United States Court of Appeals,
Eleventh Circuit.
No. 96-4253.
Juan GAMBETTA, Plaintiff-Appellant,
v.
PRISON REHABILITATIVE INDUSTRIES AND DIVERSIFIED ENTERPRISES,
INC., Pamela J. Davis, President and Member of the Board of
Directors of PRIDE, Inc., J. Floyd Glisson, former President and
Member of the Board of Directors of PRIDE, Inc., State of Florida
Department of Corrections, Harry K. Singletary, Secretary, State of
Florida Department of Corrections, in his individual capacity,
Defendants-Appellees,
Richard L. Dugger, former Secretary, State of Florida Department
of Corrections, in his individual capacity, Defendant.
May 15, 1997.
Appeal from the United States District Court for the Southern
District of Florida. (No. 93-592-cv-DTKH), Daniel T.K. Hurley,
Judge.
Before ANDERSON and EDMONDSON, Circuit Judges, and ROSENN*, Senior
Circuit Judge.
ROSENN, Senior Circuit Judge:
This appeal presents an important question of economic and
penological concern of first impression in this circuit, wherein
prisoners incarcerated for violations of Florida criminal laws seek
the benefits of federal minimum wage laws when they engage in
correctional work programs operated by a non-profit corporation
established by the State. In its entirety, this question would
require that we explore largely uncharted waters, in that neither
the Supreme Court nor the courts of appeals have addressed the
matter comprehensively. Because we conclude as a matter of law,
*
The Honorable Max Rosenn, Senior U.S. Circuit Judge for the
Third Circuit, sitting by designation.
however, that the employer in this matter is a state
instrumentality, we need pursue only a more limited inquiry. The
result of that inquiry is that we affirm the district court's grant
of summary judgment in favor of the defendants.
I.
Chapter 946 of the Florida Statutes mandates that a private,
non-profit corporation be established, independent of the state, to
operate the correctional work program for the state Department of
Corrections (DOC). Since 1981, the program has been operated by
Prison Rehabilitative Industries and Diversified Enterprises, Inc.
("PRIDE"). Using prisoner labor, PRIDE manufactures and produces
a wide range of products which it sells both internationally and to
government entities in this country. In order to prepare inmates
for release, PRIDE simulates a real-world business environment:
inmates complete employment applications and are interviewed,
receive on-the-job training and performance evaluations, and can
file grievances and be terminated for cause. PRIDE currently pays
inmate workers 45 to 50 cents per hour, some of which goes to repay
the cost of incarceration, some to victim restitution, and some
into the inmate's account.
In 1993, plaintiff Juan Gambetta, for himself and other
Florida inmates, filed suit in the United States District Court for
the Southern District of Florida, alleging that PRIDE had violated
the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219 (1992),
by failing to pay them minimum wages prescribed by the Act. Named
as defendants were DOC, its past and present Secretaries, PRIDE,
and its past and present Presidents. For the purpose of this
review, we assume that DOC and its officials are no longer involved
in the suit, having been dismissed for all but injunctive purposes.
The district court granted summary judgment to PRIDE,1 holding that
plaintiffs are not "employees" of PRIDE, and plaintiffs timely
appealed.2
II.
Summary judgment is appropriate "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue of
fact is genuine if the record as a whole could lead a rational
trier of fact to find for the non-moving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91
L.Ed.2d 202 (1986). It is inappropriate at the summary judgment
stage for the court to weigh the evidence and determine the truth
of the matter. Id. at 249, 106 S.Ct. at 2510-11. Rather, the
court's function is to determine whether there exists an issue for
trial.
The appellants contend that the district court erred in
granting summary judgment to the defendants because PRIDE is a
private corporation that is granted a monopoly to operate the
1
We affirm, although not precisely on the same ground. An
appellate court may affirm a correct judgment of the district
court even if that decision may be based on another ground.
Powers v. United States, 996 F.2d 1121, 1123-24 (11th Cir.1993).
2
The district court had federal question jurisdiction over
this case pursuant to 28 U.S.C. § 1331 and we have jurisdiction
pursuant to 28 U.S.C. § 1291 as an appeal from a final order.
state's correctional industries, generating over $70 million in
annual revenues, paying its executives and outside lawyers and
lobbyists handsome salaries and fees, and competing against other
companies engaged in interstate commerce. They, therefore,
vigorously argue that PRIDE is not exempt from federal minimum-wage
requirements, that inmates participating in PRIDE's correctional
programs meet the definition of "employee" under the FLSA, and that
they are not exempt from coverage.
On the other hand, the appellees note that PRIDE's primary
mission in operating the correctional industries is to reduce
inmate idleness and promote rehabilitation and job-training by
"duplicating, as nearly as possible, the operating activities of a
free-enterprise type of profitmaking enterprise." § 946.501
Fla.Stat.3 Appellees assert that inmate activities, however, are
still governed by state law and agreements between the DOC and
PRIDE by which the Department retains ultimate control over
placement of the inmates and that, as structured, PRIDE is an
instrumentality of state government.
PRIDE conducts its operations independently of state
government and its policies and salaries are established by its
Board of Directors. The Board determines policies, reviews its
financial condition, and approves the corporation's annual
operating budget. Its president reports to the Board and is in
charge of the company's day to day operations. The Board hires,
discharges, and pays its employees (non-inmates) and ostensibly
3
All sectional references in this opinion, unless
specifically designated otherwise, are to Florida Statutes.
operates as a private business, conducting its own accounting and
purchasing system, manufacturing and shipping, and develops its own
operating policies. It receives no funding from the State.
Under state statute, PRIDE sells the products produced by
inmates working in the State correctional programs only to agencies
of the State, political subdivisions, other states, foreign
entities, agencies of the federal government, or any contract
vendor of such agencies. § 946.515(1). PRIDE may, however, sell
agricultural goods to private entities. § 946.515(3). In 1992,
the Florida legislature amended the statute creating PRIDE so as to
provide that ""PRIDE' is deemed to be a corporation primarily
acting as an instrumentality of the state." § 946.5026. The
amendatory statute also provided that the provisions of § 768.28
defining "state agency" also shall apply to PRIDE.
Although the inmates may not be compelled to work for PRIDE,
it is the DOC that statutorily determines which inmates may
participate in the correctional work programs operated by PRIDE.
§ 946.511(1). The DOC evaluates and prescribes education, work and
work-training for each inmate entering the correctional system, and
assigns the inmates. The Department is required to review the
inmate assignments every six months. PRIDE's policies and
procedures relating to the use of inmates in its correctional work
programs must be submitted to the Department for approval. §
946.511(2).
PRIDE, however, establishes policies and procedures which
govern its non-inmate employees and, as to them, it is not required
to follow the State's hiring or compensation policies. PRIDE
retains outside consultants, attorneys, accountants, lobbyists, and
public relations firms. It is not required to comply with the
State's bidding procedures in the purchase of goods, materials, and
services for use in its correctional work programs. PRIDE
maintains its own purchasing and accounting systems and controls
all manufacturing and shipping functions.
The salaries of PRIDE's non-inmate employees and its top
managers have no relationship to salaries, pensions and benefits of
state employers. Although PRIDE contracts for its prison industry
program with the State and is technically required to make lease
payments, it has never made such payments although it maintains and
makes capital improvements to property which belongs to the State.
The lease of facilities to PRIDE at each correctional work
program are required by statute to be negotiated by Florida
Department of Management Service and approved by the Attorney
General, and the Governor and cabinet sitting as the Board of
Trustees of the Internal Improvement Trust Fund. § 946.504(5)(b)
and (c). All of the property leased by the State to PRIDE, or
subsequently purchased by it, is insured in behalf of the DOC
through the Department's existing policy and account. § 946.509.
All of PRIDE's assets revert to full ownership of the Department
when PRIDE ceases to utilize them. § 946.505. The State also
provides PRIDE with liability insurance. § 964.510.
PRIDE is exempt from the payment of sales taxes and is
routinely audited by the Auditor General of the State. It is
required to report to the Governor and the legislature as to the
status of its correctional work programs and submit an annual,
independently audited financial statement. § 946.516(1).
The statute initially setting up PRIDE as an independent
entity in 1981 specifically provided that all members of its Board
of Directors be appointed by the Governor of the State and
confirmed by the Florida Senate. The Secretary of the DOC also
sits on the Board of Directors.
III.
The district court here granted summary judgment to PRIDE
because it determined that the plaintiffs were not "employees"
under the FLSA (D.C. op. at 6). Having reviewed the relevant
authorities, the court concluded that the proper test to determine
whether an inmate is an "employee" focuses on "(1) the goals sought
to be achieved by the work program; and (2) the relationship
between the Department of Corrections and the managing entity."
(Id.) We decline to address the question of whether the district
court applied the proper test,4 and instead affirm solely on the
basis that, as a matter of law, the "managing entity" (i.e., PRIDE)
is a state instrumentality.
Appellants have presented considerable evidence that PRIDE
4
We are particularly hesitant about endorsing the first
factor. The district court believes that plaintiffs are not
"employees" because the PRIDE program has at least in part a
rehabilitative purpose. Presumably, all prison work programs
have at least a small rehabilitative component, and so the
court's reasoning might exclude all prisoners from FLSA coverage.
Excluding all prisoners seems contrary to Congressional intent
and runs counter to numerous statements made by various Courts of
Appeals. See, e.g., Danneskjold v. Hausrath, 82 F.3d 37, 44 (2d
Cir.1996); Watson v. Graves, 909 F.2d 1549, 1554 (5th Cir.1990);
Vanskike v. Peters, 974 F.2d 806, 808 (7th Cir.1992); Hale v.
Arizona, 993 F.2d 1387, 1392 (9th Cir.1993). The district court
itself states that prisoners are not categorically excluded from
the FLSA (D.C. op. at 3).
operates independently of the Department of Corrections. This
evidence includes: statements made by the Secretary and former
Secretary of DOC and by the president of PRIDE; the statement of
legislative intent in Chapter 946 that the program authorized "can
best operate independently of state government," § 946.502(5);
PRIDE's position that it is exempt from state public disclosure
laws; and expenditures made by PRIDE for lobbying, despite a
Florida law forbidding the use of public funds for this purpose.
Although there may be some evidence to the contrary, we
believe that significant evidence establishes that as a matter of
law PRIDE is an instrumentality of the state. It is true that, as
originally authorized, PRIDE was to operate "independently." In
1992, however, the Florida Legislature enacted § 946.5026,
specifically providing that PRIDE "is deemed to be a corporation
primarily acting as an instrumentality of the state." At least one
Florida state court has held that § 946.5026 was enacted "merely to
clarify and make entirely free from any doubt PRIDE's [previously]
existing status...." PRIDE v. Betterson, 648 So.2d 778, 780
(Fla.Dist.Ct.App.1994). Also of great significance is the
statutory control that the State has over the selection and
appointment of the Board of Directors of PRIDE.
PRIDE's salaries for its top managers and its non-inmate
employees bear no relationship to the salaries and emoluments of
state employees. To a notable degree, PRIDE's operations are
conducted independently of state government and its Board of
Directors determines its policies, its operating budget, and
entrepreneurial features. In the final analysis, however, power
and control over PRIDE and custody over the inmates is vested in
the State. By statute, all members of the Board are appointed by
the Governor of the State and confirmed by the Florida Senate. All
of PRIDE's assets revert to full ownership of the State when it
discontinues their use. It is exempt from sales taxes, is audited
by the State, and is required to report to the Governor and
legislature on the status of its correctional programs, and to
submit an audited financial statement. There are other factors,
especially the 1992 statutory amendment, which endow PRIDE with the
characteristics of a state instrumentality.
We think it important to distinguish Williams v. Eastside
Mental Health Center, 669 F.2d 671 (11th Cir.), cert. denied, 459
U.S. 976, 103 S.Ct. 318, 74 L.Ed.2d 294 (1982), in which this court
reversed a district court decision deeming a community mental
health center created pursuant to Alabama statute to be an
instrumentality of the state. In that case, we stated that if a
state chooses to delegate certain functions to a separately
incorporated non-profit institution, rather than perform the
functions itself, "it must live with the consequences." Id. at
678.5 In the case at bar, Florida exercises far greater control
over PRIDE than Alabama did over Eastside, and so we consider that
case to be inapposite.
IV.
Having concluded as a matter of law that PRIDE is an
5
Although Williams was decided under the since-overruled
National League of Cities v. Usery regime, 426 U.S. 833, 96 S.Ct.
2465, 49 L.Ed.2d 245 (1976), nothing in Usery was essential to
the court's statement.
instrumentality of the State of Florida, we now ascertain the
impact of that status upon the applicability of the FLSA. More
specifically, because PRIDE is operating, in a sense, as an arm of
the Department of Corrections, pursuing a corrections function that
traditionally has been the responsibility of state government, we
examine cases from our sister circuits involving the applicability
of the FLSA to prison industries which generate income for the
prison.6
In recent years, at least three other courts of appeals have
addressed situations very much like the case at bar: the Fourth
Circuit in Harker v. State Use Industries, 990 F.2d 131 (4th Cir.),
cert. denied, 510 U.S. 886, 114 S.Ct. 238, 126 L.Ed.2d 192 (1993);
the Eighth Circuit in McMaster v. Minnesota, 30 F.3d 976 (8th
Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1116, 130 L.Ed.2d
1080 (1995); and the Ninth Circuit in Hale v. Arizona, 993 F.2d
1387 (9th Cir.), cert. denied, 510 U.S. 946, 114 S.Ct. 386, 126
L.Ed.2d 335 (1993). In each case, state prison inmates sought to
be paid federal minimum wage for their labor in state prison
industries. Each of the three courts of appeals rejected the
inmates' claims on the basis that they were not "employees" under
the FLSA.
6
There is no question that the FLSA does not apply to the
more ordinary situation where a prisoner performs labor which
does not generate income (e.g., janitorial services within the
prison). "[N]o Court of Appeals has ever questioned the power of
a correctional institution to compel inmates to perform services
for the institution without paying the minimum wage. Prisoners
may thus be ordered to cook, staff the library, perform
janitorial services, work in the laundry, or carry out numerous
other tasks that serve various institutional missions of the
prison...." Danneskjold v. Hausrath, 82 F.3d 37, 43 (2d
Cir.1996).
Each court looked to the dual purposes of the FLSA—the
provision of a decent standard of living for all workers and the
avoidance of unfair competition, Harker, 990 F.2d at 133, 134;
McMaster, 30 F.3d at 980; Hale, 993 F.2d at 1396—and concluded
that neither was implicated. Each court noted that the state
provides prisoners with food, shelter, and clothing, so that their
standard of living is not at issue in this sort of case. Harker,
990 F.2d at 133; McMaster, 30 F.3d at 980; Hale, 993 F.2d at
1396. And each court noted that Congress has addressed the issue
of unfair competition more specifically in the Ashurst-Sumners Act,
18 U.S.C. §§ 1761-62, which criminalizes the transportation in
interstate commerce of prison-made goods in instances where
7
prisoner labor threatens fair competition. Harker, 990 F.2d at
134; McMaster, 30 F.3d at 980; Hale, 993 F.2d at 1397. Moreover,
Ashurst-Sumners exempts prison-made goods manufactured for use by
federal, state and local governments. 18 U.S.C. § 1761(b). We are
persuaded by the reasoning of our sister circuits, and we join them
in the conclusion that inmates who work for state prison industries
are not covered by the FLSA.
Like Judge Wilkinson in Harker, supra, we too are concerned
with the dramatic effects that a contrary decision would have on
public policy, specifically at a time when federal and state
prisons are struggling with the mounting costs of maintaining
7
Congress enacted Ashurst-Sumners in 1935 and the FLSA in
1938. Congress has never replaced Ashurst-Sumners but has
periodically amended and recodified it. See Harker, 990 F.2d at
134. The two statutes must be read in pari materia, "and it is
axiomatic that, in this situation, the more specific statute must
control." Id.
prisoners and with their burgeoning numbers. FLSA coverage for
prisoners may also open the door to worker's compensation,
overtime, and vacation pay. See Alexander B. Wellen, Comment,
Prisoners and the FLSA: Can the American Taxpayer Afford Extending
Prison Inmates the Federal Minimum Wage?, 67 Temp.L.Rev. 295, 296
(1994). Compelling states to pay the minimum wage to every inmate
engaged in a PRIDE-type program could escalate costs enormously and
could well compel correctional systems to curtail or terminate
their highly-desirable programs. If FLSA coverage is to extend
inside prison walls, this is a decision for Congress and not the
courts. See Harker, 990 F.2d at 136.
V.
Accordingly, we hold that inmates of state prisons who work
for industries operated as state instrumentalities are not covered
by the Fair Labor Standards Act and are not entitled to receive
federal minimum wage for their labor. Therefore, the judgment of
the district court in favor of appellees is AFFIRMED.