Court Opinion

ID: 4740
Source: CourtListenerOpinion
Date Created: 2010-04-25 04:58:42+00
Date Added: 2024-06-11T12:13:00.877933
License: Public Domain

UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                         _____________________

                              No. 90-3706
                         _____________________

LYNN MARTIN, Secretary of Labor,

                            Plaintiff-Appellant,

versus

LESLIE N. BEDELL and BLUE WATER MARINE,
CATERING, INC.,

                     Defendants-Appellees.

____________________________________________________________

           Appeal from the United States District Court
               for the Eastern District of Louisiana
____________________________________________________________

                           (March 25, 1992)

BEFORE WISDOM, HIGGINBOTHAM, and SMITH, Circuit Judges.

WISDOM, Circuit Judge:

     This case presents the question whether the cooks employed

by the defendant/appellee, a caterer to boats providing offshore

support to oil companies in the Gulf of Mexico, are entitled to

overtime pay under the Fair Labor Standards Act (FLSA).   Because

the income generated by those cooks must be attributed to their

employer, the employer is bound to comply with the Act's overtime

provisions.   Because the district court's factual findings are

insufficient to support its determination that the cooks do not
                                   2

fit within the narrow definition of "seaman" under the FLSA, we

remand for further, limited factual findings.      We therefore

REVERSE the decision below as to the employer's exemption from

enterprise coverage, and REMAND as to the cook's status as

nonseaman, so that the district court may make necessary findings

as to the work the cooks perform.

                          I.    BACKGROUND

     Blue Water Marine Catering, Inc. ("Blue Water") supplies

cooks for "jack-up boats".     Those boats provide offshore

maintenance services for oil companies.      Both parties concede

that the oil and gas produced by those companies enter the stream

of interstate commerce.

     For the dates pertinent to this appeal, Blue Water paid its

cooks a day rate.   The Department of Labor, through its Wage and

Hour Division, investigated Blue Water and determined that this

form of payment violated the FLSA.     The Secretary of the

Department of Labor, Elizabeth Dole (now Lynn Martin), brought

this suit to force Blue Water and its president, Leslie N.

Bedell, to comply with the overtime provisions of the FLSA.

Accordingly, we shall refer to the plaintiff/appellant as

"Labor".

     The district court held a one-day bench trial limited to

Blue Water's liability.   The court decided that neither the cooks

as individuals nor Blue Water as an enterprise was covered by the

FLSA.   As to the cooks, it held that their work outside of

Louisiana's territorial waters was outside the jurisdiction of
                                                3

the FLSA.       When the cooks did work within those waters, the court

held that the food they cooked (food that was consumed aboard)

was not "goods for commerce"; therefore, their services were not

closely related to or directly essential to the production of

goods for commerce, and were not covered by the Act.                             The court

also held that Blue Water itself was excused from compliance

because it fitted within the Act's exception for business

establishments employing only immediate members of one family.

Finally, the court held that the cooks, although they worked on

seagoing vessels, did not fit within the FLSA's narrowly

construed exemption of seamen.                  Labor appeals all but this last

holding, which Blue Water challenges.

                            II. THE STATUTORY FRAMEWORK

       The FLSA guarantees overtime pay to employees engaged "in

the production of goods for commerce" ("individual coverage") or

"employed in an enterprise engaged in commerce or in the

production of goods for commerce" ("enterprise coverage").1

Either individual or enterprise coverage is enough to invoke FLSA

protection.2

   1
       29 U.S.C. § 207(a)(1) reads:
              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 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.
       2
        Our finding that Blue Water is subject to enterprise
coverage therefore values it unnecessary to consider the district
                                 4

     Many exceptions temper the strictness of this rule.

Relevant to the issue of enterprise coverage in this case is the

"mom and pop" exception.   The FLSA defines "enterprise engaged in

commerce or in the production of goods for commerce" to exclude

"any establishment which has as its only regular employees"

members of one immediate family.3     The sales of such an

establishment are not included in determining the minimum amount

of revenues that triggers the Act's application.4     Labor's

interpretive bulletins define an "establishment" to be a

"distinct physical place of business".5     The only employees who

work at the home office establishment of Blue Water are Mr.

Bedell, his wife, and her daughter.     Without other "regular

employees" their office in Gretna, Louisiana would be excluded

from the Act as a "mom and pop" establishment.

     There are also relevant exemptions from individual coverage.

For example, an employer need not comply with the Act's overtime

court's decision on individual coverage.
     3
        29 U.S.C. § 203(s)(2) provides:
       Any establishment that has as its only regular
       employees the owner thereof or the parent, spouse,
       child or other member of the immediate family of
       such owner shall not be considered to be an
       enterprise engaged in commerce or in the
       production of goods for commerce or a part of such
       an enterprise. The sales of such an establishment
       shall not be included for the purposes of
       determining the annual gross volume of sales of
       any enterprise for the purposes of this
       subsection.
     4
         Id.
     5
         29 C.F.R. § 779.23 (1990).
                                  5

requirements if its employees are exempt under 29 U.S.C. §

213(b).    One of those exemptions, § 213(b)(6), is for "any

employee employed as a seaman".

    III. ENTERPRISE COVERAGE AND THE "MOM AND POP" EXCLUSION

     Applying the words "employer", "establishment", and

"enterprise" under the FLSA can be confusing.    Labor's own

interpretations bravely attempt to define them.6   In general,

"employer" is usually a person; "establishment" is a place of

business; and "enterprise" is the business itself, a number of

related activities done for a common business purpose.

     6
          29 C.F.R. § 779.203 (1990) provides:
              The coverage, exemption and other provisions
         of the Act depend, in part, on the scope of the
         terms "employer," "establishment," or
         "enterprise." As explained more fully in Part 776
         of this chapter, these terms are not synonymous.
         The term "employer" has been defined in the Act
         since its inception and has a well established
         meaning. As defined in section 3(d), it includes,
         with certain stated exceptions, any person acting
         directly or indirectly in the interest of an
         employer in relation to an employee. (See §
         779.19.) The term "establishment" means a
         "distinct physical place of business" rather than
         "an entire business or enterprise." (See §
         779.23) The term "enterprise" was not used in the
         Act prior to the 1961 amendments, but the careful
         definition and the legislative history of the 1961
         and 1966 amendments provide guidance as to its
         meaning and application. As defined in the Act,
         the term "enterprise" is roughly descriptive of a
         business rather than of an establishment or of an
         employer although on occasion the three may
         coincide. The enterprise may consist of a single
         establishment (see § 779.204(a)) which may be
         operated by one or more employers; or it may be
         composed of a number of establishments which may
         be operated by one or more employers (see §
         779.204(b)).
                                  6

     For the times relevant to this case, no enterprise was

subject to the FLSA unless its annual gross sales volume exceeded

$250,000.7   As we noted above, the Act excludes sales figures for

a "mom and pop" establishment that regularly employs only

immediate family members.    The district court found that Blue

Water's home office in Gretna, Louisiana was such an

establishment: its sales figures, all generated from that

establishment, would not count toward a finding of enterprise

coverage.    The court found that the jack-up boats on which the

cooks are employed are separate establishments under the Act, but

that the sales volume generated by the cooks' work in those

establishments were attributable to Blue Water's home office.

For that reason, those sales (which the court found to be greater

than $250,000) do not count toward enterprise coverage.    In so

ruling, the court weaved two errors together.    Unravelling them

reveals two separate holdings by which the district court might

have found, and by which we find as a matter of law, that Blue

Water is subject to enterprise coverage under the FLSA.

     The court erred first in the legal finding that, "while the

cooks and galley hands are employees of Blue Water's enterprise,

they are not employees of the Heritage Avenue [Bedell home

office] establishment".    The court found that "[n]one of the

other regular employees of Blue Water ever set foot inside this

establishment"; "the only regular employees of that

     7
        29 U.S.C.A. § 203(s)(1) (1978). In 1989 that figure was
raised to $500,000. 29 U.S.C.A. § 203(s)(1)(A)(ii)(Supp. 1991).
                                 7

establishment" are the three Bedell family members.    It is not

necessary, however, for cooks or for others ever to set foot in

Blue Water's Gretna establishment to be its employees.    It was

error to deny that they might be employees of Blue Water's Gretna

establishment.

     The district court assumed that no one could be a "regular

employee" of an establishment at which he never appears.

Although the Act itself offers little guidance on this issue, we

disagree.   The question whether someone is the regular employee

of an establishment is not answered, or not answered solely, by

looking to whether he works at the establishment.8    It is

     8
        Labor's interpretive bulletins state that employees of an
exempt retail or service establishment can also be exempt even if
they do not work at the establishment. 29 C.F.R. § 779.307 reads
in pertinent part that
       such employees as collectors, repair and service
       men, outside salesmen, merchandise buyers,
       consumer survey and promotion workers, and
       delivery men actually employed by an exempt retail
       or service establishment are exempt from the
       minimum wage and overtime provisions of the Act
       although they may perform the work of the
       establishment away from the premises.
The bulletins also state that employees of a non-exempt
establishment cannot become exempt simply by visiting exempt
establishments on behalf of their employers. 29 C.F.R. § 779.310
provides that
       traveling auditors, manufacturers' demonstrators,
       display-window arrangers, sales instructors, etc.,
       who are not "employed by" an exempt establishment
       in which they work will not be exempt merely
       because they happen to be working in such an
       exempt establishment, whether or not they work for
       the same employer. Mitchell v. Kroger Co., 248
F.2d 935 (8th Cir. 1957).
The mere location of employment is therefore not conclusive. A
court should look to the economic reality, and not the location,
of employment to determine who employs an employee.
                                 8

answered according to economic reality, applied through factors

with which this and other courts have attempted a legal

definition of "employee".9   Blue Water has never contended that

its cooks are actually the employees of any other employer.

Because they could be employees of the Blue Water enterprise

without being employees of the Bedell establishment, however, we

cannot say that they are employees of Blue Water's home office.10

     9
        See, e.g., Watson v. Graves, 909 F.2d 1549, 1553 (5th
Cir. 1990)(citations omitted):
       For purposes of FLSA, determination of employee
       status focuses on economic reality and economic
       dependence. The "economic reality" test includes
       inquiries into:
            whether the alleged employer (1) has 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.

     10
        Based on the facts before us, we find it unlikely that
the technical, and for obvious reasons necessary, control exerted
over Blue Water's cooks by the masters of the jack-up boats would
be sufficient to destroy the economic reality of their employment
by Blue Water. Yet even if it were the case that the cooks are
employed by the jack-up boat owners as well as by Blue Water, we
note that under the FLSA an individual can be employed by one
employer or by more than one joint employer. Falk v. Brennan,
414 U.S. 190, 195 (1973); Donovan v. Sabine Irrigation Co., Inc.,
695 F.2d 190, 194 (5th Cir. 1983); Hodgson v. Griffin and Brand
of McAllen, Inc., 471 F.2d 235 (5th Cir.), cert. denied, 414 U.S.
819 (1973). 29 C.F.R. § 791.2 (1991) provides:
            (a) A single individual may stand in the
       relation of an employee to two or more employers
       at the same time under the Fair Labor Standards
       Act of 1938, since there is nothing in the act
       which prevents an individual employed by one
       employer. A determination of whether the
       employment by the employers is to be considered
       joint employment or separate and distinct
       employment for purposes of the act depends upon
       all the facts in the particular case. . . . [I]f
                                  9

     The Blue Water enterprise, however, is not exempt from FLSA

coverage merely because the Bedell home office might be a

statutory "mom and pop" establishment.    The trial court's second

error was its unsupported holding that, because the cooks are not

employed at Blue Water's one establishment, then the revenues

generated by their work in the jack-up boats must be attributed

to that home office establishment.    The court found,

inconsistently, that Blue Water's only establishment is its home

office, yet it also found that the cooks are employed at each

jack-up boat.   We find that if the cooks are not employed at the

Bedell home office establishment, then the jack-up boats must

constitute distinct establishments in the Blue Water enterprise.

     It would be inconsistent with the remedial purposes of the

FLSA to attribute the income generated by the work of the cooks

on jack-up boats to the Bedell home and not to those

establishments and the larger Blue Water enterprise.     Otherwise,

any business controlled by immediate family members could exclude

its employees from FLSA coverage by segregating them, even though

their labors were the employer's only source of income, from the

home office.    We read the "mom and pop" exclusion to exclude from

       the facts establish that the employee is employed
       jointly by two or more employers, i.e., that
       employment by one employer is not completely
       disassociated from employment by the other
       employer(s), all of the employee's work for all of
       the joint employers during the workweek is
       considered as one employment for purposes of the
       Act.
                                 10

coverage only "Mom", "Pop", their immediate relatives, and the

revenues their work generates.   An enterprise that otherwise

meets the prerequisites of FLSA coverage (i.e., has gross annual

sales greater than the statutory minimum) cannot avoid that

coverage by employing only immediate family members at its home

base, when a large pool of non-family employees generate the bulk

of its income.   In declaring that Blue Water's cooks worked at as

many establishments as there are jack-up boats, the district

court then erred by attributing the income earned by working on

those establishments not to the Blue Water enterprise but to the

one establishment in Gretna.

     The appellee cannot have it both ways.     Either Blue Water

has one establishment that regularly employs a large number of

unrelated employees, or it is an enterprise with many

establishments; one of those establishments is exempt, but the

income generated by work performed at its many other

establishments should be attributed to the entire enterprise, and

therefore count toward the dollar volume requirements of the

FLSA.   It is irrelevant which of these scenarios is true.

Because the factual resolution of these issues would have no

effect on the outcome, and because it is established that the

revenues generated by the cooks' work are greater than the

statutory minimum for enterprise coverage, we hold that Blue

Water is subject to enterprise coverage as a matter of law.

                     IV. THE SEAMAN EXEMPTION

     This Court has long been accustomed to a very broad
                                  11

definition of the word "seaman" for purposes of the Jones Act.

This case reminds us, however, that the definition of seaman

under the Jones Act is limited to that Act and its remedial

goals.11    In contrast, the remedial goals of the Fair Labor

Standards Act lead us to read narrowly its exemptions, including

the definition of "seaman".12    A "seaman" is removed entirely

from the Act's overtime provisions.    An employer has the burden

of proving that its employees stand outside of this Act's very

broad protection.13

     Because employment solely on seagoing vessels does not

necessarily make one a "seaman" under the FLSA, a court must look

to the actual work performed.    Our review of a district court's

investigation of this question is limited to its findings of

fact, which we accept unless they are clearly erroneous.14      We

review de novo the application of those facts to the law.15

     In this case the district court found that Blue Water's

cooks perform work essential to the operation of seagoing vessels

traveling between Louisiana and the outer Continental Shelf.         It

     11
        This Court has already decided that a seaman under the
Jones Act is not a seaman under the FLSA. Dole v. Petroleum
Treaters, Inc., 876 F.2d 518 (5th Cir. 1989).
     12
           Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960).
     13
        Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190,
206 (1966).
     14
           Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714
(1986).
     15
           Id.
                                  12

also found that, "[w]hile aboard the vessel, the cooks are

subject to the authority, direction, and control of the master of

the vessel".   Yet from these facts the district court found that

the cooks are not seaman because their services are not "rendered

primarily as an aid in the operation of a vessel as a means of

transportation".16

     This Court has decided two cases involving the "seaman"

exemption.17   Although neither case offers us much help here, our

more recent case directs us to the interpretive bulletins of the

Wage and Hour Division of the Department of Labor, which, in

turn, rely heavily on our earlier case; those bulletins also

provide an answer in this case.    We give great weight to the

consistent interpretations of those bulletins.18   They allow the

holding that in some cases a seagoing cook may not be a seaman.

     The regulations state that a "seaman" is an employee who

"performs, as master or subject to the authority, direction, and

control of the master aboard a vessel, service which is rendered

primarily as an aid in the operation of [a] vessel as a means of

     16
          Quoting 29 C.F.R. § 783.31; Petroleum Treaters, 876 F.2d
at 521.
     17
        Petroleum Treaters, 876 F.2d 518; Walling v. W. D. Haden
Co., 153 F.2d 196 (5th Cir.), cert. denied, 328 U.S. 866 (1946).
     18
        Tony & Susan Alamo Found. v. Secretary of Labor, 471
U.S. 290, 297 (1985); Petroleum Treaters, 876 F.2d at 521-22)
("The fact that the interpretation has not varied since the
FLSA's enactment also entitles it to 'great respect'. Chemehuevi
Tribe of Indians v. Federal Power Comm'n, 420 U.S. 395 (1975).")
                                  13

transportation".19    They also state that "[w]hether an employee

is 'employed as a seaman', within the meaning of the Act, depends

upon the character of the work he actually performs and not on

what it is called or the place where it is performed".20      When a

worker performs both seaman's work and nonseaman's work, he is a

seaman unless his nonseaman's work is substantial in amount.21

Labor defines "substantial" as work that "occupies more than 20

percent of the time worked by the employee during the

workweek".22

     The regulations also provide:

               The term "seaman" includes members of the
          crew such as sailors, engineers, radio operators,
          foremen, pursers, surgeons, cooks, and stewards
          if, as is the usual case, their service is of the
          type described in § 783.31. In some cases it may
          not be of that type, in which even the special
          provisions relating to seaman will not be
          applicable.23

     A cook is usually a seaman because he usually cooks for

seamen.     In this case that commonplace may well be untrue.   It

would appear that Blue Water's cooks primarily feed workers who

are not involved in the navigation of the boat on which they live

and from which they work.24    Even though the district court was

     19
        29 C.F.R. § 783.31 (1991), citing (among other cases)
Walling v. W.D. Haden Co.
     20
           29 C.F.R. § 783.33 (1991), again citing W.D. Haden Co.
     21
           29 C.F.R. § 783.37 (1991).
     22
           Id.
     23
           29 C.F.R. § 783.32 (1990) (emphasis added).
     24
          For example, in W.D. Haden, 153 F.2d at 199, we
emphasized that the Act does not exempt seaman, but those
"employed as seaman", a distinction we found more than
                               14

correct to look to whether the cooks' services do in fact aid the

operation of vessels as means of transportation, it did not state

its findings in terms sufficient to satisfy the standards of

Labor's interpretive bulletins, to which we defer.   We remand so

that the district court may determine if the cooks spend more

than 20% of their time preparing food for non-crew members.    If

they do, they are not seamen under the FLSA.

                         VI. CONCLUSION

     For the reasons stated above, we REVERSE in part, and REMAND

to the district court for the limited factual findings made

necessary by this opinion.

tautological. We found that shell miners employed on a seagoing
vessel "are employed more in industry than in shipwork". In this
case, similarly, it seems likely that Blue Water's cooks are
employed more in feeding industrial workers than in feeding ship
workers. If more than 20% of their time is spent in the former,
then they are intended beneficiaries of the FLSA. As we wrote in
W.D. Haden, "[t]he entire Act is pervaded by the idea that what
each employee actually does determines its application to him".
Id.