     11-4035-cv
     Irizarry v. Catsimatidis

 1                  UNITED STATES COURT OF APPEALS
 2                      FOR THE SECOND CIRCUIT
 3
 4
 5                        August Term, 2012
 6
 7    (Argued: December 13, 2012         Decided: July 9, 2013)
 8
 9                      Docket No. 11-4035-cv
10
11
12   BOBBY IRIZARRY, RUBEN MORA, JOSELITO AROCHO, JOSEPH CREMA,
13   ALFRED CROKER, FRANK DELEON, MARIO DIPRETA, WILLIAM HELWIG,
14   ROBERT MISURACA, ROBERT PASTORINO, VICTOR PHELPS, DANIEL
15   SALEGNA, GILBERTO SANTIAGO,
16
17                                            Plaintiffs-Appellees,
18
19   CARLOS TORRES, on behalf of himself and all others similarly
20   situated, LEWIS CHEWNING,
21
22                       Plaintiffs-Counter-Defendants-Appellees,
23
24   RAYMOND ALLEN, LLANOS BLAS, NABIL ELFIKY, MOHAMMED DABASH,
25   CARLOS MARTINEZ, LUIS MORALES, STEVE GROSSMAN, FRANKLYN
26   COLLADO, DAVID ADLER, DINO A. ZAINO, PATRICK LABELLA, ROBERT
27   MASTRONICOLA, ANTHONY BROOKS, VICTOR BENNETT, CANDIDO MOREL,
28   JOSE MARTINEZ, WAYNE HENDRICKS, HAROLD HORN, TROY MILLER,
29   OUSMANE DIATTA, ELLIOT STONE, TINA RODRIGUEZ, GABRIEL
30   KARAMANIAN, BRIAN HOMOLA, ANNA GARRETT, NELSON BETANCOURT,
31   JOSE DELACRUZ, YURI LAMARCHE, MICHAEL GROSECLOSE, RODOLFO
32   DELEMOS, PIO MOREL, ABIGAIL CLAUDIO, MALICK DIOUF, DAVID
33   OTTO, ALEJANDRO MORALES, VICTOR DIAZ, PAUL PETROSINO,
34   EDUARDO GONZALEZ, JR., JOSE BONILLA-REYES, VINCENT PEREZ,
35   MARTIN GONZALEZ, CALVIN ADAMS, WILLIAM FRITZ, KATHERINE
36   HALPERN, CHRISTIAN TEJADA, EDWARD STOKES, PLINIO MEDINA,
37   TOWANA STARKS, LAWSON HOPKINS, RUBEN M. ALEMAN, EUGENE
38   RYBACKI, EARL CROSS, MANOLO HIRALDO, ROBERT HAIRSTON,
39
40                                                      Plaintiffs,
41

                                   1
 1
 2
 3
 4                                   -v.-
 5
 6   JOHN CATSIMATIDIS,
 7
 8                                                   Defendant-Appellant.
 9
10   GRISTEDE’S OPERATING CORP., GRISTEDE’S FOODS NY, INC.,
11   NAMDOR, INC., GRISTEDE’S FOODS, INC., CITY PRODUCE OPERATING
12   CORP.,
13
14                                          Defendants-Counter-Claimants,
15
16   GALLO BALSECA, JAMES MONOS,
17
18                                                           Defendants.*
19
20
21
22
23   Before:
24             WESLEY AND HALL, Circuit Judges, GOLDBERG, Judge.**
25
26
27
28        A class of current and former employees of Gristede’s
29   supermarkets sued several corporate and individual
30   defendants for alleged violations of the Fair Labor
31   Standards Act and the New York Labor Law. The United States
32   District Court for the Southern District of New York
33   (Crotty, J.) granted partial summary judgment for the
34   plaintiffs, concluding that John Catsimatidis, the owner,
35   president, and CEO of Gristede’s, was the plaintiffs’
36   “employer” under both laws. Catsimatidis appeals, and we
37   AFFIRM IN PART, VACATE IN PART, AND REMAND.
38


          *
           The Clerk of Court is directed to amend the caption as
     listed above.
          **
           The Honorable Richard W. Goldberg, of the United States
     Court of International Trade, sitting by designation.

                                        2
 1
 2
 3            JONATHAN D. HACKER (Walter Dellinger, Brianne J.
 4                 Gorod, Joanna Nairn, on the brief), O’Melveny
 5                 & Myers LLP, Washington, D.C. for Appellant.
 6
 7            DEEPAK GUPTA, Gupta Beck PLLC, Washington, D.C.
 8                 (Gregory A. Beck, Jonathan E. Taylor, Gupta
 9                 Beck PLLC, Washington, D.C.; Adam T. Klein,
10                 Justin M. Swartz, Molly A. Brooks, Outten &
11                 Golden LLP, New York, NY, on the brief) for
12                 Appellees.
13
14            RACHEL GOLDBERG, Attorney, Office of the Solicitor
15                 (M. Patricia Smith, Solicitor of Labor,
16                 Jennifer S. Brand, Associate Solicitor, Paul
17                 L. Frieden, Counsel for Appellate Litigation,
18                 on the brief), for Amicus Curiae Secretary of
19                 Labor.
20
21            Tsedeye Gebreselassie, Catherine K. Ruckelshaus,
22                 National Employment Law Project, New York, NY,
23                 for Amicus Curiae Make The Road New York,
24                 Brandworkers International, Restaurant
25                 Opportunities Center New York, Chinese Staff
26                 and Workers Association, National Mobilization
27                 Against Sweatshops, National Employment Law
28                 Project, Legal Aid Society of New York, Urban
29                 Justice Center, Asian American Legal Defense
30                 and Education Fund.
31
32
33
34   WESLEY, Circuit Judge.
35
36       After the failure of a settlement in a wage-and-hour

37   case brought by a group of employees of Gristede’s

38   supermarkets, the plaintiff employees moved for partial

39   summary judgment on the issue of whether John Catsimatidis,

40   the chairman and CEO of Gristede’s Foods, Inc., could be

                                  3
 1   held personally liable for damages.    The case turns on

 2   whether Catsimatidis is an “employer” under the Fair Labor

 3   Standards Act (“FLSA”), 29 U.S.C. § 203(d), and the New York

 4   Labor Law (“NYLL”), N.Y. Lab. Law §§ 190(3), 651(6).       The

 5   United States District Court for the Southern District of

 6   New York (Crotty, J.) granted partial summary judgment for

 7   the plaintiffs on the issue, establishing that Catsimatidis

 8   would be held jointly and severally liable for damages along

 9   with the corporate defendants.    See Torres v. Gristede’s

10   Operating Corp., No. 04 Civ. 3316(PAC), 2011 WL 4571792

11   (S.D.N.Y. Sept. 9, 2011) (“Torres III”).    Catsimatidis

12   appeals.   We affirm the district court’s decision so far as

13   it established that Catsimatidis was an “employer” under the

14   FLSA; we vacate and remand the grant of partial summary

15   judgment on plaintiffs’ NYLL claims.

16                             Background

17       Catsimatidis is the chairman, president, and CEO of

18   Gristede’s Foods, Inc., which operates between 30 and 35

19   stores in the New York City metro area and has approximately

20   1700 employees.   Although a series of mergers and

21   acquisitions has complicated the question of which companies

22   are responsible for the Gristede’s business and


                                   4
 1   supermarkets, the parties have not made corporate structure

 2   the focus of this case.    They essentially agree that

 3   Catsimatidis is the owner and corporate head of all

 4   implicated companies, but they dispute the manner and degree

 5   of his control over the stores and employees.

 6       In 2004, a group of then-current and former employees

 7   of Gristede’s supermarkets sued several companies involved

 8   in operating the stores.    The employees also sued three

 9   individual defendants: Catsimatidis, Gristede’s District

10   Manager James Monos, and Gristede’s Vice President Gallo

11   Balseca.   The district court certified a class composed of

12   “[a]ll persons employed by defendants as Department Managers

13   or Co-Managers who were not paid proper overtime premium

14   compensation for all hours that they worked in excess of

15   forty in a workweek any time between April 30, 1998 and the

16   date of final judgment in this matter (the ‘class period’).”

17   Torres v. Gristede's Operating Corp., No. 04 Civ. 3316(PAC),

18   2006 WL 2819730, at *11 (S.D.N.Y. Sept. 29, 2006) (“Torres

19   I”) (quotation marks omitted).     In this decision, the court

20   noted that the parties disputed the duties of co-managers

21   and department managers, though the scope of plaintiffs’

22   duties are not at issue in this appeal.



                                    5
 1       After two-and-a-half years of litigation, the district

 2   court granted summary judgment for the plaintiffs on their

 3   FLSA and NYLL claims, which concerned reduction of hours,

 4   withholding of overtime, misclassification as exempt

 5   employees, and retaliation.   See Torres v. Gristede's

 6   Operating Corp., 628 F. Supp. 2d 447, 461-63, 475 (S.D.N.Y.

 7   2008) (“Torres II”).   The court held that plaintiffs were

 8   entitled to liquidated damages, the amount of which would be

 9   determined in future proceedings.   Id. at 462 n.14, 465.

10   Plaintiffs reserved the right to move separately for a

11   determination that the individual defendants were

12   individually liable as joint employers.    Id. at 453 n.2.

13       Following the summary judgment order, the parties

14   reached a settlement agreement, which the district court

15   approved.   The corporate defendants later defaulted on their

16   payment obligations under the agreement.   Defendants sought

17   to modify the settlement, but the district court denied

18   their request.   Plaintiffs then moved for partial summary

19   judgment on Catsimatidis’s personal liability as an

20   employer.

21       The district court granted the motion for reasons both

22   stated on the record at the conclusion of oral argument on


                                   6
 1   the motion, see Special App’x at 43-46, and memorialized in

 2   a written decision, see Torres III.     The reasons included

 3   the fact that Catsimatidis “hired managerial employees,”

 4   “signed all paychecks to the class members,” had the “power

 5   to close or sell Gristede’s stores,” and “routinely

 6   review[ed] financial reports, work[ed] at his office in

 7   Gristede’s corporate office and generally preside[d] over

 8   the day to day operations of the company.”     Torres III, 2011

 9   WL 4571792, at *2.   According to the district court, “[f]or

10   the purposes of applying the total circumstances test, it

11   does not matter that Mr. Catsimatidis has delegated powers

12   to others[; w]hat is critical is that Mr. Catsimatidis has

13   those powers to delegate.”    Id. (citation omitted).    The

14   court concluded that “[t]here is no area of Gristede’s which

15   is not subject to [Catsimatidis’s] control, whether [or not]

16   he chooses to exercise it,” and that, therefore,

17   Catsimatidis “had operational control and, as such, [] may

18   be held to be an employer.”    Id. at *3.1




          1
           In its oral ruling and accompanying order, the district
     court granted summary judgment finding Catsimatidis individually
     liable as an “employer” under the NYLL, but the court did not
     explain its reasons beyond what might be inferred from its
     discussion setting forth its reasoning in the FLSA context. See
     Torres III, 2011 WL 4571792, at *1; Special App’x at 46-47.

                                     7
 1                              Discussion2

 2    I.         Definition of “employer” under the FLSA

 3         The Supreme Court has recognized “that broad coverage

 4   [under the FLSA] is essential to accomplish the [statute’s]

 5   goal of outlawing from interstate commerce goods produced

 6   under conditions that fall below minimum standards of

 7   decency.”     Tony & Susan Alamo Found. v. Sec'y of Labor, 471

 8   U.S. 290, 296 (1985).     Accordingly, the Court “has

 9   consistently construed the Act liberally to apply to the

10   furthest reaches consistent with congressional direction.”

11   Id. (quotation marks omitted).      “The common law agency test

12   was found too restrictive to encompass the broader

13   definition of the employment relationship contained in the

14   [FLSA].”     Frankel v. Bally, Inc., 987 F.2d 86, 89 (2d Cir.

15   1993).     Instead, the statute “defines the verb ‘employ’



           2
           “We review an award of summary judgment de novo, and we
     will uphold the judgment only if the evidence, viewed in the
     light most favorable to the party against whom it is entered,
     demonstrates that there are no genuine issues of material fact
     and that the judgment was warranted as a matter of law.”
     Barfield v. NYC Health & Hosps. Corp., 537 F.3d 132, 140 (2d Cir.
     2008) (citing Fed R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477
     U.S. 317, 322-23 (1986)). “The nonmoving party must set forth
     specific facts showing that there is a genuine issue for trial,
     and this Court must view the evidence in the light most favorable
     to the nonmoving party and draw all reasonable inferences in its
     favor.” Rubens v. Mason, 527 F.3d 252, 254 (2d Cir. 2008)
     (internal quotation marks and citation omitted).

                                     8
 1   expansively to mean ‘suffer or permit to work.’”     Nationwide

 2   Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (quoting

 3   29 U.S.C. § 203(g)).   Unfortunately, however, the statute’s

 4   definition of “employer” relies on the very word it seeks to

 5   define: “‘Employer’ includes any person acting directly or

 6   indirectly in the interest of an employer in relation to an

 7   employee.”   29 U.S.C. § 203(d).    The statute nowhere defines

 8   “employer” in the first instance.

 9       The Supreme Court noted early on that the FLSA contains

10   “no definition that solves problems as to the limits of the

11   employer-employee relationship under the Act.”     Rutherford

12   Food Corp. v. McComb, 331 U.S. 722, 728 (1947).     The Court

13   has also observed “that the ‘striking breadth’ of the FLSA’s

14   definition of ‘employ’ ‘stretches the meaning of ‘employee’

15   to cover some parties who might not qualify as such under a

16   strict application of traditional agency law principles’ in

17   order to effectuate the remedial purposes of the act.’”

18   Barfield, 537 F.3d at 141 (quoting Darden, 503 U.S. at 326)

19   (internal citation omitted).

20       “Accordingly, the Court has instructed that the

21   determination of whether an employer-employee relationship

22   exists for purposes of the FLSA should be grounded in


                                    9
 1   ‘economic reality rather than technical concepts.’”      Id.

 2   (quoting Goldberg v. Whitaker House Coop., Inc., 366 U.S.

 3   28, 33 (1961)).   The “economic reality” test applies equally

 4   to whether workers are employees and to whether managers or

 5   owners are employers.    See Herman v. RSR Sec. Servs. Ltd.,

 6   172 F.3d 132, 139 (2d Cir. 1999).

 7       “[T]he determination of the [employment] relationship

 8   does not depend on such isolated factors” as where work is

 9   done or how compensation is divided “but rather upon the

10   circumstances of the whole activity.”     Rutherford, 331 U.S.

11   at 730.   Some early cases concerned managerial efforts to

12   distance themselves from workers in an apparent effort to

13   escape the FLSA’s coverage.    For example, in Goldberg, the

14   Supreme Court considered whether a manufacturing cooperative

15   was an “employer” of “homeworker” members who created

16   knitted and embroidered goods in their homes and were paid

17   by the month on a rate-per-dozen basis.    366 U.S. at 28-29.

18   The Court concluded that this constituted an employer-

19   employee relationship because management’s authority made

20   “the device of the cooperative too transparent to survive

21   the statutory definition of ‘employ’ and the Regulations

22   governing homework.”    Id. at 33.   “In short, if the


                                    10
 1   ‘economic reality’ rather than ‘technical concepts’ is to be

 2   the test of employment, these homeworkers are employees.”

 3   Id. (internal citations omitted).    Similarly, the Court

 4   noted in Rutherford that “[w]here the work done, in its

 5   essence, follows the usual path of an employee, putting on

 6   an ‘independent contractor’ label does not take the worker

 7   from the protection of the Act.”    331 U.S. at 729.

 8       The Second Circuit “has treated employment for FLSA

 9   purposes as a flexible concept to be determined on a case-

10   by-case basis by review of the totality of the

11   circumstances”; we have “identified different sets of

12   relevant factors based on the factual challenges posed by

13   particular cases.”   Barfield, 537 F.3d at 141-42.

14       In Carter v. Dutchess Community College, 735 F.2d 8 (2d

15   Cir. 1984), we identified factors that are likely to be

16   relevant to the question of whether a defendant is an

17   “employer.”   In that case, prison inmates teaching classes

18   in a program that was managed by a college claimed the

19   college was their employer.   The district court rejected

20   this assertion because “the college had only qualified

21   control over the inmate instructors; the Department of

22   Correctional Services always maintained ultimate control.”



                                   11
 1   Barfield, 537 F.3d at 142 (describing Carter) (quotation

 2   marks omitted).   This Court, however, concluded that the

 3   “ultimate control” rule “would not comport with the

 4   ‘remedial’ purpose of the FLSA, which Congress intended to

 5   ‘have the widest possible impact in the national economy.’”

 6   Id. (quoting Carter, 735 F.2d at 12).     Instead, we

 7   established four factors to determine the “economic reality”

 8   of an employment relationship: “whether the alleged employer

 9   (1) had the power to hire and fire the employees, (2)

10   supervised and controlled employee work schedules or

11   conditions of employment, (3) determined the rate and method

12   of payment, and (4) maintained employment records.”      Id.

13   (quoting Carter, 735 F.2d at 12).3

14        Barfield also discusses the factors this court has used

15   “to distinguish between independent contractors and

16   employees,” 537 F.3d at 143 (citing Brock v. Superior Care,


          3
            Although the Carter court did not ultimately conclude that
     the prisoners were employees of the college, it noted that the
     following facts about the college “may be sufficient to warrant
     FLSA coverage” and certainly presented issues of material fact on
     the subject: the college “made the initial proposal to ‘employ’
     workers; suggested a wage as to which there was ‘no legal
     impediment’; developed eligibility criteria; recommended several
     inmates for the tutoring positions; was not required to take any
     inmate it did not want; decided how many sessions, and for how
     long, an inmate would be permitted to tutor; and sent the
     compensation directly to the inmate’s prison account.” 735 F.2d
     at 15.

                                    12
 1   Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988)), and “to assess

 2   whether an entity that lacked formal control nevertheless

 3   exercised functional control over a worker,” id. (citing

 4   Zheng v. Liberty Apparel Co., 355 F.3d 61, 72 (2d Cir.

 5   2003)).3   None of the factors used in any of these cases,

 6   however, comprise a “rigid rule for the identification of an

 7   FLSA employer.”   Id.   “To the contrary, . . . they provide

 8   ‘a nonexclusive and overlapping set of factors’ to ensure

 9   that the economic realities test mandated by the Supreme

10   Court is sufficiently comprehensive and flexible to give



          3
            In Zheng, the court considered whether a   garment
     manufacturer that contracted out the last phase   of its production
     process to workers including the plaintiffs was   an “employer”
     under the FLSA. It concluded that the relevant    factors in such
     an instance were

          (1) whether [the manufacturer]’s premises and equipment were
          used for the plaintiffs’ work; (2) whether the Contractor
          Corporations had a business that could or did shift as a
          unit from one putative joint employer to another; (3) the
          extent to which plaintiffs performed a discrete line-job
          that was integral to [the manufacturer]’s process of
          production; (4) whether responsibility under the contracts
          could pass from one subcontractor to another without
          material changes; (5) the degree to which the [manufacturer]
          or [its] agents supervised plaintiffs’ work; and (6) whether
          plaintiffs worked exclusively or predominantly for [the
          manufacturer].

     Zheng, 355 F.3d at 72. These factors highlight the flexible and
     comprehensive nature of the economic realities test in
     determining when an entity is an “employer” (in this case,
     whether the manufacturer was a “joint employer” along with
     another corporation) but are not directly implicated here.

                                    13
 1   proper effect to the broad language of the FLSA.”         Id.

 2   (quoting Zheng, 355 F.3d at 75-76).

 3       a.     Individual liability

 4       None of the cases above dealt specifically with the

 5   question we confront here: whether an individual within a

 6   company that undisputedly employs a worker is personally

 7   liable for damages as that worker’s “employer.”        The only

 8   case from our Circuit to confront the question squarely is

 9   RSR, 172 F.3d 132.     RSR provided guards, pre-employment

10   screening, and other security services.        It was sued for

11   FLSA violations with regard to its security guards.         Its

12   chairman of the board, Portnoy, was found by the district

13   court after a bench trial to be an “employer” under the

14   statute.     We affirmed, in a decision that both applied the

15   four-factor test from Carter and noted other factors bearing

16   upon the “overarching concern [of] whether the alleged

17   employer possessed the power to control the workers in

18   question.”     Id. at 139.

19       As background, we noted that “[a]lthough Portnoy

20   exercised broad authority over RSR operations . . . , he was

21   not directly involved in the daily supervision of the

22   security guards.”     Id. at 136.      Nonetheless, because “he was


                                       14
 1   the only principal who had bank credit, he exercised

 2   financial control over the company.”    Id.    “Thus, he had

 3   authority over” the operations manager, who directly

 4   supervised the guards.   Id.   “Portnoy kept himself apprised

 5   of RSR operations by receiving periodic reports [including]

 6   work orders, memos, investigation reports, and invoices

 7   concerning the business operations, as well as weekly

 8   timesheets of [a manager’s] duties.”    Id. at 137.     He also

 9   “referred a few individuals to RSR as potential security

10   guard employees,” “assigned guards to cover specific

11   clients, sometimes set the rates clients were charged for

12   those services, gave [a manager] instructions about guard

13   operations, and forwarded complaints about guards to” a

14   manager.   Id.

15       Portnoy also “signed payroll checks on at least three

16   occasions” and “established a payment system by which

17   clients who wanted undercover operatives would pay”

18   Portnoy’s separate labor-relations firm.      Id.   Additionally,

19   Portnoy “represented himself to outside parties as” being

20   “the ‘boss’ of RSR” by “allowing his name to be used in

21   sales literature, by representing to potential clients that

22   he was a principal with control over company operations . .


                                    15
 1   . and by giving [a manager] instructions with respect to []

 2   clients’ security needs.”        Id.

 3         We determined that at least three of the four Carter

 4   factors applied.    First, Portnoy had hired employees, and

 5   although this “involved mainly managerial staff, the fact

 6   that he hired individuals who were in charge of the guards

 7   [was] a strong indication of control.”          Id. at 140.   Second,

 8   Portnoy had, “on occasion, supervised and controlled

 9   employee work schedules and the conditions of employment.”

10   Id.   Third, he had “participate[d] in the method of

11   pay[ing]” the guards, even though he was not involved in

12   determining their salaries, because he had previously

13   “ordered a stop to the illegal pay practice of including

14   security guards on 1099 forms as independent contractors,”

15   and he “had the authority to sign paychecks throughout the

16   relevant period.”     Id.   Although there was no evidence that

17   Portnoy had been involved in maintaining employment records,

18   we confirmed that the fact that “this fourth factor is not

19   met is not dispositive.”      Id.      The “‘economic reality’ test

20   encompasses the totality of circumstances, no one of which

21   is exclusive.”     Id. at 139.      In sum, we determined that

22   Portnoy was “not only a 50 percent stockowner; he had direct


                                         16
 1   involvement with the security guard operations from time to

 2   time and was generally involved with all of RSR’s

 3   operations.”   Id. at 141.

 4       RSR also highlighted two legal questions relevant here.

 5   The first concerns the scope of an individual’s authority or

 6   “operational control” over a company – at what level of a

 7   corporate hierarchy, and in what relationship with plaintiff

 8   employees, must an individual possess power in order to be

 9   covered by the FLSA?   The second inquiry, related but

10   distinct, concerns hypothetical versus actual power: to what

11   extent and with what frequency must an individual actually

12   use the power he or she possesses over employees to be

13   considered an employer?

14            i.    Operational control

15       In addition to applying the Carter test, RSR noted the

16   district court’s recognition that Portnoy exercised direct

17   authority over the two persons most responsible for managing

18   the security guards, as well as the fact that “[b]ecause

19   [Portnoy] controlled the company financially, it was no idle

20   threat when he testified that he could have dissolved the

21   company if [one of the managers] had not followed his

22   directions.”   Id. at 140 (emphasis added).   Accordingly, we


                                   17
 1   emphasized that we rejected Portnoy’s argument “that

 2   evidence showing his authority over management, supervision,

 3   and oversight of RSR’s affairs in general is irrelevant, and

 4   that only evidence indicating his direct control over the

 5   guards should be considered.”    Id.     We concluded that this

 6   formulation “ignores the relevance of the totality of the

 7   circumstances in determining Portnoy’s operational control

 8   of RSR’s employment of the guards.”       Id.   We also noted that

 9   “operational control” had been cited as relevant by other

10   circuits considering the question of individual liability

11   under the FLSA.   See id.

12       “Operational control” is at the heart of this case.

13   Catsimatidis’s core argument is that he was a high-level

14   employee who made symbolic or, at most, general corporate

15   decisions that only affected the lives of the plaintiffs

16   through an attenuated chain of but-for causation.       Although

17   Catsimatidis undisputedly possessed broad control over

18   Gristede’s corporate strategy, including the power to decide

19   to take the company public, to open stores, and to carry

20   certain types of merchandise, he contends that a FLSA

21   “employer” must exercise decision-making in a “day-to-day”

22   capacity.   Appellant’s Br. at 3.      By this, he appears to


                                     18
 1   mean decisions about individual store-level operations,

 2   close to, if not actually including, the particular working

 3   conditions and compensation practices of the employees

 4   themselves.     Plaintiffs counter that many cases have found

 5   individuals with “operational control” on a more general

 6   level to be employers.     Appellees’ Br. at 28-31.

 7       Most circuits to confront this issue have acknowledged

 8   – and plaintiffs do not dispute – that a company owner,

 9   president, or stockholder must have at least some degree of

10   involvement in the way the company interacts with employees

11   to be a FLSA “employer.”     Many cases rely on Wirtz v. Pure

12   Ice Co., 322 F.2d 259, 262 (8th Cir. 1963), for this

13   proposition.     In Wirtz, the court concluded that the

14   individual defendant was not an employer even though he was

15   the “controlling stockholder and dominating figure” because

16   although he “could have taken over and supervised the

17   relationship between the corporation and its employees had

18   he decided to do so,” he did not.     Id. (quotation marks

19   omitted).     The defendant visited the facility at issue a few

20   times per year but “had nothing to do with the hiring of the

21   employees or fixing their wages or hours,” and he “left the

22   matter of compliance with the Fair Labor Standards Act up to


                                     19
 1   the various managers of the businesses in which he had an

 2   interest.”    Id. at 262-63.   The court noted, however, that

 3   if it were to consider “a combination of stock ownership,

 4   management, direction and the right to hire and fire

 5   employees, then a contrary conclusion would be well

 6   supported.”    Id. at 263.

 7       In RSR, we cited three cases with holdings in

 8   accordance with Wirtz in resolving the “operational control”

 9   issue.   First, in Donovan v. Sabine Irrigation Co., 695 F.2d

10   190, 194-95 (5th Cir. 1983), the Fifth Circuit determined

11   that an individual without an interest in the employer

12   corporation could be held liable if he “effectively

13   dominates its administration or otherwise acts, or has the

14   power to act, on behalf of the corporation vis-a-vis its

15   employees” – or if he lacked that power but “independently

16   exercised control over the work situation.”     The Sabine

17   court found the individual defendant liable because he

18   “indirectly controlled many matters traditionally handled by

19   an employer in relation to an employee (such as payroll,

20   insurance, and income tax matters),” noting also that the

21   defendant’s “financial gymnastics directly affected Sabine’s

22   employees by making it possible for Sabine to meet its


                                     20
 1   payroll and keep its employees supplied with the equipment

 2   and materials necessary to perform their jobs.”   Id. at 195.

 3   (quotation marks omitted).

 4       Second, in Dole v. Elliott Travel & Tours, Inc., 942

 5   F.2d 962, 966 (6th Cir. 1991), the Sixth Circuit was unmoved

 6   by the protestations of an individual defendant who

 7   testified that he “made major corporate decisions” but “did

 8   not have day-to-day control of specific operations.”    The

 9   court found that the defendant’s responsibilities, which

10   included determining employee salaries, constituted

11   “operational control of significant aspects of the

12   corporation’s day to day functions.”   Id. (quotation marks

13   omitted) (emphasis in original).

14       Finally, in Donovan v. Agnew, 712 F.2d 1509, 1511 (1st

15   Cir. 1983), the First Circuit imposed liability on

16   individual defendants “who together were President,

17   Treasurer, Secretary and sole members of the Board” of the

18   defendant company.   One of the defendants had been

19   “personally involved in decisions about layoffs and employee

20   overtime hours,” id., and the defendants together had

21   “operational control of significant aspects of the

22   corporation's day to day functions, including compensation


                                   21
 1   of employees, and [] personally made decisions to continue

 2   operations despite financial adversity during the period of

 3   nonpayment,” id. at 1514.

 4        Plaintiffs in our case place particular emphasis on the

 5   statement by the Agnew court that “[t]he overwhelming weight

 6   of authority is that a corporate officer with operational

 7   control of a corporation’s covered enterprise is an employer

 8   along with the corporation, jointly and severally liable

 9   under the FLSA for unpaid wages.”4    Id. at 1511.   Although

10   this appears to suggest that any amount of corporate control

11   is sufficient to establish FLSA liability, the First Circuit

12   warned against taking the FLSA’s coverage too far, noting

13   that “the Act’s broadly inclusive definition of ‘employer’”

14   could, if “[t]aken literally and applied in this context[,]

15   . . . make any supervisory employee, even those without any


          4
            This language was cited by our Circuit in a case
     concerning the meaning of the word “employer” in the context of
     the Employee Retirement Income Security Act (“ERISA”), in which
     we noted that “[i]n FLSA cases, courts have consistently held
     that a corporate officer with operational control who is directly
     responsible for a failure to pay statutorily required wages is an
     ‘employer’ along with the corporation, jointly and severally
     liable for the shortfall.” Leddy v. Standard Drywall, Inc., 875
     F.2d 383, 387 (2d Cir. 1989) (citing Agnew, 712 F.2d at 1511).
     Because Leddy did not require or contain any actual analysis of
     the FLSA, however, this statement does not constitute a holding
     that liability on the basis of “operational control” requires an
     individual to have been directly responsible for FLSA violations.


                                    22
 1   control over the corporation’s payroll, personally liable

 2   for the unpaid or deficient wages of other employees.”    Id.

 3   at 1513.

 4       Drawing on this language, the First Circuit later

 5   concluded that individuals who had “exercised some degree of

 6   supervisory control over the workers” and been “responsible

 7   for overseeing various administrative aspects of the

 8   business” but had not demonstrated other important

 9   characteristics – “in particular, the personal

10   responsibility for making decisions about the conduct of the

11   business that contributed to the violations of the Act” –

12   were not personally liable under the FLSA.   Baystate

13   Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 678 (1st

14   Cir. 1998).   The court rejected an “expansive application of

15   the definition of an ‘employer’” that would find that “the

16   significant factor in the personal liability determination

17   is simply the exercise of control by a corporate officer or

18   corporate employee over the ‘work situation.’”   Id. at 679.

19   No other decision has gone as far as Baystate; most courts

20   have endeavored to strike a balance between upholding the

21   broad remedial goals of the statute and ensuring that a

22   liable individual has some relationship with plaintiff

23   employees’ work situation.

                                   23
 1       For example, in Gray v. Powers, 673 F.3d 352, 354-57

 2   (5th Cir. 2012), the court found that the co-owner of a

 3   company that owned a nightclub was not a bartender’s

 4   “employer” despite being a signatory on the corporate

 5   account and “occasionally sign[ing] several pages of pre-

 6   printed checks.”   The individual defendant had little

 7   control over the bar and its employees except to direct a

 8   bartender to serve certain customers on several occasions

 9   when he was at the bar.   Id. at 354.   Similarly, in Patel v.

10   Wargo, 803 F.2d 632, 638 (11th Cir. 1986), the Eleventh

11   Circuit held that an individual who was both president and

12   vice president of a corporation, as well as a director and

13   principal stockholder, was not an employer because he did

14   not “have operational control of significant aspects of [the

15   company’s] day-to-day functions, including compensation of

16   employees or other matters ‘in relation to an employee.’”

17       By contrast, in Reich v. Circle C. Investments, Inc.,

18   998 F.2d 324, 329 (5th Cir. 1993), the court found that a

19   non-owner of a company that had invested in a nightclub had

20   exercised sufficient “control over the work situation” as

21   the “driving force” behind the company.   The court cited

22   evidence that the individual hired employees, gave them


                                   24
 1   instructions (including specific songs for dancers’

 2   routines), and signed their payroll checks.   Id.    He had

 3   also removed money from corporate safes, “ordered one

 4   employee to refrain from keeping records of the tip-outs,”

 5   and “spoke[n] for [the company] during the Secretary’s

 6   investigation of possible FLSA violations.”   Id.

 7       These cases reaffirm the logic behind our holding in

 8   RSR, which focused on defendant Portnoy’s “operational

 9   control of RSR’s employment of the guards,” see RSR, 172

10   F.3d at 140 (emphasis added), rather than simply operational

11   control of the company.   Evidence that an individual is an

12   owner or officer of a company, or otherwise makes corporate

13   decisions that have nothing to do with an employee’s

14   function, is insufficient to demonstrate “employer” status.

15   Instead, to be an “employer,” an individual defendant must

16   possess control over a company’s actual “operations” in a

17   manner that relates to a plaintiff’s employment.     It is

18   appropriate, as we implicitly recognized in RSR, to require

19   some degree of individual involvement in a company in a

20   manner that affects employment-related factors such as

21   workplace conditions and operations, personnel, or

22   compensation – even if this appears to establish a higher


                                   25
 1   threshold for individual liability than for corporate

 2   “employer” status.

 3       The fundamental concern in the initial cases construing

 4   the FLSA was preventing a business entity from causing

 5   workers to engage in work without the protections of the

 6   statute.   It was an “economic reality” that the “homework”

 7   cooperative in Goldberg functioned as the workers’ employer

 8   because it paid them to create clothing, even if the

 9   compensation structure technically circumvented agency-law

10   concepts of formal employment.     See Goldberg, 366 U.S. at 31

11   (stating that the Court would be “remiss . . . if we

12   construed the Act loosely so as to permit this homework to

13   be done in ways not permissible under the Regulations”); see

14   also United States v. Rosenwasser, 323 U.S. 360, 363 (1945)

15   (“A worker is as much an employee when paid by the piece as

16   he is when paid by the hour.”).    This concern is not as

17   pressing when considering the liability for damages of an

18   individual within a company that itself is undisputedly the

19   plaintiffs’ employer.

20       Even in the individual-liability context, however, “the

21   remedial nature of the [FLSA] . . . warrants an expansive

22   interpretation of its provisions so that they will have ‘the


                                   26
 1   widest possible impact in the national economy.’”     RSR, 172

 2   F.3d at 139 (quoting Carter, 735 F.2d at 12).     Nothing in

 3   RSR, or in the FLSA itself, requires an individual to have

 4   been personally complicit in FLSA violations; the broad

 5   remedial purposes behind the statute counsel against such a

 6   requirement.   The statute provides an empty guarantee absent

 7   a financial incentive for individuals with control, even in

 8   the form of delegated authority, to comply with the law, and

 9   courts have continually emphasized the extraordinarily

10   generous interpretation the statute is to be given.    Nor is

11   “only evidence indicating [an individual’s] direct control

12   over the [plaintiff employees] [to] be considered.”     RSR,

13   172 F.3d at 140.   Instead, “evidence showing [an

14   individual’s] authority over management, supervision, and

15   oversight of [a company’s] affairs in general” is relevant

16   to “the totality of the circumstances in determining [the

17   individual’s] operational control of [the company’s]

18   employment of [the plaintiff employees].”   Id.

19       A person exercises operational control over employees

20   if his or her role within the company, and the decisions it

21   entails, directly affect the nature or conditions of the

22   employees’ employment.   Although this does not mean that the


                                   27
 1   individual “employer” must be responsible for managing

 2   plaintiff employees – or, indeed, that he or she must have

 3   directly come into contact with the plaintiffs, their

 4   workplaces, or their schedules – the relationship between

 5   the individual’s operational function and the plaintiffs’

 6   employment must be closer in degree than simple but-for

 7   causation.    Although the answer in any particular case will

 8   depend, of course, on the totality of the circumstances, the

 9   analyses in the cases discussed above, as well as the

10   responsibilities enumerated in the Carter factors, provide

11   guidance for courts determining when an individual’s actions

12   rise to this level.

13               ii.     Potential power

14       In RSR, we noted that “operational control” need not be

15   exercised constantly for an individual to be liable under

16   the FLSA:

17       [Employer] status does not require continuous
18       monitoring of employees, looking over their
19       shoulders at all times, or any sort of absolute
20       control of one’s employees. Control may be
21       restricted, or exercised only occasionally,
22       without removing the employment relationship from
23       the protections of the FLSA, since such
24       limitations on control do not diminish the
25       significance of its existence.
26
27   172 F.3d at 139 (quotation marks and alteration omitted).


                                    28
 1   The district court in this case appears to have relied on

 2   this language in stating that “[w]hat is critical is that

 3   Mr. Catsimatidis has [certain] powers to delegate” and that

 4   “[t]here is no area of Gristede’s which is not subject to

 5   his control, whether [or not] he chooses to exercise it.”

 6   Torres III, 2011 WL 4571792   at *2-3.   The parties also

 7   dispute the importance of evidence indicating that

 8   Catsimatidis only rarely exercised much of the power he

 9   possessed.

10       Employer power that is “restricted or exercised only

11   occasionally” does not mean “never exercised.”     In Donovan

12   v. Janitorial Services, Inc., 672 F.2d 528, 531 (5th Cir.

13   1982), the Fifth Circuit noted that the company owner’s

14   “considerable investment in the company gives him ultimate,

15   if latent, authority over its affairs,” and the fact that he

16   had “exercised that authority only occasionally, through

17   firing one employee, reprimanding others, and engaging in

18   some direct supervision of Johnson Disposal drivers, does

19   not diminish the significance of its existence.”     In

20   Superior Care, this court noted that although

21   representatives of the defendant business, a nurse-staffing

22   company, visited job sites only infrequently, the company


                                   29
 1   had “unequivocally expressed the right to supervise the

 2   nurses’ work, and the nurses were well aware that they were

 3   subject to such checks as well as to regular review of their

 4   nursing notes.”    840 F.2d at 1060.     “An employer does not

 5   need to look over his workers’ shoulders every day in order

 6   to exercise control.”    Id.   Similarly, in Carter, we

 7   rejected the proposition that the community college was not

 8   employing prison inmates solely because the prison had

 9   “ultimate control” over the prisoners, reasoning that the

10   community college also made decisions that affected the

11   prisoners’ work.    735 F.2d at 13-14.

12       The Eleventh Circuit has squarely held that even when a

13   defendant “could have played a greater role in the day-to-

14   day operations of the [] facility if he had desired, . . .

15   unexercised authority is insufficient to establish liability

16   as an employer.”    Alvarez Perez v. Sanford-Orlando Kennel

17   Club, Inc., 515 F.3d 1150, 1161 (11th Cir. 2008).       The

18   Alvarez court found that an officer in a company that owned

19   a kennel club was not an employer, in part because even

20   though he might have had the authority to do so, he “had not

21   taken part in the day-to-day operations of the facility, had

22   not been involved in the supervision or hiring and firing of

23   employees, and had not determined their compensation.”        Id.

                                     30
 1         Unlike Alvarez, RSR does not state unambiguously that

 2   unexercised authority is insufficient to establish FLSA

 3   liability, and we see no need to do so here in light of the

 4   evidence of the authority that Catsimatidis did exercise.

 5   Nonetheless, all of the cases discussed indicate that the

 6   manifestation of, or, at the least, a clear delineation of

 7   an individual’s power over employees is an important and

 8   telling factor in the “economic reality” test.   Ownership,

 9   or a stake in a company, is insufficient to establish that

10   an individual is an “employer” without some involvement in

11   the company’s employment of the employees.

12   II.       Catsimatidis as “employer”

13         “Using this ‘economic reality’ test, we must decide

14   whether [Catsimatidis] is an employer under the FLSA.”      See

15   RSR, 172 F.3d at 140.   Is there “evidence showing his

16   authority over management, supervision, and oversight of

17   [Gristede’s] affairs in general,” see id., as well as

18   evidence under the Carter framework or any other factors

19   that reflect Catsimatidis’s exercise of direct control over

20   the plaintiff employees?

21

22



                                   31
 1        a.   Catsimatidis’s overall authority

 2        Catsimatidis is the chairman, president, and CEO of

 3   Gristede’s Foods, Inc.    Joint App’x 1016.5   He does not

 4   report to anyone else at Gristede’s.     Id. at 1794.

 5   Catsimatidis personally owns the building in which

 6   Gristede’s headquarters is located.     Id. at 1789-90.   His

 7   office is in that building, shared with Charles Criscuolo,

 8   Gristede’s COO.   Id. at 1793-94.    Catisimatidis was “usually

 9   there for part of the day, at least [four] days a week.”

10   Id. at 1334.   The human resources and payroll department is

11   located in the same building.    Id. at 1794-5.    Regarding his

12   duties, Catsimatidis testified: “I do the banking.      I do the

13   real estate.   I do the financial. . . . I come up with

14   concepts for merchandising. . . . I’m there every day if

15   there is a problem,” including problems with buildings,

16   problems with the “Department of Consumer Affairs,

17   governmental relations,” and “[p]roblems with vendors,

18   relationships with vendors, it takes up most of the time.”

19   Id. at 1800-01.

20

          5
           Although Catsimatidis’s and other employees’ functions
     within Gristede’s appear to have shifted during the lengthy
     pendency of this lawsuit, all references are to the period
     relevant to the case.

                                     32
 1           A series of subordinate managers reported to

 2   Catsimatidis but did not appear to have an extensive amount

 3   of interaction with him.     Catsimatidis spoke to Criscuolo

 4   every day because they shared an office.       Id. at 1797.

 5   Catsimatidis testifed that Vice President Gallo Balseca

 6   “runs operations” and was “in the stores every day,” and

 7   that the district managers reported to Balseca.       Id. at

 8   1796.     Balseca reported to Criscuolo, but Catsimatidis

 9   rarely spoke directly to Balseca.       Id. at 1794, 1797.

10   Catsimatidis testified that the company’s director of

11   security “reports to the chief operating officer on a day-

12   to-day basis, but if there is something he thinks I should

13   know about, he would call and tell me.”       Id. at 1809.

14   Catsimatidis occasionally sat in on merchandising and

15   operations meetings.     Id. at 1799.

16       Catsimatidis stayed apprised of how Gristede’s was

17   doing, reviewing the overall profit and loss statements as

18   well as the “sales to purchases” statements of particular

19   stores.     He received “weekly gross margin reports from all

20   the perishable departments” and “a comprehensive P[rofit]

21   and L[oss] report on a quarterly basis” that he studied in

22   depth and sometimes used to make general recommendations.


                                     33
 1   Id. at 1849.   As Executive Director of Human Resources and

 2   Asset Protection Renee Flores stated, “if there is a store

 3   that buys more than they sell, and it’s a consistent thing,

 4   he may say, ‘You know what, you might want to take a look at

 5   that, because they’re buying more than they’re selling.’”

 6   Id. at 1450-51.

 7       Catsimatidis testified that he made “big picture”

 8   “merchandising decisions, like do we, for the next six

 9   months, push Coca-Cola or push Pepsi-Cola?” and “the

10   decisions on having pharmacies in the stores.”     Id. at 1815.

11   He testified that after making this sort of decision, he

12   would tell Criscuolo or “yell it out when they have the

13   [merchandising meeting]” in their shared office.     Id. at

14   1816.   He might also “yell out to go out and do more sales.”

15   Id. at 1817.

16       In general, employees agreed, as Executive Vice

17   President Robert Zorn testified, that Catsimatidis “has

18   whatever privileges an owner of a company has” to “make

19   ultimate decisions as to how the company is run,” and that

20   there was “no reason to believe that if he chose to make a

21   decision anybody there has the power to override him.”

22   Id. at 1329.   They also agreed that Catsimatidis has the


                                   34
 1   power to “shut down a store” or “sell a store if he felt

 2   that was the appropriate thing to do.”     Id. at 1370.6

 3        b.   Involvement with stores

 4        Although Catsimatidis did not exercise managerial

 5   control in stores on the day-to-day level of a manager, the

 6   evidence demonstrates that he exercised influence in

 7   specific stores on multiple occasions.     For example, he made

 8   suggestions regarding how products are displayed in stores.

 9   In general, he testified that he focused on “driv[ing]

10   sales, driv[ing] product, get[ting] more sales out of the

11   stores” through techniques such as “buying a Coca-Cola at

12   [the] right price, and [] put[ting] it on a front end

13   display at the right price.”    Id. at 1819.

          6
           At oral argument and in its written decision, the district
     court placed substantial reliance on an affidavit that
     Catsimatidis submitted in a separate lawsuit, a trademark action
     brought by Trader Joe’s Company after it found out about a
     Gristede’s plan to re-open a former Gristede’s store under the
     name “Gristede’s Trader John’s.” The district court emphasized
     that the affidavit, which discussed the process by which
     Catsimatidis had come up with the idea, indicated that
     Catsimatidis has the power to “set prices for goods offered for
     sale,” “select the decor for the stores,” and “control any
     store’s signage and advertising.” Torres III, 2011 WL 4571792,
     at *1. Although the parties dispute the significance and
     admissibility of the affidavit, it is not necessary to our
     decision. The affidavit indicates that Catsimatidis had the
     power to open a new store that was generally intended to offer
     “items at prices materially lower than comparable items in our
     other Gristede[’]s stores.” Joint App’x 3752. This only
     underscores the implication of the evidence we have already
     discussed: that Catsimatidis possessed the ability to control
     Gristede’s operations at a high level.

                                    35
 1       Catsimatidis testified specifically that “when [he]

 2   used to go around the stores, [he] used to make comments to

 3   the store managers about displays,” telling them, for

 4   example, “if you put up this product, you might sell $100 a

 5   week.”     Id. at 1828.   He would make visits to “five or ten”

 6   stores on Saturday mornings, staying about ten minutes in

 7   each one.     Id.   He referred to these as “just [] goodwill

 8   visit[s], merchandising, sales, what are we doing right,

 9   what are we doing wrong, what can we do better.”      Id. at

10   1831-32.    His deposition also contained the following

11   exchange:

12       Q: Why did you want to visit every store?
13
14       A: To check the merchandising.
15
16       Q: Can’t the store managers take care of that
17       themselves?
18
19       A: If the store managers did it perfectly, then I
20       wouldn’t have to visit the stores.
21
22       Q: But you have a level of trust in the store managers,
23       right?
24
25       A: You hope so, yes.
26
27       Q: Why do you think it was necessary for the president
28       of the company to go around to all these stores?
29
30       A: For the same reason Sam Walton went and visited his
31       stores.
32
33       Q: What reason is that?

                                      36
 1
 2       A: You just get a better feeling for merchandising. Sam
 3       Walton was a great merchandiser.
 4
 5       Q: On the Saturday morning visits to the stores, what
 6       did you do?
 7
 8       A: I walked in, introduced myself to the manager, most
 9       of them I knew, and just we would talk about
10       merchandising. I would say is this selling, is this
11       not selling, are you missing any products that you
12       think you should have? And I would – I felt I would
13       get input from store managers on merchandising
14       problems.
15
16   Id. at 1829-30.

17       Catsimatidis would also address problems that occurred

18   in individual stores.     For example, he testified that if a

19   vendor called him and said there was a problem, “[m]aybe

20   that he was supposed to have a display and not have a

21   display,” he would not get involved personally but would

22   refer the issue to Criscuolo.      Id. at 1827.   Catsimatidis

23   testified that “if a store didn’t look clean, or if it was

24   very cluttered, [he] would make the comment about it . . .

25   to the store manager, and then follow up and say it to

26   [Criscuolo].”     Id. at 1831.   On one occasion, he went to a

27   store and was “annoyed” that a type of fish he tried to buy

28   was not in stock, so he “sent an e-mail to the meat

29   director, copy to his boss, . . . sent one to the store

30   manager, and sent one to the district manager.”       Id. at

                                      37
 1   1882.    Catsimatidis commented that the emails were his

 2   attempt to “bring[] it to their attention that the

 3   department looked bad” and that he “would hope the

 4   supervisor or the merchandisers would fix it.”       Id. at 1883.

 5          Additionally, Catsimatidis testified that the company’s

 6   system automatically forwards him copies of any consumer

 7   complaints, which he then forwards by email “to the

 8   responsible parties . . . with a comment of ‘What the hell

 9   is happening?’”     Id. at 1821.    For example, he might forward

10   a complaint about a store being dirty, and he sent a

11   complaint about lids not fitting coffee cups to the deli

12   director.    Id.   He testified, “I figured if they think I

13   know about the problem, they’ll work harder towards fixing

14   it.”    Id. at 1822.   When asked why this was, he said, “I

15   guess they want to keep the boss happy, and I want to keep

16   the consumers happy,” and that “one of my jobs is how to get

17   the consumers in our stores, and how to keep them in our

18   stores.”    Id. at 1823.   He has directed similar complaints

19   to store managers.     Id. at 1825.

20          Mitchell Moore, a former store manager, testified that

21   Catsimatidis asked him to get involved with a “reset” at a

22   particular store, meaning an effort to “change the store


                                        38
 1   around, move items around the store, allocation, bring in

 2   new items.”     Id. at 1418.   Moore also testified that

 3   Catsimatidis, while walking through a store, might “want me

 4   to change a display around or to make it fuller or to put a

 5   different variety in there,” or to “put signs on certain

 6   items, give them a good deal on it” if he wanted Moore to

 7   “push a particular item.”      Id. at 1421-22.     Zorn said that

 8   he had seen Catsimatidis go to stores for grand openings or

 9   reopenings, “walk up and down the aisles . . . ask[]

10   questions about – you know, he sees a product that is new

11   and asks, you know – you know, who we buy that from and, you

12   know, comments on the store decor,” although Zorn noted that

13   Catsimatidis was “there more in a PR capacity than a

14   management type capacity.”       Id. at 1352-53.

15       c.      The Carter factors

16       The first element of the Carter test considers whether

17   the individual defendant “had the power to hire and fire

18   employees.”     Barfield, 537 F.3d at 142 (quotation marks

19   omitted).     The evidence demonstrates that Catsimatidis

20   possesses, but rarely exercises, the power to hire or fire

21   anyone he chooses.     He testified, “I guess I can fire the

22   people that directly report to me,” which he said would


                                       39
 1   include “only maybe four or five” employees such as the COO

 2   and CFO.   Joint App’x 1863.   He testified in 2005 that he

 3   could not remember having fired anyone in five or six years.

 4   Id. at 1862.   In RSR, we emphasized that the hiring and

 5   firing of “individuals who were in charge of [the plaintiff

 6   employees] is a strong indication of control.”      RSR, 172

 7   F.3d at 140.

 8       Zorn testified that Catsimatidis had hired him and

 9   “obviously would” have the authority to hire and fire

10   others, “but he doesn’t get involved in that.”     Joint App’x

11   1338.   For example, when Zorn was “involved in letting go

12   long-time employees for various reasons,” he let

13   Catsimatidis know “as a courtesy” and fired the employees

14   even if Catsimatidis “wasn’t happy about it.”      Id. at 1343.

15   On one occasion when both Zorn and Catsimatidis interviewed

16   a potential manager, Catsimatidis “was in favor of it but he

17   left the decision to” Zorn.    Id. at 1342.   Catsimatidis

18   promoted Deborah Clusan from director of payroll to director

19   of payroll and human resources.     Id. at 476.   He promoted

20   Moore to store manager from night manager.    Moore testified

21   that Catsimatidis “came to speak with me, asked me what my

22   background was, . . . and then the next day the vice


                                    40
 1   president called me, and told me that I would be starting in

 2   the Store 504 the next day.”     Id. at 1412, 1415.   Moore,

 3   like other employees, indicated that he “view[ed] Mr.

 4   Catsimatidis as [his] boss” and that Catsimatidis would have

 5   the power to fire a store employee.     Id. at 1425-26.

 6       The second Carter factor asks whether the individual

 7   defendant “supervised and controlled employee work schedules

 8   or conditions of employment.”     Barfield, 537 F.3d at 142

 9   (quotation marks omitted).     Plaintiffs overstate the

10   importance of the two pieces of evidence on which they rely

11   for this factor.   Although they state in their brief that

12   Catsimatidis said he “has handled complaints from Gristede’s

13   workers’ union representatives ‘every week for as long as I

14   could remember,’” Appellees’ Br. at 39, this

15   mischaracterizes Catsimatidis’s testimony; he stated that he

16   had not been personally involved in union negotiations or

17   discussions of problems, see Joint App’x 1802-03, 1812,

18   1876.   Plaintiffs also assert that Catsimatidis “authorized

19   an application for wage subsidies and tax credits on behalf

20   of Gristede’s employees.”    Appellees’ Br. at 39.    The

21   evidence reflects only that Catsimatidis signed the

22   application for tax credits to which Gristede’s was entitled


                                     41
 1   for employing people “coming off of Social Services, off of

 2   welfare.”   Joint App’x at 482-83.   Moreover, plaintiffs do

 3   not indicate how this affected their “work schedules or

 4   conditions of employment.”   Although Catsimatidis’s

 5   involvement in the company and the stores as discussed above

 6   demonstrates some exercise of operational control, it does

 7   not appear to relate closely to this factor of the

 8   Carter test.

 9       The third factor asks whether the individual defendant

10   “determined the rate and method of payment.”     Barfield, 537

11   F.3d at 142 (quotation marks omitted).    The district court

12   and plaintiffs emphasize the fact that Catsimatidis’s

13   electronic signature appears on paychecks.     This – like all

14   factors – is not dispositive.    See Gray, 673 F.3d at 354.

15   Nonetheless, we held in RSR that “[t]he key question is

16   whether [the defendant] had the authority to sign paychecks

17   throughout the relevant period, and he did.”     RSR, 172 F.3d

18   at 140.

19       RSR also focused on the fact that the defendant

20   “controlled the company financially.”    Id.   It is clear that

21   Catsimatidis possessed a similar degree of control.     He

22   testified that he keeps track of “payroll” as “a line item


                                     42
 1   on accounting” and “a part of profit and loss,” to know what

 2   percentage of Gristede’s sales and expenses payroll

 3   comprises, but he does not get involved with individual

 4   salaries or schedules.    Joint App’x at 1834-35.   Although he

 5   did not speak to his managers “about people getting paid,”

 6   id. at 1834, he knew that employees were paid on time

 7   “[b]ecause the unions would have come down on us real hard”

 8   if there was a problem.    Id. at 1852.   Catsimatidis

 9   explained that he might also learn about a problem “[i]f I

10   walked down the aisle, and the employee saw me, they might

11   complain,” although the official procedure for such

12   complaints involved the employees’ union and store manager.

13   Id. at 1866-67.   Catsimatidis set up a meeting between

14   lower-level managers and an outside payroll company, id. at

15   1452-53, and although he did not know specifically “if

16   George Santiago in the store got a paycheck that week,” his

17   “rules are if somebody works, they get paid,” id. at 469.

18   The district court also noted that Catsimatidis stated “in

19   open Court in this proceeding that he could shut down the

20   business, declare bankruptcy, as well as provide the

21   personal signature necessary for a bank letter of credit to

22   be issued in favor of Gristede’s,” Torres III, 2011 WL


                                    43
 1   4571792, at *1, which further demonstrates the kind of

 2   financial control emphasized in RSR.

 3       The fourth Carter factor asks whether the individual

 4   defendant “maintained employment records.”   Barfield, 537

 5   F.3d at 142 (quotation marks omitted).   Plaintiffs offer

 6   only that “Catsimatidis works in the same office where

 7   employment records are kept” and promoted the payroll

 8   director, Appellees’ Br. at 41, essentially admitting that

 9   Catsimatidis did not meet this factor.   In sum, the evidence

10   – much of it Catsimatidis’s own testimony – indicates that

11   Catsimatidis meets the first and third Carter factors.

12       d.   Totality of the circumstances

13       There is no question that Gristede’s was the

14   plaintiffs’ employer, and no question that Catsimatidis had

15   functional control over the enterprise as a whole.   His

16   involvement in the company’s daily operations merits far

17   more than the symbolic or ceremonial characterization he

18   urges us to apply.   Unlike the defendant in Wirtz, who

19   visited his company’s facilities only a few times a year,

20   Catsimatidis was active in running Gristede’s, including

21   contact with individual stores, employees, vendors, and

22   customers.   Catsimatidis dealt with customer complaints, in-


                                   44
 1   store displays and merchandising, and the promotion of store

 2   personnel.    That he may have done so “only occasionally”

 3   does not mean that these actions are irrelevant, see RSR,

 4   172 F.3d at 139, especially when considered in the context

 5   of his overall control of the company.

 6       Although there is no evidence that he was responsible

 7   for the FLSA violations – or that he ever directly managed

 8   or otherwise interacted with the plaintiffs in this case –

 9   Catsimatidis satisfied two of the Carter factors in ways

10   that we particularly emphasized in RSR: the hiring of

11   managerial employees, and overall financial control of the

12   company.     See id. at 136-37, 140 (finding that the

13   individual defendant “exercised financial control over the

14   company” and “frequently” gave instructions to subordinate

15   managers); see also Donovan v. Grim Hotel Co., 747 F.2d 966,

16   972 (5th Cir. 1984) (noting that the individual defendant

17   was the “‘top man’” in a hotel company who “held [the

18   hotels’] purse-strings and guided their policies” and that

19   the hotels “speaking pragmatically, . . . functioned for the

20   profit of his family”).     This involvement meant that

21   Catsimatidis possessed, and exercised, “operational control”

22   over the plaintiffs’ employment in much more than a “but-


                                     45
 1   for” sense.   His decisions affected not only Gristede’s

 2   bottom line but individual stores, and the personnel and

 3   products therein.

 4       We recognize that the facts here make for a close case,

 5   but we are guided by the principles behind the liquidated

 6   damages provision of the FLSA in resolving the impact of the

 7   totality of the circumstances described herein.   The Supreme

 8   Court has noted that “liquidated damages as authorized by

 9   the FLSA are not penalties but rather compensatory damages

10   ‘for the retention of a workman’s pay which might result in

11   damages too obscure and difficult of proof for estimate

12   other than by liquidated damages.’”   Republic Franklin Ins.

13   Co. v. Albemarle County Sch. Bd., 670 F.3d 563, 568 (4th

14   Cir. 2012) (quoting Brooklyn Sav. Bank v. O’Neil, 324 U.S.

15   697, 707 (1945)); see also Marshall v. Brunner, 668 F.2d

16   748, 753 (3d Cir. 1982) (noting that liquidated damages “are

17   compensatory, not punitive in nature”).

18       As counsel for amicus curiae the Secretary of Labor

19   explained at oral argument, the purpose of the FLSA is not

20   to punish an employer but to remunerate aggrieved employees.

21   Considered in the context of the expansive interpretation

22   that courts have afforded the statute, this policy reasoning


                                   46
 1   particularly counsels in favor of finding that Catsimatidis

 2   was an “employer” given the failure of the settlement

 3   between the corporate defendants and the plaintiff

 4   employees.   Catsimatidis was not personally responsible for

 5   the FLSA violations that led to this lawsuit, but he

 6   nonetheless profited from them.      And although the Gristede’s

 7   Supermarkets business entity appears to have been larger

 8   than other businesses discussed in the cases that have

 9   considered this question, the company was not so large as to

10   render Catsimatidis’s involvement a legal fiction.      The

11   company is not public.    Its stores, in which Catsimatidis

12   actively exercised his influence, are all in the New York

13   City metropolitan area, as are the company headquarters,

14   where he worked almost daily.     In sum, as the district court

15   concluded, “it is pellucidly clear that he is the one person

16   who is in charge of the corporate defendant.”7     Torres III,

17   2011 WL 4571792, at *3.

18


          7
           The district court’s decision indirectly referenced
     statements made by Catsimatidis in open court at a hearing on the
     settlement agreement to the effect that he was “here to speak for
     1,700 employees that [sic] their jobs . . . on the line,” that he
     “represent[ed] the 1,700 current employees,” and that he was
     “their employer.” Joint App’x 3594-95. We do not, of course,
     afford these statements weight as legal conclusions, but they are
     telling.

                                     47
 1          Although we must be mindful, when considering an

 2   individual defendant, to ascertain that the individual was

 3   engaged in the culpable company’s affairs to a degree that

 4   it is logical to find him liable to plaintiff employees, we

 5   conclude that this standard has been met here.

 6   Catsimatidis’s actions and responsibilities – particularly

 7   as demonstrated by his active exercise of overall control

 8   over the company, his ultimate responsibility for the

 9   plaintiffs’ wages, his supervision of managerial employees,

10   and his actions in individual stores – demonstrate that he

11   was an “employer” for purposes of the FLSA.

12   III.       New York Labor Law

13          The NYLL defines “employer” as “any person . . .

14   employing any individual in any occupation, industry, trade,

15   business or service” or “any individual . . . acting as

16   employer.”    N.Y. Lab. Law. §§ 190(3), 651(6).    The

17   definition of “employed” under the NYLL is that a person is

18   “permitted or suffered to work.”     Id. § 2(7).

19          The district court granted partial summary judgment in

20   plaintiffs’ favor on their NYLL claims, but neither its oral

21   nor its written decision contained any substantive

22   discussion of the issue.    Plaintiffs assert that the tests


                                     48
 1   for “employer” status are the same under the FLSA and the

 2   NYLL, but this question has not been answered by the New

 3   York Court of Appeals.   Defendants respond that corporate

 4   officers cannot be held liable under the NYLL simply by

 5   virtue of their status, but plaintiffs are arguing that

 6   Catsimatidis should be held liable “not as [a] corporate

 7   officer[] or shareholder[], but as [an] employer[].”      See

 8   Chu Chung v. New Silver Palace Rest., Inc., 272 F. Supp. 2d

 9   314, 318 (S.D.N.Y. 2003).

10       Plaintiffs also contend in their response brief that

11   “there is no need to also establish [Catsimatidis’s] status

12   as an employer under state law” because the settlement

13   agreement establishes that he will be personally liable “‘if

14   the Court holds John Catsimatidis to be an

15   employer’–period.”   Appellees’ Br. at 41-42 (quoting

16   Settlement Agreement § 3.1(H)).      Defendants do not respond

17   to this in their reply brief.

18       In light of the possible disagreement between the

19   parties regarding the need for us to decide this issue of

20   state law, and particularly in light of the absence of

21   discussion of the issue in the district court’s decision, we

22   vacate the grant of summary judgment in plaintiffs’ favor on


                                     49
 1   the NYLL claims and remand to the district court.     The case

 2   will return to the lower court in any event for a

 3   determination of damages in light of our holding today; in

 4   the process, the parties and the district court may

 5   determine (1) whether the NYLL question requires resolution,

 6   and (2) what that resolution should be.

 7                            Conclusion

 8       We have examined all of Catsimatidis’s arguments on

 9   appeal and find them to be without merit.   For the foregoing

10   reasons, the judgment of the district court granting partial

11   summary judgment in favor of plaintiffs is AFFIRMED IN PART,

12   VACATED IN PART, AND REMANDED.




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