Source: https://flsaovertimelaw.com/tag/enterprise-coverage/
Timestamp: 2019-04-21 00:20:19+00:00

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Alvarez v. 40 Mulberry Restaurant, Inc.
This case was before the court on the defendant’s motion for summary judgment. Plaintiff alleged that the defendant at issue was a “successor in interest” to his actual employers, whom he actively worked for and whose failure to pay him pursuant to the FLSA gave rise to his claims. The defendant alleged to be the “successor in interest” such that it had derivative liability (of plaintiff’s actual employers), asserted that the case was due to be dismissed against it, because plaintiff could not show that it grossed $500,000.00 or more in annual sales during the periods relevant to the claim. Explaining that this was an incorrect reading of the law, the court reasoned that the successor employer was covered, so long as the plaintiff’s actual employers were subject to enterprise coverage under the FLSA. However, because neither the plaintiff, nor the defendants addressed the issue of whether the plaintiffs actual employers were covered enterprises, the court remanded the case for further discovery on this issue.
Defendants 40 Mulberry and Chin claim that, because it has not been established that AR Restaurant has ever grossed $500,000 or more in annual sales, Alvarez’s FLSA claim must be dismissed. That is incorrect.
The FLSA covers only those workers employed by an “enterprise” that is “engaged in commerce.” 29 U.S.C. § 207. “An entity constitutes an enterprise where ‘the related activities performed (either through unified operation or common control) by any person or persons [are] for a common business purpose.’ ” Rodriguez v. Almighty Cleaning, 784 F.Supp.2d 114, 121 (E.D.N.Y.2011) (quoting 29 U.S.C. § 203(r)). An enterprise is “engaged in commerce or in the production of goods for commerce” if, inter alia, it: (1) “has 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 (2) its “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. § 203(s)(1)(A)(i)-(ii).
Defendants argue that, because the summary judgment record would not permit a fact finder to conclude that AR Restaurant has ever grossed $500,000 or more in annual sales, Alvarez cannot sue 40 Mulberry and Chin under the FLSA. But that does not logically follow. It is correct that, on the record before the Court, AR Restaurant’s financial condition would prevent an employee from suing under the FLSA based on work done at AR Restaurant. But Alvarez is not seeking to impose liability on 40 Mulberry and Chin based on AR Restaurant’s activities. Instead, he is claiming that, during his employment at the former Asia Roma, which ended in July 2010, the former Asia Roma (1) had $500,000 or more in annual sales; and (2) violated the FLSA’s substantive obligations as to overtime and other pay. He further alleges that defendants 40 Mulberry and Chin are responsible for those violations as successors in interest. Assuming arguendo that Asia Roma had $500,000 in annual revenues required by the FLSA in, say, 2009, the fact that AR Restaurant has not had such revenues would not shield defendants, if properly held to be responsible for Asia Roma’s conduct, from liability for FLSA violations during 2009. The financial condition of AR Restaurant is thus not determinative. The relevant question is, instead, whether Asia Roma was a qualifying “enterprise engaged in commerce” when it employed Alvarez, and whether 40 Mulberry and Chin are answerable for Asia Roma’s liabilities.
It does not appear that the parties have focused their discovery efforts on the critical question of whether Asia Roma had the requisite sales during Alvarez’s employment. However, this question is potentially dispositive, and the Court believes it must be addressed promptly.
The Court, accordingly, grants the parties one month to conduct further discovery—by means including, but not limited to, subpoenas to Asia Roma, Chan, Lee, or any other relevant party, person, or entity—on the question of whether Asia Roma constituted an “enterprise engaged in commerce” during the period of Alvarez’s employment. After the close of discovery, the Court will afford the defendants two weeks to move for summary judgment on the issue of whether Asia Roma was an “enterprise engaged in commerce” during the years it employed Alvarez. If summary judgment is granted for the defendants on that ground, such that Alvarez’s FLSA claims cannot go forward, the Court expects to dismiss, without prejudice, his state law claims. If, on the other hand, the FLSA sales threshold is met by competent evidence for all or some of these years, discovery may then go forward on the remaining issues in the case.
The court also denied the defendants’ motion for summary judgment to the extent they sought a finding that the subsequent business was not a successor in interest, reasoning that under the relevant tests (the traditional common law test OR the “substantial continuity test”) a finder of fact could certainly find that the subsequent business was a successor in interest to plaintiff’s actual employers.
Click Alvarez v. 40 Mulberry Restaurant, Inc. to read the entire Opinion & Order.
Polycarpe v. E&S Landscaping Service, Inc.
This consolidated appeal was before the Court after each one of the six (6) cases was dismissed for lack of enterprise coverage. In five (5) of the six (6) cases there was proof that the Defendants had gross revenues of $500,000.00 per year or more. Thus, the only question is whether otherwise “local” businesses came under the coverage of the FLSA, due to the fact that each had two (2) or more employees who handled goods or products that had previously traveled in interstate commerce (the “handling clause”). Answering in the affirmative, the Eleventh Circuit ended a battle of statutory misinterpretation that had gained steam in the past few years, and read the statute as written. In so doing, the Court rejected the “coming to rest” doctrine in the context of enterprise coverage and made clear the doctrine only applies in the individual coverage context.
In each instance, the Court held that the district courts below incorrectly relied on the “coming to rest” doctrine and misinterpreted the ultimate consumer exception in concluding that Plaintiffs could not show enterprise coverage under the FLSA. In some instances, the Court also noted that the district court failed to consider whether the evidence that Plaintiffs presented raised a genuine and important question of fact under the handling clause; instead of analyzing that portion of the FLSA, the district court mistakenly relied on the interpretive framework of an individual-coverage case.
Jacobs v. New York Foundling Hosp.
Appellants appealed from a judgment of the United States District Court for the Eastern District of New York (Azrack, M.J.) granting, inter alia, appellee’s (employer’s) motion for summary judgment and dismissing appellants’ claim that they were unlawfully denied overtime pay in violation of the Fair Labor Standards Act of 1938, 29 U.S.C. § 207(a)(1). Appellants contended appellee is an “enterprise” obligated to pay overtime because certain contractual and regulatory relations render its activities “in connection with the activities of a public agency” pursuant to § 203(r)(2)(C) and thus “performed for a business purpose.” The Second Circuit disagreed and affirmed the judgment below.
On appeal, the Employees contended that Foundling, a private, non-profit, independent contractor, is an “enterprise” under 29 U.S.C. § 203(r)(1) because its contractual and regulatory relations with the New York City Administration for Children’s Services (“ACS”) render its activities “in connection with the activities of a public agency” pursuant to 29 U.S.C. § 203(r)(2)(C) and thus “performed for a business purpose.” Accordingly, the Employees claimed, Foundling owes them overtime pay under the Act. Because it concluded that the FLSA’s definition of “enterprise” does not extend to a private, non-profit, independent contractor associated by regulation and contract with a public agency, the Second Circuit held Foundling was not obligated to pay overtime under the Act.
The Court cited the following facts as relevant to its analysis: “New York Foundling Hospital is a private, charitable provider of social services to children and families in the New York City area. Founded in 1869 by a Catholic religious order as a home for abandoned children, today its services include foster care, adoption, and physical and mental health initiatives.
All of the children served through Foundling’s Foster Home and Boarding Home Programs are referred by ACS, which is responsible for administering New York City’s child welfare services and is authorized to contract with private providers like Foundling under New York Social Services Law § 423(2). The Foster Home Program deals with approximately 150 abused or neglected children without special needs who have been removed from their biological families and placed with foster parents. The Boarding Home Program serves the same category of children who could not have or have not yet been placed with foster parents. Foundling’s funding is derived exclusively from charitable grants and other federal, state, and local government sources. Almost half of its total revenue originates as payments from ACS.
The relationship between ACS and Foundling is set forth in a number of agreements premised upon Foundling’s status as an independent contractor and, in turn, the entities’ operational independence. The contracts provide that Foundling’s “executive staff shall manage its affairs and programs and shall have the responsibility for the day-to-day provision of Services to and for each child placed with it.”Foundling “alone is responsible for … [the] work, direction, compensation and personal conduct” of its employees, as well as for their recruiting, screening, and training. Foundling can unilaterally terminate the agreements, in whole or in part, with thirty days notice.
The Court disagreed with Plaintiffs’ argument that regarding 203(r)’s ambiguity and adopted Defendant’s reading of the statute stating, ‘[T]he phrase ‘in connection with the activities of a public agency’ means activities performed by a public agency, not activities performed by a private nonprofit organization providing services to a public agency.’ Dep’t of Labor Br. 3.
Analysis of the Act offers significant support to the Department’s position, and we therefore find it persuasive. First, as previously noted, absent special circumstances inapplicable to Foundling, non-profit organizations do not operate for a business purpose and are not enterprises. See Tony & Susan Alamo Found., 471 U.S. at 297, 299. In § 203(r)(2)(A), (B), and (C), however, Congress singled out specific non-profits (i.e., medical, certain educational and transportation facilities, and public agencies) that are to be deemed enterprises nonetheless. The Employees concede that entities like Foundling-charitable independent contractors that support neglected children-are not included in this list, and they offer nothing other than their problematic plain language approach to § 203(r)(2)(C) to suggest that Congress intended such organizations to be engrafted onto the existing exceptions when they contract with a public agency. See Greene v. United States, 79 F.3d 1348, 1355 (2d Cir.1996) (“The ancient maxim expressio unius est exclusio alterius (mention of one impliedly excludes others) cautions us against engrafting an additional exception to what is an already complex [statute].”).
Second, § 203(r)(2)(A) and (B) end in parentheticals stating that the entities enumerated therein-hospitals, certain schools, certain common carriers, etc.-are covered “regardless of whether or not such [entities are] operated for profit or not for profit.”Section 203(r)(2)(C) lacks this parenthetical. If the “in connection with” phrase in § 203(r)(2)(C) were intended to cover private, third-party entities that contract with the government, the parenthetical would have been critical to include in the section because public agencies themselves-unlike schools and hospitals-are by definition solely public and non-profit. Its absence adds weight to the Department’s conclusion that § 203(r)(2)(C) encompasses only the public “activities performed by a public agency,” not the private acts of independent contractor organizations associated with an agency through contract and regulation, like Foundling.
Third, by limiting § 203(r)(2)(C) to “activities performed by a public agency,” the Department’s reading avoids the absurd result that follows from the Employees’ contrary interpretation. See United States v. Dauray, 215 F.3d 257, 264 (2d Cir.2000) (“A statute should be interpreted in a way that avoids absurd results.”). Ultimately, the Act applies to Foundling only if it qualifies both as an “enterprise” under § 203® and as an “enterprise engaged in commerce” under § 203(s).Section 203(s) defines an “enterprise engaged in commerce” as an “enterprise that … is an activity of a public agency.”§ 203(s)(1)(C) (emphasis added). Because “of” is a word used to indicate belonging or a possessive relationship, the Department points out that “Foundling’s activities are not the activities of ACS, even assuming it operates in connection with ACS.”See Powell v. Tucson Air Museum Found., 771 F.2d 1309, 1312 (9th Cir.1985) (“Because the Museum is a private corporation which is an independent contractor of Pima County, it is not an ‘activity of a public agency’ … and thus is not subject to the requirements of the FLSA.”).
Thus, § 203(r)(2)(C) and § 203(s)(1)(C) operate in tandem, and if the former is interpreted to encompass a third-party, private, independent contractor somehow associated with an agency, the Act still would not apply to that third-party because the “in connection with” phrase is missing from the latter. The Employees’ notion that § 203(r)(2)(C) includes Foundling while § 203(s)(1)(C) excludes Foundling is a result we are compelled to avoid. The Department’s interpretation of § 203(r)(2)(C), in contrast, allows the two sections to be read seamlessly: the “activities performed by a public agency” comports with both the activities “in connection with” a public agency and the activities “of” a public agency.
[w]hile nothing in the legislative history specifically addresses the phrase “in connection with the activities of a public agency” in Section 203(r)(2)(C), the legislative history is replete with statements that the amendments were meant to extend FLSA coverage to federal, state, and local government employees. There is, by contrast, no indication that Congress intended to extend enterprise coverage to employees of nonprofit entities that provide services to a public agency. Dep’t of Labor Br. 7.
Because the Employees concede that legislative history offers no support for their position, and the district court’s own thorough analysis “reveal[ed] no mention of an intent to extend enterprise coverage to non-profits that act in conjunction with … agencies,” Jacobs v. N.Y. Foundling Hosp., 483 F.Supp. 251, 261 (E.D.N.Y.2007), legislative history further buttresses the Department’s view that “in connection with the activities of a public agency” means activities performed by a public agency and not those performed by private independent contractors providing services to that agency.
Curiously, the Court noted, “[i]n this case, the parties do not dispute that Foundling is not a hospital, school, or any other type of institution listed under § 203(r)(2)(A), nor an actual municipal public agency under § 203(r)(2)(C). At issue, rather, is the meaning of the phrase “in connection with” as applied to “the activities of a public agency” in § 203(r)(2)(C).” It is not clear, but Foundling may have qualified as an enterprise under 203(r)(2)(A), an argument apparently waived by the Plaintiffs.
This case was before the Court on Defendants’ Motion for Summary Judgment, based on an asserted lack of enterprise coverage under the FLSA. The Court denied Defendants’ Motion, based on the fact that Plaintiff demonstrated that 2 or more employees handled goods which had traveled in interstate commerce. While, this appears to be an unquestionable correct reading of the statute, it is significant, because several courts within the Southern District of Florida, have inexplicably failed to read the statute on its face to allow for coverage under similar circumstances.
After considering the historical perspective (and changes) to the FLSA, the Court stated, “in a case where materials are at issue under the second prong of the definition of an enterprise, the “ultimate consumer” limitation has no application. See also Exime, 591 F.Supp.2d at 1371 (Court should “give effect, if possible, to every word and clause” contained in a statute, citing Lowery v. Ala. Power Co., 483 F.3d 1184, 1204-05 (11th Cir.2007)).
Addressing recent 11th Circuit case law related to coverage (and distinguishing same), the Court stated, “Fast forward then to 2006 and beyond. We recognize that the cases relied upon by Defendant (including several recent Southern District cases interpreting language found in two Eleventh Circuit cases) ostensibly support a far different construction of enterprise coverage that takes us back to where we were prior to 1974. See, e.g., Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1267 (11th Cir.2006) (citing Dunlop in part for the proposition that “[w]hen goods reach the customer for whom they were intended, the interstate journey ends and employees engaged in any further intra state movement of the goods are not covered under the Act.”) (emphasis in original) (citations omitted); Lamonica, 578 F.Supp.2d at 1367 (“[A] customer who purchases an item from Home Depot is not engaged in commerce even if Home Depot previously purchased it from out-of-state wholesalers.”); Navarro, 533 F.Supp.2d at 1226 (“[T]he out-of-state shippers send the parts to the local dealer, where they are kept until they are purchased in the local market. Therefore, the interstate journey stops when the parts reached [sic] the local dealer.”).
To the extent these district court were applying the second prong of enterprise coverage under section 203(s)(1)(A)(i), which is at issue here, they may be over-relying on distinguishable, but more recent, Eleventh Circuit cases, and overlooking the analysis of the question in Dunlop following the 1974 amendments to the FLSA.
So where did the confusion originate? It seems to have begun with the Eleventh Circuit panel decision’s summary discussion of Dunlop in Thorne v. All Restoration Services, which was a case decided entirely under the individual coverage provisions of the FLSA. A worker, Thorne, who was employed by a small mold restoration company sued for overtime compensation under the FLSA. Thorne claimed that the company was covered by the enterprise coverage as well as the individual coverage provisions of the statute. At trial, however, only Thorne testified in his case in chief. The trial court, Judge Cohn from our district, entered Rule 50 judgment as a matter of law on both the enterprise coverage and individual coverage components of the case. SeeCase No. 04-60095, D.E. 46 (S.D. Fla. Feb 1, 2005).
On appeal to the Eleventh Circuit, Thorne did not challenge Judge Cohn’s finding that enterprise coverage had not been established as a matter of law. Apparently there was no testimony in the record at that point in the trial that even the $500,000 sales threshold had been met. See Brief for Appellant, 2005 WL 4814060, at *3-7 (11th Cir. May 31, 2005). The Court’s opinion expressly acknowledged that enterprise coverage was no longer at issue on appeal. 448 F.3d at 1265 n. 1.
The Court then examined whether Judge Cohn’s determination as to individual coverage should be upheld. The individual coverage issue, as the Court pointed out, turned on whether Thorne was “directly participating in the actual movement of persons or things in interstate commerce by (i) working for an instrumentality of interstate commerce, e.g., transportation or communication industry employees, or (ii) by regularly using the instrumentalities of interstate commerce in his work, e.g., regular and recurrent use of interstate telephone, telegraph, mails, or travel.” Id. at 1266.That is undoubtedly the test for individual coverage under 29 U.S.C. § 207(a)(1) and the regulations thereunder, 29 C.F.R. §§ 776.23(d)(2), 776.24 (2005).
The statutory definition for enterprise coverage, by contrast, does not only apply to employees with “direct participation” in the “actual movement” of things in interstate commerce. That is a far narrower test found in the first prong of the statute, which is precisely why the 1961, 1966 and 1974 amendments created and expanded enterprise coverage under the statute. See29 U.S.C. § 203(s)(1)(A)(i) (“has employees engaged in commerce or in the production of goods 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”) (emphasis added).
It is telling, for instance, that many of the primary decisions cited by the Eleventh Circuit’s decision in Thorne were from the 1940’s. 448 F.3d at 1266-68 (citing McLeod v. Threlkeld, 319 U.S. 491, 496-97 (1943) (finding that plaintiff’s activities were purely local, and he was not individually engaged in commerce when he merely cooked and cleaned for railroad workers); Kirschbaum v. Walling, 316 U.S. 517, 518-526 (1942)).
Courts distinguish between merchants who bring commerce across state lines for sale and the ultimate consumer, who merely purchases goods that previously moved in interstate commerce for intrastate use. Therefore, a customer who purchases an item from Home Depot is not engaged in commerce even if Home Depot previously purchased it from out-of-state wholesalers.
In Dunlop v. Industrial America Corporation, 516 F.2d 498, 499 (5th Cir.1975), the court was faced with the question of whether a business which consumes gasoline and oil in the process of providing services to its customers is the “ultimate consumer” of those goods, and therefore not subject to FLSA coverage. The defendant corporation operated a wholly intrastate garbage removal service, and its only tie to interstate commerce was that its employees used gasoline and oil products which had moved in interstate commerce in operating and maintaining the company’s trucks. The court held that the defendant was not covered because it was an “ultimate consumer” of the goods. Id. at 499-502.
From this discussion, one is left with two important impressions. One is that Dunlop stands for that proposition today. And, two, is that this proposition applies equally to individual coverage cases like Thorne, as well as enterprise coverage cases like Dunlop.Both impressions are flatly incorrect. First, Dunlop does not stand for the proposition that, even after the 1974 amendments, enterprise coverage under the second prong of subsection s(1)(A)(i) fails when an entity is the ultimate consumer of “materials” as well as goods that have moved in interstate commerce in the past. The Thorne decision never explained that the holding in Dunlop was out-dated by the Court’s own admission after 1974. That omission was not critical, of course, to the outcome in Thorne.Frankly, the entire citation and reference to Dunlop was indeed dicta because the holding in Thorne was expressly not applicable to enterprise coverage.
Second, Dunlop also does not apply to individual coverage analysis.Dunlop was focused on the second prong of the enterprise definition. Unlike the first prong of that definition, individual coverage analysis is entirely distinct from the “goods or materials” prong of the statute. Dunlop thus has no relevance to a case limited to individual coverage. Similarly, Dunlop has no application to an enterprise coverage case that is based on the first prong of the statute. And, for the same reason, Thorne has no relevance to a case governed by the broader second prong of subsection s(1)(A)(i). Yet, Thorne’s reliance on Dunlop seems to suggest quite the opposite.
That is also evident from a later Eleventh Circuit case, Scott v. K.W. Max Invs., Inc., 256 Fed.Appx. 244 (11th Cir.2007). That case, at first blush, appears to have relied on Thorne’s individual coverage analysis and the “ultimate consumer” limitation to decide an enterprise coverage claim. And it has been cited as such by some district court opinions, infra.Yet that opinion did not once mention Dunlop or distinguish its analysis of the expansion of enterprise coverage via the “materials” prong added in 1974. It did not need to do so, in fact, because it was deciding the enterprise coverage issue primarily on the “first prong” of the statute. The court’s holding as to enterprise coverage claim was focused on whether there was any evidence in the record of any “actual movement” of goods in commerce. None was presented except for a single isolated purchase of lumber in interstate commerce that did not qualify as a regular and recurrent practice. With respect to the second prong of enterprise coverage, “goods or materials” that had been moved in commerce in the past, the Court’s discussion was quite limited. “Scott offers no specific argument or any evidence that any of the goods purchased from Home Depot had been moved in or produced for interstate commerce.” Id. at 248.Therefore, we do not read Scott as holding in any way that the ultimate consumer limitation applies to “materials” under the second prong of the statute.
Unlike Judge Seitz’s opinion in Exime, however, several Southern District cases rely on the conclusion that Scott permits the use of individual coverage case definitions to decide enterprise coverage cases as a general matter. This is simply too broad a proposition. With respect to the “goods or materials” prong of the statute, as discussed earlier, the 1974 amendments significantly broadened that definition of enterprise coverage, extinguishing the “ultimate consumer” issue altogether from that prong of the statute. This significant change to the text of the statute did not apply to individual coverage cases governed by 29 U.S.C. § 207(a)(1), nor did it apply to the first prong of the definition of an enterprise under 29 U.S.C. § 203(s)(1)(A)(i).
Like Judge Seitz, we do not choose to follow those cases that read more into the holding in Scott and the dicta in Thorne, and overlook the significance of the holding and analysis found in Dunlop. See, e.g., Lamonica, 578 F.Supp.2d at 1366; Ben-Aime, 572 F.Supp.2d at 1317; Polycarpe, 572 F.Supp.2d at 1321. We certainly do not question the outcome of these decisions to the extent they were based, as several seem to be, on the first prong of the enterprise coverage provision. The ultimate consumer doctrine certainly continues to apply, as it does for individual coverage, to enterprise coverage cases that are so limited. If, on the other hand, the “goods or materials” prong of the statute applies, then there is no longer any need to address the ultimate consumer or “come to rest” doctrine. The dispositive question simply asks whether two or more employees are handling materials, that have traveled in interstate commerce at some point in the past, for an enterprise with at least $500,000 in sales. And while it is true, as Defendants contend, that fulfillment of the statutory business volume requirement is not itself sufficient to create enterprise coverage, “[m] ost, if not every, Circuit Court that has spoken on this issue [including the 11th Circuit, as well as some lower federal courts] ha[ve] … construed the 1974 amendment as expanding enterprise coverage to virtually all employers, so long as that employer satisfies the $500,000 gross sales requirement.”Exime, 372 F.Supp.2d at 1370. “Thus the enterprise commerce test, quite simply, embraces all businesses whose employees regularly handle materials previously moved across inter-state lines.”Id. at 1372.
Having determined, under the current version of the FLSA, Defendants’ employees handled materials that are still “in commerce,” the Court then found that Plaintiff had produced sufficient evidence that they did so on a “regular and recurrent” basis. Therefore, the Court denied Defendants Motion for Summary Judgment.
Although not mentioned by the Court, many of the cases holding contra are up on a consolidated appeal at the 11th Circuit. Therefore, this case, which appears to correctly annunciate the scope of enterprise coverage under the circumstances, will stand if the 11th Circuit similarly reverses the prior contra holdings of several the Florida district courts distinguished by this Court.
Plaintiff filed this lawsuit under the Fair Labor Standards Act (FLSA). Starting on July 8, 2006, plaintiff worked as a medical assistant for defendant. Her duties included checking patients in and out of their appointments, verifying insurance coverage, answering the phone, filing, faxing and other clerical duties. She alleges that she often worked over forty hours per week. She also alleges that defendant’s annual gross sales volume exceeds $500,000.00. At issue in this case is whether defendant engaged in interstate commerce.
In another bewildering decision, the District Courts of Florida continue to narrow the scope of the FLSA’s coverage, contra to the Department of Labor’s enforcement policies and virtually all other Circuit and District Courts.
“As an initial matter, plaintiff cites cases that hold that the second prong of the enterprise coverage test is determinative. She argues that since defendant conceded that his business grossed at least $500,000 per year that this Court should simply deny the motion in its entirety and rely exclusively on the second prong of the test. This Court disagrees. Simply because some judges have recognized that business with annual gross sales volume exceeding $500,000 often also engage in interstate commerce, does not mean that all such business are engaged in interstate commerce. The statute requires that a business meet both prongs of the test before jurisdiction rests in the federal courts.
“In support of a possible claim for individual coverage, plaintiff averred that about 70% of defendant’s patients are not Florida residents, that she regularly used the telephone, internet and facsimile machine to contact out of state insurance companies, and that she processed patients’ credit card payments.
In regards to the fact that some of defendant’s patients were not full time Florida residents, this Court finds the ultimate-consumer doctrine instructive. That doctrine states that goods are no longer in the stream of commerce once obtained by the ultimate consumer thereof. 29 U.S.C. § 203(I); Thorne, at 1267. This Court holds that although some patients may have been residents of other states, defendant was not engaged in interstate commerce if his contact with those patients was primarily local. Defendant averred that he only works within Florida. Defendant is licensed in Florida and other states but his license is “inactive” everywhere except Florida. There is no evidence to suggest that defendant solicited business from patients while they were out of state or that any contact with out of state patients was regular or recurrent.
This Court also holds that plaintiff’s use of the telephone or facsimile machines to make long distance phone calls or use of the internet and credit cards is insufficient to establish jurisdiction. To be considered “engaged in interstate commerce” a business must use a credit card specifically to transact business in interstate commerce. Here, defendant has submitted sufficient evidence to show that his practice is a local enterprise “and the items used in the business proliferated this goal of local service.” Polycarpe v. E & S Landscaping Servs, Inc., 572 F.Supp.2d 1318, 1321-22 (S.D.Fla.2008). This also appears to be the case in regards to internet usage. Pierre C. Bien-Aime v. Nanak’s Landscaping, Inc., 2008 WL 3892160 (S.D.Fla. August 12, 2008). “The fact that the Defendant Company provided services of an exclusively local nature is dispositive. Polycarpe at 1322.
The Court held that Plaintiff failed to show that she regularly and recurrently engaged in interstate commerce.
Defense and Plaintiff attorney’s alike, who regularly handle FLSA cases are scratching their heads with this decision, which, on its face, found issues of fact which should have led to a denial of Defendant’s Summary Judgment Motion. Nonetheless, the Court, pointing out all the factual issues, seemingly applied both an incorrect Summary Judgment standard, and an incorrect reading of the FLSA’s coverage provisions (both Enterprise and Individual) and dismissed what appears to be a perfectly valid case, at least at the Summary Judgment stage.
Of additional concern, a review of the docket reveals that the Court ignored well-settled law and refused to allow the Plaintiff (non-movant) time to conduct limited discovery on the issue of coverage, prior to ruling on Defendant’s Motion, which was filed at the inception of the lawsuit and prior to any discovery.

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