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Martinez v. Petrenko

United States Court of Appeals, First Circuit

July 6, 2015

GABRIEL F. MARTINEZ, Plaintiff, Appellant,
v.
VICTOR F. PETRENKO, Defendant, Appellee

As amended July 16, 2015.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE. Hon. Joseph A. DiClerico, Jr., U.S. District Judge.

Benjamin T. King, with whom Douglas, Leonard & Garvey, P.C. was on brief, for appellant.

Martha Van Oot, with whom Jackson Lewis, P.C. was on brief, for appellee.

Before Howard, Chief Judge, Selya and Kayatta, Circuit Judges.

OPINION

KAYATTA, Circuit Judge.

To maintain a private action under the Fair Labor Standards Act (" FLSA" or " the Act" ) for a failure to pay for overtime at the mandated rate, an employee must prove a nexus to interstate commerce sufficient to trigger coverage under the Act. The employee can prove this nexus by showing that the employee engaged in commerce for the employer within the meaning of the Act, or by showing that the employer has other employees who engaged in commerce within the meaning of the Act and that the employer also generated annual gross sales of not less than $500,000. In filing this lawsuit asserting an FLSA claim for unpaid overtime, Gabriel Martinez alleged that his employer engaged in commerce within the meaning of the Act and generated annual gross sales of not less than $500,000. While this allegation served to fend off a motion to dismiss, Martinez was ultimately unable to ferret out any evidence to prove that his employer's sales were high enough to trigger coverage under the Act.

Eventually confronted with a motion for summary judgment based on the fact that his employer's annual gross sales were less than $500,000, Martinez pointed to evidence that he himself engaged in commerce within the meaning of the Act. Finding that this change in the way Martinez proposed to establish coverage came too late, the district court granted summary judgment against Martinez on his FLSA claim. For other reasons, the court also granted summary judgment on Martinez's state-law claims. We affirm.

I. Background

A. Statutory Background

An employee enjoys the protections of the FLSA's overtime pay requirements only when either the employee individually or the employer's enterprise as a whole is " engaged in commerce or in the production of goods for commerce." 29 U.S.C. § 207(a)(1). The burden is on the employee to prove a sufficient nexus to interstate commerce as an essential element of the claim. See Chao v. Hotel Oasis, Inc., 493 F.3d 26, 32-33 & n.6 (1st Cir. 2007) (holding that coverage is " an element of the claim," and that the defendants' stipulation relieved the plaintiff of her burden to prove it).

FLSA coverage triggered by the business activities of the employer (often called " enterprise coverage" ) requires a showing that the employer:

(i) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials ... have been moved in or produced for commerce by any person; and (ii) is an enterprise whose annual gross volume [" AGV" ] of sales made or business done is not less than $500,000 . . . .

29 U.S.C. § 203(s)(1)(A); see also 29 C.F.R. § 779.259 (defining " [w]hat is included in annual gross volume" ).

How one shows that coverage is triggered by the activities of the individual employee (so-called " individual coverage" ) is less clear. Neither the statute nor our circuit precedent offers any road map. Other circuits have held that the employee must " directly participate" in the movement of persons or things in interstate commerce, but this can be satisfied through regular use of an instrument of interstate commerce, such as by using a telephone to call other states for business purposes. See, e.g., Reagor v. Okmulgee Cnty. Family Res. Ctr., 501 F.App'x 805, 809 (10th Cir. 2012) (internal quotation marks and alterations omitted). What is clear, in any event, is that the facts capable of establishing individual coverage are different from those supporting a theory of enterprise coverage. To establish individual coverage, the employee must present facts showing his own activities. To establish enterprise coverage, the employee instead must present facts showing the activities of other employees, and the employer's sales.

B. Factual Background

As this is an appeal from a grant of summary judgment, we recite the facts in the light most favorable to Martinez, the non-movant, and we draw all reasonable inferences in his favor. See Ramos-Santiago v. ...


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