Traci L. Jones v. Freedom Rain, TLC

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
OCTOBER 21, 2010
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 09-16134
________________________
D. C. Docket No. 08-01599-CV-2-KOB
TRACI L. JONES,
Plaintiff-Appellant,
versus
FREEDOM RAIN, TLC,
d/b/a The Lovelady Center, and
BRENDA SPAHN,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(October 21, 2010)
Before HULL, MARTIN and FAY, Circuit Judges.
PER CURIAM:

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Plaintiff-Appellant Traci L. Jones (“Jones”) filed this lawsuit against
Defendants-Appellees Freedom Rain, TLC d/b/a The Lovelady Center (“TLC”)
and Brenda Spahn (“Spahn”), her former employer, alleging that Defendants
violated the Fair Labor Standards Act (“FLSA”) by failing to pay her overtime
compensation. The district court granted summary judgment in favor of
Defendants, finding that, as a matter of law, the FLSA’s individual and enterprise
coverage provisions did not apply to TLC, and that Spahn’s liability was only
derivative of TLC’s liability. As there are disputed issues of material fact as to
whether TLC is subject to the FLSA’s enterprise coverage provision due to the
amount of its annual gross volume of sales or business, we reverse the judgment of
the district court granting summary judgment to Defendants and remand for
further proceedings consistent with this opinion.
I. BACKGROUND
Defendant TLC is a non-profit corporation that, during the relevant time
period, owned The Lovelady Center, a residential treatment and recovery program
for homeless women who were either recently released from prison, victims of
domestic violence, or substance abusers. In addition to operating the
rehabilitation center, TLC also operated several other businesses, including an
employment agency, diner, daycare, beauty shop, and store. TLC employed 30 to
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50 workers, including Plaintiff Jones, who was a Client Representative for TLC
from June 2006 to August 2007. Jones reported to Defendant Spahn, who was the
founder and Executive Director of TLC. During Jones’ employment with TLC,
she maintains that she typically worked over 45 hours-per-week, but was not paid
time-and-a-half overtime pay for hours worked in excess of 40 hours-per-week.
On September 2, 2008, Jones filed a lawsuit to recover her unpaid overtime
compensation. In a one-count Complaint, Jones alleged that Defendants willfully
violated the overtime provisions of the FLSA, 29 U.S.C. § 207, by failing to
compensate her for all hours worked in excess of 40 hours-per-week during her
employment with TLC. In their Answer, Defendants, among other things, denied
that they were subject to the FLSA. After discovery was conducted, Defendants
filed a Motion for Summary Judgment alleging that there were no genuine issues
as to any material facts regarding whether Defendants were subject to the overtime
provisions of the FLSA. On October 26, 2009, the district court granted
Defendants’ Motion for Summary Judgment, finding that, as a matter of law: (1)
the FLSA’s individual coverage provision did not apply to Defendants because
Jones did not show that she was engaged in interstate commerce or in the
production of goods for interstate commerce; (2) the FLSA’s enterprise coverage
provision did not apply to Defendants because, even if Jones could show that TLC
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employees engaged in interstate commerce, she did not show that TLC’s gross
business income exceeded $500,000; and (3) Spahn’s liability was only derivative
of TLC’s liability, of which there was none. On November 25, 2009, Jones filed a
Notice of Appeal.
II. STANDARD OF REVIEW
We review the district court’s grant of summary judgment de novo,
considering all the evidence and factual inferences in the light most favorable to
the non-moving party. See Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 956
(11th Cir. 2009). Under Fed.R.Civ.P. 56(c), a motion for summary judgment is
properly granted 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).
III. DISCUSSION
On appeal, Jones argues the district court erred in finding that the FLSA’s
enterprise coverage provision did not apply to Defendants. Under the FLSA,
enterprise coverage only applies to “an enterprise engaged in commerce or in the
production of goods for commerce,” which means an enterprise that:
(i) has employees engaged in commerce or in the production of goods
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for commerce, or that has employees handling, selling, or otherwise
working on goods or materials that have been moved in or produced for
commerce by any person; and
(ii) is an enterprise whose annual gross volume of sales made or
business done is not less than $500,000 (exclusive of excise taxes at the
retail level that are separately stated);
29 U.S.C. § 207(a)(1); 29 U.S.C. § 203(s)(1)(A). Thus, for enterprise coverage to
apply, a business must have: (1) employees engaged in commerce or handling
goods moved in commerce, and (2) annual gross volume of sales or business done
of at least $500,000. In the instant case, Jones presented evidence regarding the
first requirement by showing that TLC’s employees engaged in interstate
commerce by operating an employment agency, diner, daycare, beauty shop, and
store. However, the district court found that Jones did not satisfy the second
requirement as she failed to present evidence showing that TLC had annual gross
volume of sales or business done of at least $500,000 for the pertinent years. As
such, the district court found that the FLSA’s enterprise coverage provision did
not apply to Defendants.
We reviewed the evidence before the district court de novo to determine if
genuine issues of material fact existed as to whether TLC had annual gross volume
of sales or business done of at least $500,000 in 2006 and 2007. According to 29
C.F.R. § 779.259,
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[t]he annual gross volume of sales made or business done of an
enterprise consists of its gross receipts from all types of sales made and
business done during a 12-month period. The gross volume of sales made
or business done means the gross dollar volume (not limited to income)
derived from all sales and business transactions including, for example,
gross receipts from service, credit, or other similar charges. . . . The gross
volume of sales or business includes the receipts from sales made or
business done by the retail or service establishments of the enterprise as
well as the sales made or business done by any other establishments of
the enterprise, exclusive of the internal transactions between them.
(emphasis added). Thus, for purposes of the FLSA, “annual gross volume of sales
or business done” consists of gross receipts from all types of sales, including sales
made by any establishments of the enterprise. By definition, the gross volume of
sales is not limited to income.
As to 2006 annual gross volume of sales or business done, Jones submitted
TLC’s 2007 IRS Form 990 to show that TLC’s annual gross volume of sales or
business done in 2006 exceeded $500,000. Line 17 of Form 990’s Support
Schedule states that TLC had “gross receipts from admissions, merchandise sold
or services performed, or furnishing of facilities in any activity that is related to
the organization’s charitable, etc., purpose” of $868,197 in 2006, well beyond the
$500,000 threshold. Defendants argue that this document was unauthenticated
and thus should not be considered. TLC, however, produced this document, Bates
Numbered 0060-0072, to Jones in its response to Jones’ interrogatories, stating
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that it elected “pursuant to FRCP 33(d) to produce business records” in lieu of
answering some of the interrogatories directly. Def’s Resp. to Pl.’s Interrog. Doc.
42, Ex. L. Subsequently, in its responses to Jones’ requests for admissions, both
Defendants admitted that “Bates Numbered Documents 1-1,260 are photocopies of
Freedom Rain’s [TLC’s] documents.” Def’s Resp. to Pl.’s Req. for Admis. Doc.
42, Ex. Q, No. 21 and Ex. F, No. 30. Thus, Defendants’ argument is without merit
as this document was authenticated. See 29A Am.Jur.2d Evidence § 1053 (2010).
This document raises disputed issues of fact as to whether TLC’s annual gross
volume of sales or business done in 2006 exceeded the $500,000 threshold.
As to 2007 annual gross volume of sales or business done, Jones submitted
TLC’s 2007 Profit and Loss Statement to show that TLC’s annual gross volume of
sales or business done in 2007 exceeded $500,000. The Profit and Loss Statement
shows the following “income”: $66,337.03 from TLC’s employment agency
business (“TLC Personnel”); $180.00 from TLC’s daycare business (“Kid zone
Income”); $163,101.74 from TLC’s work release program (“PDL”); $203,195.75
from rent (“Program Fees”); $9,670.00 from the State of Alabama; $37,415 from
the TASC program (“Tasc - Another Chance” and “Tasc - CCP”); $25.00 from
transportation fees; and $9,467.90 from vending. The total of these income
figures is $489,392.42, which is below the $500,000 threshold. Jones, however,
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argues that the stated amount of income from TLC’s employment agency business,
$66,337.03, is grossly underestimated. Jones estimated that if 65% of TLC’s
approximately 200 clients worked 2,000 hours grossing $8.00 per hour, then the
amount of income from TLC’s employment agency business would be $2,080,000,
which would make the 2007 annual gross volume of sales or business done far
exceed the $500,000 enterprise coverage threshold. Defendants again argue that
this document was unauthenticated and thus should not be considered, and that
Jones’ estimate of income from TLC’s employment agency business is pure
speculation.
As stated above, Defendants’ argument that the document is unauthenticated
is without merit. TLC produced this document, Bates Numbered 0205-0207, to
Jones in its response to Jones’ interrogatories, stating that it elected “pursuant to
FRCP 33(d) to produce business records” in lieu of answering some of the
interrogatories directly. Def’s Resp. to Pl.’s Interrog. Doc. 42, Ex. L.
Subsequently, in its responses to Jones’ requests for admissions, both Defendants
admitted that “Bates Numbered Documents 1-1,260 are photocopies of Freedom
Rain’s [TLC’s] documents.” Def’s Resp. to Pl.’s Req. for Admis. Doc. 42, Ex. Q,
No. 21 and Ex. F, No. 30. Thus, this document was authenticated. See 29A
Am.Jur.2d Evidence § 1053 (2010). Further, although Defendants state Jones’
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estimate of income from TLC’s employment agency business is speculation, they
presented no evidence to refute the estimate. Jones’ estimate may not be precise
and may not persuade a jury, but that does not make it pure speculation. Her
estimate was based upon Defendants’ responses to discovery as well as her
personal knowledge gained as a client representative for TLC. From Jones’
calculation, a jury could infer that the stated amount of income from TLC’s
employment agency business is underestimated. Even if the stated amount of
income is underestimated by only $10,607.58, and not $2,013,662.97 as Jones
estimated, then Defendants’ annual gross volume of sales or business done would
meet the $500,000 enterprise coverage threshold. At the very least, Jones raised
disputed issues of fact as to whether TLC’s annual gross volume of sales or
business done in 2007 exceeded the $500,000 threshold.
Summary judgment is proper only when there are no genuine issues of
material fact. Viewing the evidence and any justifiable inferences in Jones’ favor,
a reasonable person could conclude that there are disputed issues of material fact
as to whether TLC’s annual gross volume of sales or business exceeded $500,000
in 2006 and 2007, which would subject TLC to the FLSA’s enterprise coverage
provision. Consequently, the district court’s reasoning in this regard is
insufficient to sustain summary judgment. Finding these genuine issues of
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material fact that must be resolved by a jury, we reverse the district court’s grant
of summary judgment to Defendants.
IV. CONCLUSION
For the foregoing reasons, we reverse the district court’s grant of summary
judgment to Defendants and remand for further proceedings consistent with this
opinion.
REVERSED and REMANDED.
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