Opinion
CV-21-00635-PHX-SPL
10-06-2022
Gonzalo Leyva, Plaintiff, v. Alberto Silva Avila, et al., Defendants.
ORDER
HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE.
Before the Court are three pending motions: (1) Plaintiff Gonzalo Leyva's (“Plaintiff”) Motion for Joinder of Additional Parties (Doc. 41); Plaintiff's Motion for Partial Summary Judgment (Doc. 49); and Defendants Alberto Silva Avila's (“Defendant Avila”) and DGO Tile and Granite, LLC's (“DGO Tile” and, collectively with Defendant Avila, “Defendants”) Motion for Summary Judgment (Doc. 51). The motions for summary judgment are fully briefed and ready for review. (Docs. 49, 51, 53, 55, 57 & 58). For the reasons below, the Court grants Defendants' Motion and enters summary judgment in Defendants' favor. The Court denies Plaintiff's Motion for Partial Summary Judgment and Motion for Joinder of Additional Parties.
Plaintiff's Motion for Joinder of Additional Parties (Doc. 41) is also fully briefed and ready for review. (Docs. 41, 44 & 46). However, the Court denies the Motion as moot because it has granted summary judgment in Defendants' favor.
Because it would not assist in resolution of the instant issues, the Court finds the pending motions are suitable for decision without oral argument. See LRCiv. 7.2(f); Fed.R.Civ.P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998).
I. BACKGROUND
This case arises out of alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq., the Arizona Minimum Wage Act (“AMWA”), A.R.S. §§ 23-362, et seq., and the Fair Wages and Healthy Families Act (“FWHFA”), A.R.S. §§ 23-350, et seq. (Doc. 1-3 at 7-9). On or about August 15, 2018, Plaintiff began working as a tile setter for DGO Tile. (Id. at 5). DGO Tile is an Arizona company that performs remodeling work for bathrooms in residential homes exclusively in Arizona, mostly in the Phoenix and Scottsdale areas. (Doc. 54 at 2). Defendant Avila is the Managing Member of DGO Tile, (see id.), and it was his responsibility to get customers and to set the prices charged to them (Doc. 56 at 7). As a tile setter for DGO Tile, Plaintiff would cut and install tile in the homes' bathrooms and bathroom walls. (Id. at 2). Plaintiff asserts that he was occasionally sent to purchase materials at stores in Arizona, including Home Depot and Big D. (Doc. 48 at 2). Typically, however, Defendant Avila was responsible for purchasing tile products, grout, equipment, tools, and other materials that were used on jobsites. (Doc. 56 at 5). Defendant Avila usually made such purchases at Home Depot, Lowe's, Desert Building Material, the Tom Duffy Company, and online from Custom Grout. (Id.).
In late March 2019, Defendant Avila formed a new limited liability company called DGO Contracting, LLC (“DGO Contracting”). (Doc. 54 at 5). According to Plaintiff's Motion for Joinder (Doc. 41)-in which Plaintiff seeks to join DGO Contracting as a defendant in this matter-once DGO Contracting came into existence, Plaintiff “was either employed by both Defendant DGO Tile and DGO Contracting or DGO Contracting became the successor company to Defendant DGO Tile and assumed all of its liabilities and obligations.” (Doc. 41 at 7). However, Defendants assert that DGO Tile and DGO Contracting “are separate entities with different operations, customers, employees, and contractors” and that “DGO Contracting is neither a successor nor joint employer with DGO Tile.” (Doc. 51 at 9-10, n.2). The Court finds that the exact relationship between DGO Tile and DGO Contracting is irrelevant to deciding the pending motions for summary judgment. Thus, the Court need not delve into the issue any further.
Beginning in May 2019 and continuing to the end of his relationship with Defendants a few months later, Plaintiff asserts that Defendants stopped paying him minimum wage compensation or overtime compensation for work he had completed. (Doc. 1-3 at 7). On March 5, 2021, Plaintiff filed a complaint in state court, asserting that Defendants violated certain federal and state statutes by failing to pay him for certain minimum and overtime wages. (Doc. 1-3 at 7-9). On April 14, 2021, Defendants removed the case to federal court. (Doc. 1). Now at the dispositive motion stage of the case, only four of Plaintiff's original six claims remain: violations of the FLSA's minimum wage and overtime compensation standards, the AMWA's minimum wage standard, and the FWHFA's paid sick time requirements.
Plaintiff also asserted two other state-law claims (Counts V and VI). However, on April 26, 2022, the Court dismissed those claims without prejudice. (Doc. 50).
II. LEGAL STANDARD
Summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party can satisfy this burden by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See id. at 32223. When considering a motion for summary judgment, a court must view the factual record and draw all reasonable inferences in a light most favorable to the nonmoving party. Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002).
III. DISCUSSION
Defendants seek summary judgment in their favor as to each of Plaintiff's four remaining claims. (Doc. 51 at 1). Plaintiff seeks partial summary judgment and requests that the Court find (1) that he was engaged in interstate commerce for purposes of the FLSA and AMWA; (2) that Defendants were his “employer” as that term is defined under the FLSA and AMWA; (3) that he was an “employee” as that term is defined under the FLSA and AMWA; and (4) that Defendants' violations were “willful” under the FLSA and AMWA. (Doc. 49 at 1-2). The Court will first address summary judgment as to Plaintiff's two FLSA claims (Counts I and II). The Court will then turn to Plaintiff's state-law claims under the AMWA (Count III) and the FWHFA (Count IV).
A. FLSA Claims: Violation of Minimum Wage (Count I) and Overtime Compensation (Count II) Standards
“To establish a minimum-wage or overtime violation of the FLSA, Plaintiff must establish three elements: (1) [he] was an employee of Defendants; (2) [he] was covered under the FLSA, and (3) Defendants failed to pay [him] minimum wage or overtime wages.” Smith v. Nov. Bar N Grill LLC, 441 F.Supp.3d 830, 834 (D. Ariz. 2020) (citing 29 U.S.C. §§ 206(a), 207(a)). Defendants argue that summary judgment in their favor is appropriate because Plaintiff cannot establish the second element-that is, that he was covered under the FLSA. (Doc. 51 at 5). The Court agrees.
Section 206(a) of the FLSA requires employers to pay their employees a minimum wage, while § 207(a) requires employers to pay their employees an overtime wage. The elements for each claim are otherwise identical. See 29 U.S.C. §§ 206(a), 207(a).
“There are two types of coverage under the FLSA: individual and enterprise.” Smith, 441 F.Supp.3d at 834-35 (citing Chao v. A-OneMed. Servs., Inc., 346 F.3d 908, 914 (9th Cir. 2003)). Individual and enterprise coverage are independent and alternative theories of coverage, Zorich v. Long Beach Fire Dep't & Ambulance Serv., Inc., 118 F.3d 682, 68586 (9th Cir. 1997), and therefore “[a]n employee can be covered under the FLSA if either . . . attaches.” Litzendorf v. Prop. Maint. Sols. LLC, No. CV-16-00271-PHX-GMS, 2017 WL 5900830, at *3 (D. Ariz. Nov. 30, 2017) (citing Zorich, 118 F.3d at 686). The Court will address each type of coverage in turn.
i. Individual Coverage
For individual coverage, an employee is covered under the FLSA if he is “engaged in commerce.” 29 U.S.C. §§ 206(a), 207(a). Under the FLSA, “commerce” is defined to mean “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” Id. § 203(b). In determining whether an employee is engaged in commerce, “[t]he test is whether the work is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than isolated, local activity.”Mitchellv. C.W. Vollmer & Co., 349 U.S. 427, 429 (1955); see also Smith, 441 F.Supp.3d at 838 (citing McLeodv. Threlkeld, 319 U.S. 491, 493-94, 497 (1943), for its proposition that individual coverage requires conduct that does more than merely “affect or indirectly relate to interstate coverage”); 29 C.F.R. § 779.103 (“Employees are ‘engaged in commerce' . . . when they are performing work involving or relating to the movement of persons or things . . . among the several States or between any State and any place outside thereof.”). “In determining whether an employee is engaged in commerce, the court must ‘focus on the activities of the employee and not on the business of the employer.'” Smith, 441 F.Supp.3d at 835 (quoting Mitchell v. Lublin, McGaughy & Assocs., 358 U.S. 207, 211 (1959)).
The FLSA also provides individual coverage where the employee is “engaged . . . in the production of goods for commerce.” 29 U.S.C. §§ 206(a), 207(a). “Goods are produced for commerce ‘where the employer intends, hopes, expects, or has reason to believe that the goods . . . will move in such interstate or foreign commerce.'” Litzendorf, 2017 WL 5900830, at *3 (quoting 29 C.F.R. § 776.21(a)). The Court need not address this alternate theory of individual coverage, however, because Plaintiff does not contend that he produced any goods for commerce when he worked for Defendants.
The Supreme Court has distinguished between those who move goods interstate and those who merely handle goods locally after they were moved interstate, holding that “handlers of goods for a wholesaler who moves them interstate on order or to meet the needs of specified customers are in commerce, while those employees who handle goods after acquisition by a merchant for general local disposition are not.” McLeod, 319 U.S. at 494. Courts in the Ninth Circuit have held accordingly. See, e.g., Smith, 441 F.Supp.3d at 839 (citing McLeod for its holding that “employees do not engage in interstate commerce merely by handling goods that were previously in interstate commerce”); Llanes v. Zalewski, 412 F.Supp.3d 1266, 1270 (D. Or. 2019) (listing cases) (“[C]ourts have consistently held that an employee cannot establish individual coverage simply by buying or handling goods locally, even if the goods originated out of state.”); Yan v. Gen. Pot, Inc., 78 F.Supp.3d 997, 1003 (N.D. Cal. 2015) (“The definition for individual coverage requires that the employee ‘is engaged in commerce or in the production of goods for commerce' and is not so broad as to include working on goods or materials that have been moved in commerce by any person.”).
This principle-that strictly intrastate, local handling of goods is insufficient to establish an individual's engagement in commerce-is more formally recognized as the “coming-to-rest” doctrine. The coming-to-rest doctrine provides that “goods that originally moved in interstate commerce, but that came to rest within the state prior to intrastate handling and sale, los[e] their interstate character and employees involved in the intrastate distribution of such goods [are] not engaged in commerce.” Donovan v. Scoles, 652 F.2d 16, 18 (9th Cir. 1981) (citations omitted). In Donovan, the Ninth Circuit held that the doctrine is not applicable to the enterprise theory of coverage. Id. at 19 (“The question of whether the goods have come to rest in transit has no relevance to [the enterprise coverage] analysis.”). However, the Ninth Circuit recognized the doctrine's applicability to the original version of the FLSA, which limited coverage to individual employees and did not yet recognize the enterprise theory of coverage. Id. at 18. Notably, the Ninth Circuit did not reject the doctrine's continued use in the context of individual coverage. Likewise, this Court is unaware of-and Plaintiff has not provided-any caselaw holding that the doctrine is no longer applicable to individual coverage. Thus, the Court finds that the coming-to-rest doctrine remains good law as it relates to individual coverage under the FLSA.
The Court finds that Plaintiff's coverage argument mischaracterizes Donovan's holding by, as Defendants put it, “blur[ring] the line” between individual and enterprise coverage. (Doc. 57 at 3). In arguing for individual coverage, and while citing directly to Donovan, Plaintiff contends that:
[a]n employer is found to be regularly engaged in interstate commerce when its employees handle or work on goods or materials that have been moved in or produced for commerce by any person. . . . This broad coverage extends even where the employees' participation remains purely intrastate, so long as the materials have been in interstate commerce at one point.(Doc. 53 at 5-6 (citing to Donovan, 652 F.2d at 18-19)). In other words, Plaintiff argues that he is individually covered merely because he “handle[d] or work[ed]” with tile products and other materials that originated outside Arizona, regardless of the facts that those goods were purchased in Arizona and that Plaintiff's use of the goods was strictly local and intrastate. In the context of enterprise coverage, Plaintiff would be correct- indeed, this is exactly what Donovan stands for. See Donovan, 652 F.2d at 18 (“The clear language of this amendment [adding enterprise coverage to the FLSA] indicates that even a business engaged in purely intrastate activities can no longer claim exemption from FLSA coverage if the goods its employees handle have moved in interstate commerce.”). In the context of individual coverage, however, Plaintiff's argument is without merit. To be individually covered, an employee must himself “engage in commerce” or “[engage] in the production of goods for commerce.” 29 U.S.C. §§ 206(a), 207(a). The Act's individual coverage provision simply does not extend coverage to employees who merely “handle or use” goods that were formerly moved interstate. See Llanes, 412 F.Supp.3d at 1271 (“[The enterprise coverage] provision covers enterprises that have ‘employees engaged in commerce [ or ] handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person.' . . . As the word ‘or' makes clear, Congress did not consider handling goods that had once moved in interstate commerce and engaging in commerce to mean the same thing. Holding otherwise would render FLSA's ‘handling' provision superfluous.”).
Thus, the coming-to-rest doctrine renders meaningless Plaintiff's contention that he “regularly handle[d] and purchase[d] materials that originate[d] outside of” Arizona. (Doc. 53 at 6). Plaintiff refers to tiles that were produced in Italy, China, and Mexico-as well as grout that was produced out-of-state-and asserts that his handling and occasional purchases of such materials in Arizona is sufficient to show that he engaged in commerce. Such an argument, however, stands at odds with the coming-to-rest doctrine. Although the tile and grout originated outside of Arizona and moved through interstate commerce to arrive in the state, the goods decidedly came to rest in Arizona and lost their interstate character prior to being purchased by Defendants or Plaintiff. Following their purchase, the goods were not used or distributed by Plaintiff across state lines such that they could have regained their interstate character. Rather, Plaintiff used the goods on jobsites that were strictly located in Arizona and fails to offer any evidence that he himself engaged in the movement of the goods through interstate commerce. Such evidence of purely intrastate, local use is insufficient to establish that Plaintiff engaged in commerce. See Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1267 (11th Cir. 2006) (“Courts distinguish between merchants who bring commerce across state lines for sale and the ultimate consumer, who merely purchases goods that previously moved in interstate commerce for intrastate use. Therefore, a customer who purchases an item from Home Depot is not engaged in commerce even if Home Depot previously purchased it from out-of-state wholesalers.”).
The Court notes the vagueness of Plaintiff's contention that he “regularly handle[d] and purchase[d] materials that originate[d] outside of' Arizona. First, it is unclear whether Plaintiff is asserting that he handled and purchased materials regularly, or rather that he handled materials regularly, but that his purchases of materials was not so “regular.” The Court finds Plaintiff's own deposition testimony informative, as Plaintiff testified that he purchased materials “[v]ery few times.” (Doc. 52-2 at 18). Second, Plaintiff's contention could be read to say that he personally purchased materials from outside Arizona. This is not supported by the record, as there is no evidence that Plaintiff made purchases anywhere other than local stores in Arizona, such as Home Depot and Big D. Moreover, Plaintiff specifically testified at his deposition that he “never bought anything outside of [Arizona].” (Id. at 19).
The Court declines to follow Litzendorf, a 2017 decision from this District which is relied upon by Plaintiff. Plaintiff's reliance on Litzendorf is no surprise, as the holding seems to overlook the coming-to-rest doctrine in finding that a maintenance worker's occasional Home Depot purchases of materials that originated out of state to be sufficient evidence to raise a factual dispute as to individual coverage. Litzendorf, 2017 WL 5900830, at *3. The Court finds that Litzendorf s failure to consider the coming-to-rest doctrine in its analysis cuts against the weight of authority in this Circuit and in others.
Plaintiff also points to Defendant Avila's use of the company credit card to purchase tile products and tools as evidence that Plaintiff engaged in commerce. (Doc. 49 at 8). Although a credit card transaction may sometimes constitute the use of an instrumentality of interstate commerce, the fact remains that many of the products and tools purchased had already come to rest at retail stores in Arizona before being purchased by Defendants for purely local, intrastate use. That said, the Court recognizes that some of the goods that Defendant Avila purchased-e.g., the grout purchased from Custom Grout-were purchased directly from out of state. However, the Court can only “focus on the activities of the employee and not on the business of the employer” in determining whether Plaintiff was engaged in commerce. See Smith, 441 F.Supp.3d at 835 (quoting Mitchell, 358 U.S. at 211)). Here, the fact that Defendant Avila used credit cards to purchase certain goods from out of state is insufficient to show that Plaintiff engaged in commerce by subsequently using those goods because his use of them was strictly local. Moreover, to the extent Plaintiff himself purchased some of the goods, Plaintiff offers no evidence that he purchased anything from out of state. (See Doc. 52-2 at 19 (Plaintiff responding “Never, I never bought anything outside of the state” when asked whether he had ever personally purchased from outside the state)). Rather, the only purchases alluded to by Plaintiff are those that he made at Arizona stores such as Home Depot or Big D which, as noted above, are insufficient to establish individual engagement in commerce under the coming-to-rest doctrine.
Finally, Plaintiff contends that he engaged in commerce because his work involved frequent use of telephone communication. Plaintiff correctly cites to federal regulations that recognize telephone communication as an instrumentality or channel of commerce. (Doc. 49 at 6-7 (citing 29 C.F.R. §§ 776.10, 779.103)). The same regulations provide that employees whose work involves the “regular and recurrent” use of the telephone for communications across State lines are covered by the FLSA. 29 C.F.R. § 776.10. Specifically, the regulations provide:
[E]mployees whose work involves the continued use of the interstate mails, telegraph, telephone or similar instrumentalities for communication across State lines are covered by the Act. This does not mean that any use by an employee of the mails and other channels of communication is sufficient to establish coverage. But if the employee, as a regular and recurrent part of his duties, uses such instrumentalities in obtaining or communicating information
or in sending or receiving written reports or messages, or orders for goods or services, or plans or other documents across State lines, he comes within the scope of the Act as an employee directly engaged in the work of “communication” between the State and places outside the State.Id. (internal footnote omitted). In the present case, Plaintiff asserts that Defendant Avila provided him with his daily or weekly assignments via text or phone call. Defendants dispute the frequency of such phone communication, arguing that “[i]t was not a relationship where [Defendant] Avila provided daily or weekly assignments.” (Doc. 56 at 3). Viewing this factual dispute in Plaintiff's favor, the Court assumes that Plaintiff's work with Defendants involved “regular and recurrent” text messages and phone calls with Defendant Avila. See Leisek, 278 F.3d at 898 (providing that, at summary judgment, evidence must be viewed “in the light most favorable to the non-moving party”).
However, even with that assumption made, Plaintiff still fails to offer any evidence that such texts and phone calls involved communication across State lines. The mere use of an instrumentality of commerce-such as a phone-is insufficient to demonstrate engagement in commerce if such use is purely local and does not actually implicate interstate commerce. See Mateo v. Auto Rental Co., 240 F.2d 831, 833 (9th Cir. 1957) (providing that determination whether employee engaged in commerce “must be guided by practical considerations, not technical conceptions”); see also Smith, 441 F.Supp.3d at 838 (finding that “purely local use” of a jukebox's internet capability did not constitute interstate commerce even though internet is widely recognized as instrumentality or channel of commerce). Here, Plaintiff and Defendant Avila resided in Arizona, and Defendants' customers and jobsites were located exclusively in Arizona. Thus, the texts and phone calls exchanged between them were purely intrastate communications-that is, they were conversations that exclusively concerned matters in Arizona between two Arizona residents who were in the state at all relevant times. The texts and phone calls simply did not implicate or involve interstate commerce. See Jian Long Li v. Li Qin Zhao, 35 F.Supp.3d 300, 309 (E.D.N.Y. 2014) (emphasis in original) (“[T]he use of a cellular phone by Li, but not for communication between states, is strictly an intrastate activity, notwithstanding the fact that it utilizes interstate technology.”). Therefore, the Court finds that such evidence fails to provide any meaningful support for Plaintiff's contention that he was engaged in commerce.
In sum, Defendants have demonstrated that Plaintiff lacks sufficient evidence to establish that he engaged in commerce. The goods that Plaintiff handled and sometimes purchased may have originated out of state, but they had come to rest in Arizona and Plaintiff's use of the goods was strictly local. Plaintiff may have exchanged texts and phone calls with Defendant Avila for work purposes, but the communications did not implicate interstate commerce in any way because they were not made across state lines and did not concern interstate issues. By pointing to the absence of evidence showing that Plaintiff engaged in commerce, Defendants have met their initial burden of demonstrating that Plaintiff failed to make a showing sufficient to establish individual coverage. See Celotex, 477 U.S. at 322-23 (explaining the defendant's initial burden of demonstrating the plaintiff's failure to establish an element that is essential to his claim). Plaintiff, on the other hand, failed to meet his burden of producing evidence that creates a genuine issue of material fact with respect to the individual coverage element of his FLSA claims. See Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1103 (9th Cir. 2000). The Court finds that Defendants are entitled to summary judgment as to the issue of individual coverage under the FLSA.
ii. Enterprise Coverage
For enterprise coverage, an employee is covered under the FLSA if he “is employed in an enterprise engaged in commerce or in the production of goods for commerce.” 29 U.S.C. §§ 206(a), 207(a). Section 203(s)(1) provides that an enterprise is “engaged in commerce or in the production of goods for commerce” if it:
(i) “has employees engaged in commerce or in the production of goods for commerce” or “has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person” and
(ii) has a “annual gross volume of sales made or business done [that] is not less than $500,000.”Id. § 203(s)(1)(A). As it relates to enterprise coverage, the parties do not appear to dispute the first requirement. This is no surprise, however, as DGO Tile employed individuals- such as Plaintiff-who handled “goods or materials” that had been moved in or produced for commerce at one time or another. As noted above, the Ninth Circuit held in Donovan that the coming-to-rest doctrine is inapplicable to the enterprise coverage analysis. Donovan, 652 F.2d at 18-19. Thus, in assessing enterprise coverage, it does not matter that the goods or materials in this case were purchased after they had come to rest in Arizona or that Plaintiff's use of them was strictly local. All that matters is that the goods and materials “handled” by Plaintiff were moved in interstate commerce at one time. That requirement is met in this case; as just one example, the tiles Plaintiff used were apparently produced in Italy, China, and Mexico and arrived in Arizona via interstate commerce.
Setting aside the first requirement, the parties in this case dispute the second requirement for enterprise coverage-that is, that Defendants made at least $500,000 in annual gross sales. Defendants have offered various financial documents, including tax returns and bank statements, strongly indicating that Defendants made far less than $500,000 per year in sales during the relevant years. For example, a signed copy of Defendant Avila's 2018 tax return shows that DGO Tile made $256,247 in gross sales in 2018. (Doc. 52-3 at 38). Likewise, a signed copy of Defendant Avila's 2019 tax return shows that DGO Tile made $30,194 and that DGO Contracting made $64,592, for a total of $94,786 in gross sales in 2019.(Doc. 52-3 at 56, 58). The Court finds that Defendants have offered more than enough evidence and supporting argument to meet their burden of demonstrating an absence of evidence to support Plaintiff's claims and to shift the burden to Plaintiff. See Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir. 2000) (“[A] moving defendant may shift the burden of producing evidence to the nonmoving plaintiff merely by ‘showing'-that is, pointing out through argument-the absence of evidence to support plaintiff's claim.”).
DGO Contracting, LLC (“DGO Contracting”) is a limited liability company formed by Defendant Avila in March 2019. (Doc. 52 at 3). As noted in the Background section above, the parties dispute the exact relationship between DGO Contracting and DGO Tile. For purposes of this analysis, the Court assumes that they constituted a single entity. Such an assumption views the facts in the light most favorable to Plaintiff, as this Court must do in analyzing Defendants' Motion for Summary Judgment. Moreover, Defendants themselves allow for the same assumption, at least for purposes of determining Defendants' gross sales. (See Doc. 51 at 9-10, n.2 (contending that DGO Tile and DGO Contracting are entirely separate entities but nonetheless providing DGO Contracting's annual sales “for argument's sake”)).
Plaintiff's only responsive argument relates to the credibility of the tax returns and other financial documents offered by Defendants. (Doc. 53 at 7-8). Plaintiff relies on his own deposition testimony as well as that of Defendant Avila. (Id.). First, Plaintiff testified that he heard Defendant Avila say that “he was going to have his customers start paying him in cash so he could report less [on his tax return].” (Doc. 52-2 at 34). Second, Defendant Avila testified that he was not familiar with the numbers on his tax returns and that he could not verify the total income he made during 2018 and 2019 because he did not complete the tax documents himself; rather, he provided his financial records to a tax preparer who did the work for him. (Doc. 52-1 at 68-70; Doc. 54-2 at 2-5). Third, Defendant Avila testified that he did not know why there was a $226,053 difference between DGO Tile's reported income in 2018 and 2019, that he “would imagine” it was because he worked less, but that he did not remember working significantly less in 2019. (Doc. 52-1 at 73-74). In sum, Plaintiff argues that the above deposition testimony “suffice[s] to show that Plaintiff has set forth a genuine issue of material fact for trial” as to whether Defendants made $500,000. (Doc. 53 at 8).
The Court finds that the evidence offered by Plaintiff amounts to nothing more than speculative credibility testimony and that Plaintiff therefore falls well short of meeting his burden of demonstrating a material dispute as to Defendants' annual gross sales. The law is clear that a plaintiff cannot defeat a properly supported motion for summary judgment “without offering any concrete evidence from which a reasonable juror could return a verdict in his favor and by merely asserting that the jury might, and legally could, disbelieve the defendant[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); see also Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 512 (1984) (“When the testimony of a witness is not believed, the trier of fact may simply disregard it. Normally the discredited testimony is not considered a sufficient basis for drawing a contrary conclusion.”). “[T]he plaintiff must present affirmative evidence in order to defeat a properly supported motion for summary judgment. This is true even where the evidence is likely to be within the possession of the defendant, as long as the plaintiff has had a full opportunity to conduct discovery.” Anderson, 477 U.S. at 257.
Here, Plaintiff has offered no concrete or affirmative evidence from which a reasonable juror could find that Defendants made $500,000 or more in total sales. Plaintiff's entire argument-taking up less than a page of Plaintiff's response brief- consists of a few deposition statements that merely undermine the credibility of the tax return documents. Despite having the opportunity to conduct discovery, Plaintiff cites to no financial documents or other information that would indicate that Defendants' sales were higher than the $500,000 threshold. See Polycarpe v. E&S Landscaping Serv., Inc., 616 F.3d 1217, 1229 (11th Cir. 2010) (noting tax returns indicated gross sales “far below” $500,000 and that the plaintiffs failed to “persuasively increase those amounts by citing construction loans, internal business transactions, old contracts for sale before the employment period at issue, or expected future proceeds from property sales or ongoing litigation”). Plaintiff had access to hundreds of pages of financial documents from Defendants; in addition to the tax returns, Defendants disclosed bank statements, receipts, checks, and invoices from the relevant time period. Despite this wealth of financial information, Plaintiff's responsive argument fails to discuss the disclosed documents in any detail whatsoever. Rather, Plaintiff relies solely on (i) his own testimony that Defendant Avila made a statement that he was underreporting his income and (ii) Defendant Avila's testimony that he lacked personal knowledge and was unable to verify the contents of Defendants' tax returns. Such evidence does nothing to prove that Defendants made more than $500,000 in sales. See Jian Long Li, 35 F.Supp.3d at 306 (“It is not enough for [the plaintiff] to argue that the tax returns did not credibly report the [business'] gross sales . . . without furnishing ‘concrete' and ‘affirmative' evidence to support the conclusion that the [business'] gross sales were more than $500,000 every year. . . . [The plaintiff] has yet to identify such evidence. [The plaintiff's] attack on the credibility of the tax returns, therefore, does nothing to change the fact that the ‘record as a whole' continues to ‘point in one direction,' with nothing to compel a jury to find in his favor.”).
In sum, the tax returns and other financial documents offered by Defendants show that Defendants made far less than the $500,000 threshold. Plaintiff argues only that Defendants' tax returns should not be believed, and otherwise fails to provide any evidence indicating that Defendants made at least $500,000 in sales. The Court finds that no genuine dispute of material fact exists as to whether Defendants made at least $500,000 in annual gross sales and that Defendants are entitled to summary judgment on the issue. See Smith, 441 F.Supp.3d at 842 (“Plaintiff's argument [concerning the accuracy of Defendant's tax statements] overlooks that Defendants were not required to produce evidence negating the annual-revenue requirement. Assuming the tax statements are inadmissible, Defendants nevertheless have shifted the burden by arguing that Plaintiff is unable to prove her claims at trial. . . . Because Plaintiff has come forward with no evidence, she has not met her responsive burden to show a genuine dispute of material fact.”).
All told, Plaintiff has failed to put forth a sufficient showing that he was covered under the FLSA or that any triable issue otherwise exists as to whether Plaintiff had individual or enterprise coverage. Plaintiff failed to demonstrate evidence that would allow a reasonable jury to find that he “engaged in commerce” for purposes of individual coverage, and he failed to demonstrate evidence that would allow a reasonable jury to find that Defendants made at least $500,000 in annual gross sales for purposes of enterprise coverage. Given that proving FLSA coverage is an essential element to Plaintiff's FLSA claims, Defendants are entitled to judgment as a matter of law. The Court grants summary judgment in Defendants' favor as to Plaintiff's FLSA claims (Counts I and II).
B. Violation of AMWA Minimum Wage Standard (Count III) and FWHFA Paid Sick Time Requirements (Count IV)
“The district court may decline to exercise supplemental jurisdiction over state-law claims in several circumstances, including where it ‘has dismissed all claims over which it has original jurisdiction.'” Id. at 843 (quoting 28 U.S.C. § 1367(c)(3)). “In the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine-judicial economy, convenience, fairness, and comity-will point toward declining to exercise jurisdiction over the remaining state-law claims.” Id. (internal quotations omitted) (quoting Sanford v. MemberWorks, Inc., 625 F.3d 550, 561 (9th Cir. 2010)).
Therefore, pursuant to § 1367(c)(3), the Court declines to exercise supplemental jurisdiction over Plaintiff's AMWA and FWHFA claims. See id. (declining to exercise supplemental jurisdiction over state-law claims after dismissing the plaintiff's FLSA claims for failure to show individual or enterprise coverage). Plaintiff's state-law claims (Counts III and IV) are dismissed without prejudice.
IV. CONCLUSION
Because this Court has found that Plaintiff failed to meet his burden of demonstrating a genuine dispute of material fact as it relates to an essential element of his claims-that is, whether Plaintiff was covered under the FLSA-summary judgment on Plaintiff's FLSA claims in Defendants' favor is appropriate and the Court need not address the parties' arguments with respect to Plaintiff's request for partial summary judgment or Plaintiff's request to join DGO Contracting as a defendant in this action.
Accordingly, IT IS ORDERED that Plaintiff's Motion for Partial Summary Judgment (Doc. 49) is denied.
IT IS FURTHER ORDERED that Defendants' Motion for Summary Judgment (Doc. 51) is granted as to Plaintiff's FLSA claims (Counts I and II). Such claims are dismissed with prejudice.
IT IS FURTHER ORDERED that the Court declines to exercise supplemental jurisdiction over Plaintiff's remaining state-law claims (Counts III and IV) under the AMWA and the FWHFA. Such claims are dismissed without prejudice.
IT IS FURTHER ORDERED that Plaintiff's Motion for Joinder of Additional Parties (Doc. 41) is denied as moot.
IT IS FURTHER ORDERED that the Clerk of Court shall enter judgment and terminate this action accordingly.