytman to explain why it did not appear in her pay stub that she was
paid hourly. Id. at 136. However, even after the explanation, she did not understand her pay
stub. ld.
Defendants argue that the Plaintiffs' case is undermined by the admitted truth "that they
received information about the basis for calculating their employment with every paycheck, that
the information is inconsistent with their claim that they were paid hourly, that they could not
comprehend or explain the entries on their pay stubs, that they did not seek explanations of those

9

entries and thaI they made no objection to their compensation during the entire course of their
employment" Defendants' Proposed Findings of Fact and Conclusions of Law at 14. It is
argued that "no employee, let alone a group of employees, would remain employed without
having any understanding of the basis on which they were being compensated in a manner
reflected by the testimony of the Plaintiffs." rd. at 15.
However, Broytman was also unable to answer every question about the pay stubs. Most
of them contained amounts of money, sometimes $500 or more, in a category titled "Other."
Joint Exhibits 9-12. At times, the amount in the "Other" column was several thousand dollars.
Exhibit 9 at Bates Stamp 0-0380 ($8,613 for Joe); Exhibit 11 at Bates Stamp 0-0375 ($4,320.50
for Reaves); Exhibit 12 ($2,503.75 for Garlick). Broytrnan was not able to offer an explanation
as to the function of the "Other" classification. Transcript at 184-185.
D.

Advanced Life Support Ambulance, Inc.
Defendant Advanced Life Support Ambulance, Inc., ("Advanced") is a Pennsylvania

corporation of which Nick Broytrnan is a 40% shareholder. Transcript at 1151, 155. Broytman's
mother is a 60% shareholder of Advanced, and is the corporation's president. rd. at 151, 158.
Broytman testified that Advanced was formed for the purpose of providing para-transit service,
but not emergency services. If;l. at 231.
In the deposition excerpts Plaintiffs read into evidence, Makhnovetskiy essentially
testified that he was paid by both corporations for one and the same work. Transcript at 146. He
said: "I got the same salary for two companies." If;l. Makhnovetskiy was asked whether the four
dispatchers worked for both companies, and he answered: "It depends. Sometimes yes,
sometimes no." rd. However, all dispatchers worked out of the Art of Life location. rd. He was
then asked: "Pretty much everyone works for Advanced Life? They do it for Art of Life?" rd.
10

He responded: "Yes." Id. Makhnovetskiy also testified that he did not know the company
address for Advanced. Id. He agreed that employees of both companies punched in and out on
the same time clock. Id. at 146-147.
In his testimony, Broytman denied much of this. Transcript at 153. He testified that it
was not true that Makhnovetskiy was the employee of both companies. Id. He denied that
Advanced employees punched in on the Art of Life time clock. Id. at 153-154. At his
deposition, Broytman had testified that both corporations shared the same management
hierarchy: Broytman was "at the top", Makhnovetskiy was the manager, and an individual named
Anatoly was the scheduling coordinator. Id. at 158. At trial, however, Broytman testified that
this was not true, and that he had been confused. Id. at 158·159. He similarly disavowed his
deposition testimony that the two companies had shared employees. Id. at 160-162.
Broytman also testified that Advanced employees did work under Art of Life's contract
with LogistiCare, pursuant to an agreement between the two related corporations. Transcript at
165. Advanced employees did not "have any of their own independent work." Id. Further, as of
the date ofBroytman's deposition, two years after Advanced was created, the corporation had no
assets of its own. Id. at 166.

II.

Findings of Fact

A.

flaintiffs Were Paid Hourly
I find as a matter of fact that Plaintiffs were paid hourly by Art of Life. Plaintiffs'

testimony that they were each told that they would be paid hourly was consistent, simple, and
plausible. Defendants' theory as to how Plaintiffs were paid has none of these advantages. It is
inconsistent with pre-trial representations, complex, and so unusual as to be implausible.

II

Plaintiffs' position is also supported by external evidence, such as the October 8, 2009,
letter to Garlick from Art of Life, reflecting that she had been paid $11.00 per hour. It is also
supported by the demonstration that Plaintiffs' paychecks, divided by the number of hours
worked in the relevant pay period, generally came out to the even, hourly rates of $1 0.00 or
$11.00 per hour which they allege. See Exhibit A to Plaintiffs' Proposed Findings of Fact and
Conclusions of Law.
Defendants' allegations, on the other hand, are inconsistent with the evidence. Even
using their theory, as set forth in their Exhibits 9-13, their calculations are so inaccurate that, out
of hundreds of pay checks, only two came out to the right amount of salary plus overtime. Every
other check was in an amount inconsistent - often by hundreds of dollars - with Defendants'
own formula.

r am also influenced by the fact that this supposed method of pay was only put

forward for the first time the evening before trial. Defendants would have had much to gain by
explaining it in pre-trial discovery as soon as possible, yet they did not. I find as a matter of fact
that the formula set forth in Exhibits 9-13 was never actually used in calculating Plaintiffs' pay.
Broytman's explanation that he asked Art of Life employees for their desired hourly rate,
and "generously" agreed to supplement their salaries to reach this rate, is utterly incredible. It is
impossible to imagine an employee being given the option of choosing his own hourly rate. If
Art of Life wished to pay an employee more, why would it not simply raise his or her salary?

Even if Broytman's story was true, it would arguably constitute an admission that the
employees were really paid an hourly rate, since their salaries were manipulated to reach this rate
by the use of "discretionary payments." However, I do not credit his story. It was clear at trial
that Plaintiffs were befuddled by their earnings statements, and did not know what they actually
showed, or why.

12

Because (a) Plaintiffs' pay generally equaled the hourly rates they have alleged; and (b)
the earnings statements generated by Art of Life do not show this, but rather show a salary
method of payment; and (c) neither Broytman, nor the defense exhibits could clearly explain the
nature of this salary method, I conclude as a matter of fact that Plaintiffs' earnings statements
were generated by Art of Life for the purpose of making it falsely appear that Plaintiffs received
salary plus overtime, and concealing the fact that Plaintiffs were paid hourly.
B.

Art of Life Did Not Pay Plaintiffs Overtim~
All of the plaintiffs testified that they were paid an hourly rate, but were never paid an

overtime rate, despite routinely working more than 40 hours in a workweek. Jackson testified
that Makhnovetskiy, Art of Life's general manager, told him directly that he could work all the
hours he wanted, but would not be paid overtime. The evidence provided to Plaintiffs in
discovery by Art of Life and LogistiCare, and summarized in Plaintiffs' Exhibits 34-38, supports
Plaintiffs' allegations that this was Art of Life's policy: employees could work very long hours,
but would not receive overtime.
As above, Defendants' contrary explanations are not credible. I therefore find as a matter
of fact that Art of Life did not pay Plaintiffs overtime on hours worked in excess of a 40 hour
workweek.
C.

The Plaintiffs' Calculations of Unpaid Overtime Are Reasonably Reliable
As discussed above, Plaintiffs have set forth their calculation of unpaid overtime in their

Exhibits 34-38. As has also been mentioned, Defendants dispute the premise underlying these
exhibits, i.e., that Plaintiffs were paid by the hour, but have not challenged the accuracy of the
data or the validity of the methods used in creating these exhibits. Plaintiffs have conceded that
the spreadsheets include a great deal of estimation, based on LogistiCare records and their own

13

testimony, where actual time cards were missing. The Defendants are so far from challenging
these estimates as to have used them in preparing their ovm exhibits. Therefore, I have no reason
to question the reliability of Plaintiffs' exhibits.
I have found as a matter of fact that Art of Life paid Plaintiffs by the hour, but did not pay
overtime. Accordingly, I now find that Plaintiffs' estimates of unpaid overtime are sufficiently
reliable as to be adopted in calculating damages. Keith Jackson is owed $8,188.89 in unpaid
overtime; Kevin Joe is owed $20,631.34; David Whaley is owed $19,114.21; Gregory Reaves is
owed $3,137.98; and Aja Garlick is owed $1,466.89. Plaintiffs' Exhibits 34-38, respectively.
D.

The Relationship Between Art ofUfe and Advanced Life Support Ambulance. Inc.
Based on the evidence as set forth above, I find as a matter of fact that Advanced and Art

of Life have strongly interrelated operations, since all of the work Advanced performs in
pursuant to Art of Life's contract with LogistiCare, and since Advanced has no assets with which
it could undertake independent work. Further, they share an identical management, in Bro)1man
and Makhnovetskiy. They have a unified control of labor relations in the hands of Nick
Bro)1man. They also have a strong element of common ownership or financial control, based on
Nick Broytman's large interest in both corporations, and also on the fact that the only other
owner of each corporation is one of Nick Bro)1man' s parents.
III.

Conclusions of Law

A.

Art of Life Is Liable to Plaintiffs For Violation of the FLSA Overtime Law

FLSA generally requires an employee to pay time and a half overtime, with certain
exceptions which have not been invoked here:
Except as otherwise provided in this section, no employer shall employ any of his
employees who in any workweek is engaged in commerce or in the production of
goods for commerce, or is employed in an enterprise engaged in commerce or in
14

the production of goods for commerce, for a workweek longer than forty hours
unless such employee receives compensation for his employment in excess of the
hours above specified at a rate not less than one and one-half times the regular rate
at which he is employed.
29 U.S.C. § 207(a)(I).
Because Art of Life did not pay Plaintiffs overtime for hours over 40 in a workweek, it is
in violation of FLSA.

B.

Nick Bro.uman Is IndiYidually Liable for Violation of the FLSA Overtime Law
As noted, FLSA prohibits an "employer" from failing to pay overtime compensation. 29

U.S.c. § 207(a)(1). It defines an "employer" as including "any person acting directly in the
interest of an employer in relation to an employee .... " 29 U.S.C. § 203(d).
Although there is no Third Circuit decision on the issue, FLSA has consistently been
interpreted in the district courts of this circuit as providing that "a corporate officer with
operational control is an 'employer', along with the corporation, jointly and severally liable under
the Act for unpaid wages." Dole v. Haulaway. Inc., 723 F. Supp.274, 286-287 (D.N.J. 1989),
affd 914 F.2d 243 (3d CiI. 1990), cert. den. 497 U.S. 1024 (1990); and see Dole v. Solid Waste
Services. Inc., 733 F. Supp. 895, 922 (E.D. Pa. 1989), affd 897 F.2d 521 (3d Cir.), cert. den. 497
U.S. 1024 (1990), and Su v. Li. Civ. A. No. 10-5268(MLC), 2011 WL 3329882 at *4 (D.N.J.
Aug. 1,2011).
The evidence reviewed above clearly shows that Nick Broytman was a corporate officer
with operational control with respect to Art of Life. Moreover, he was personally responsible for
deciding how Plaintiffs would be paid. He is, therefore, jointly and severally liable with Art of
Life for the violation of the FLSA overtime law.

15

C.

Advanced Life Support Ambulance, Inc .. is Liable to Plaintiffs
In Pearson v. Component Technology C~, 247 F.3d 471 (3d Cir. 2001) the Court of

Appeals for the Third Circuit discussed the theory whereby the veil between two corporations
may be pierced, and two corporations treated as a single employer, if they meet the factors for an
"integrated enterprise", which the Court described as "a son of labor-specific veil-piercing test."

14. at 485.
According to Pearson, the "integrated enterprise" test does not involve the traditional
veil-piercing inquiries regarding the observance of corporate formalities. Rather, it:
[Llooks to four labor-related characteristics of affiliated corporations; interrelation
of operations; common management; centralized control of labor relations; and
common ownership or financial control.
ld. Based on the facts as I have found them in Section lID of this opinion, it is clear that
Advanced and Art of Life are integrated under this test.
Although the Pearson case set out the factors for the "integrated enterprise" test, it did not
actually apply the test. Moreover, the case did not concern the FLSA. Instead, Pearson was
decided under the WARN Act, 29 U.S.c. § 2101 et seq. The Coun of Appeals decided that the
integrated enterprise factors were subsumed in the test prescribed by the Department of Labor
regarding whether a parent and a subsidiary are a single entity under WARN.
Therefore, there is no Third Circuit precedent which speaks to the issue of whether the
integrated enterprise test can be used in this circuit to impose direct liability in a FLSA ovenime
case. Authority in this district appears to recognize the possibility, however. In Kamens v.
Summit Stainless. Inc., 586 F. Supp. 324 (E.D. Pa. 1984), the Honorable Judge Hutton refused to
dismiss such a claim in a FLSA overtime case. More recently, the theory was dismissed, but not

16

on its merits; rather, under the "rule of the case" theory, since the judge had made a contrary
finding before the theory was raised. Bosley v. The Chubb Instirute, 516 F. Supp.2d 479 (E.D.
Pa.2007).
Further, as noted in Pearson, the joint enterprise test has been used in FLSA overtime
cases decided in other courts. Pearson, §!!lllil, at 486-486, citing Takacs v.

Hahn Auto. Corn.,

Civ. A. No. C-3-95-404, 1999 \VL 33117265 (S.D. Ohio Jan. 4,1999); see also Reich v. Bay,
Inc., 23 F.3d 110 (5th Cir. 1994) (liability imposed on sister corporation); Babych v. Psychiatric
Solutions, Civ. A. No. 09 C 8000, 2011 WL 5507374 (N.D. Ill. Nov. 9, 2011) (dismissal of joint
enterprise claim denied); Addison v. Reitman Blacktop. Inc., Civ. A. No. 10 CV 1435
(ADL)(ARL) -F.R.D. - , 2011 WL 4336693 (E.D.N.Y. Sep. 9, 2011)(dismissal of claim
denied); Anderson v. TheriaUlt Tree Harvesting, Inc., Civ. A No. 08-330-B-W, 2010 WL 323530

(D. Me. Jan. 20, 2010) (Magistrate Judge's Report and Recommendation) (dismissal of claim
denied)(stipulated dismissal of case at 2010 WL 3180924 (D. Me. Apr. 12,2010».
Moreover, the integrated enterprise test is consistent with FLSA, which extends overtime
protection to employees of any "enterprise" engaged in interstate commerce. 29 U.S.C. § 207.
The FLSA regulations define an "enterprise" as "the related activities performed (either through
unified operation or common control) by any person or persons for a common business purpose."
29 U.S.C. § 203{r). "Related activities" are not defined in the FLSA regulations. However,
activities are performed for a common business purpose if they are "directed toward the same
business objective or to similar objectives in which the group has an interest." 29 C.F.R. §
779.213.

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At trial, counsel for defense suggested that the single enterprise theory is only relevant in
cases where an employee works up to 40 hours for one employer, but works additional hours for
another, so that it is apparent that the two employers worked together to avoid paying overtime.
Transcript at 217. His larger point may have been that the single enterprise theory is successfully
invoked only where the relationship between the parties is factually relevant to the FLSA
violation. Here, it is not. Plaintiffs hope to convince the court to hold Advanced jointly liable
with Art of Life only so that, during collection, they will not have to chase assets that Art of Life
may transfer to Advanced. Record at 220.
Thus, the question is whether the single enterprise theory can be used to prevent the
hiding of corporate assets, or whether that requires resort to the traditional veil-piercing test,
employed during the collection process.
The case law does not provide a clear answer. In Reich v. Bav, Inc., ~ one company
reduced the rent it paid to an employee for the use of his equipment every time the other
company raised his pay for overtime purposes, resulting in a wash for the employee. Clearly, the
integrated nature of the enterprise was factually related to the FLSA violation. But in Iakacs v.
Hahn Auto. Corp., Iillill'li, where a single enterprise was found, the question was simply which
entities could be held liable. In the cases where courts declined to dismiss single enterprise
claims, moreover, they never discussed whether there was a factual link between the alleged
FLSA violation and the relationship of the named defendants. See Kamens, supra; Addison,
supra: Anderson y, Theriault, ll.1!1ID!,

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I conclude that the use of the joint enterprise/single employer theory which the Plaintiffs
recommend is pennissible, The thread uniting the cases which employ this theory is that they all
seek to determine whether the proposed '~joint" company is actually identical to a plaintiff's
technical employer. As explained in Pearson, the corporate formalities which are central to the
traditional veil-piercing inquiry are simply not as important under FLSA as whether the two
companies acted jointly with respect to labor issues. The theory is also consistent with FLSA
regulations defining "employer. Finally, although the case law may offer little guidance on this
issue, I am not aware of any authority in any form which would preclude the use of this theory on
filets such as those presented in this case, or which even discusses the issue decided here.
At least at all times relevant to this case, Advanced clearly had very little existence
independent of Art of Life. Advanced had no work other than that provided by Art of Life, and
could not have acted independently, since it had no assets. The two companies were controlled
by one and the same person: Nick Broytrnan. I have no hesitation in concluding that they acted
jointly. I conclude as a matter of law, therefore, that Advanced Life Support Ambulance, Inc., is
liable to Plaintiffs,
D,

Defendants' FLSA Violations Were Wilful
A finding of wilfulness in a FLSA action has a double importance. First, it extends the

applicable statute of limitations from two years to three years. 29 U.S.C. § 255a). Second, it
pennits the imposition of liquidated damages in an amount equal to the amount of the Plaintiffs
unpaid overtime compensation; hence, double damages, 29 U.S,C. § § 216(b), 260.

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The determination of whether a FLSA violation was willful is a question of law on which
the plaintiff bears the burden of proof. Wolfslayer v.Ikon Office Solutions, Inc., Civ. A. No. 03­
6709 (B.D. Pa. 2004), citing Adams v, United States, 305 F.3d 1216, 1229 (Fed. Cir. 2003)
(plaintiff bears burden) and Martin y. Se1ker Bros .. Inc., 949 F.2d 1286, 1292 (3d Cir. 1991)
(wilfulness is a question of law). To show wilfulness, Plaintiffs must show that Defendants
either knew that their c.()nduct was prohibited by FLSA, or have acted in reckless disregard of
whether or not is was prohibited. McLaughlin v. Richland Shoe Company, 486 U.S. 128 (1988).

It is not enough that FLSA have been "in the picture." Id.
The evidence in this case supports a finding of wilfulness. By the time the facts of this
case arose, Nick Broytman and Art of Life had been investigated several times by the DOL with
respect to alleged overtime violations. Broytman's testimony at trial suggested that he only
learned one nugget of information about overtime in each investigation. Transcript at 168
(learned in 2004-2005 proceeding that overtime had to be paid after 40 hours, not after 80); 169
(learned that when paying overtime for a fixed salary, emergency rate had to be calculated in for
emergency medical technicians). Nevertheless, after all of this exposure, it cannot be credited
that Broytman did not know the basic rule that an employee must be paid time and a half
overtime after 40 hours per week.
Moreover, the settlement with respect to the 2008 DOL investigation involved an
agreement on Art of Life's part to keep separate track of payroll entries, overtime, and hours
worked. Transcript at 172. This is additional evidence that Art of Life, and specifically
Broytman, was aware of the very basic overtime law involved in this case,

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Further, I have found as a matter of fact that the earnings statements which where
generated by Art of Life purposely concealed the fact that Plaintiffs were paid straight hourly
wages with no overtime. As discussed above, Broytman was not able to offer a clear or credible
explanation of how the earnings statement reflected a salary method of payment. His explanation
relied on his implausible statement that he actually overpaid all of the Plaintiffs out of
"generosity" so that their salary would resemble hourly pay. This purposefully deceptive action
regarding the earnings statements clearly demonstrates wilfulness.
I conclude, therefore, as a matter of law, that Plaintiffs have demonstrated wilful failure
to comply with FLSA on the part of the Defendants. For this reason, a three-year statute of
limitations applied in this case. Further, each Plaintiff is entitled to liquidated darnages equal to
the amount of unpaid overtime, in addition to actual damages in the amount of unpaid overtime.
Therefore:
I) Plaintiff Keith Jackson is entitled to recover $16,377.78;
2) Plaintiff Kevin Joe is entitled to recover $41,262.68;
3) Plaintiff David Whaley is entitled (0 recover $38,228.42;
4) Plaintiff Gregory Reaves is entitled to recover $6,275.96; and
5) Plaintiff Aja Garlick (Reaves) is entitled to recover $2,933.78.

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IV.

Conclusion
Based upon the findings offact and conclusions oflaw set forth above, I conclude that

Defendants Art of Life, Inc., Nick Broytman, and Advanced Life Support Ambulance, Inc., are
jointly and severally liable to Plai.ntiffs in this case in a total amount of $ 105,078.62, plus costs
and a reasonable attorney's fee as provided by 29 U.S.C. § 216(b).

BY THE COURT:

JACOB .HART
UNITED' TES MAGISTRATE JUDGE

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