[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 05-11233 ELEVENTH CIRCUIT
May 9, 2006
________________________
THOMAS K. KAHN
CLERK
D. C. Docket No. 04-60095-CV-JIC
JOSEPH THORNE,
Plaintiff-Appellant,
versus
ALL RESTORATION
SERVICES, INC. et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(May 9, 2006)
Before BIRCH and MARCUS, Circuit Judges, and NANGLE*, District Judge.
NANGLE, District Judge:
*
Honorable John F. Nangle, United States District Judge for the Eastern District of
Missouri, sitting by designation.
Joseph Thorne appeals the district court’s grant of All Restoration Services’
[ARS] Rule 50 motion for dismissal. Thorne argues that the district court erred in
granting the Rule 50 motion because there was sufficient evidence presented at
trial to show that he was entitled to individual coverage under the Fair Labor
Standards Act when he regularly used Defendants’ credit cards, and performed
restoration work directly essential to the production of goods for commerce. This
Court finds that Thorne failed to present sufficient evidence that he was either
engaged in interstate commerce or was engaged in the production of goods for
commerce. Accordingly, the Court AFFIRMS the district court’s grant of
Appellees’ Rule 50 motion and dismissal of the case.
I. BACKGROUND
Appellant Thorne sued Defendant Appellees under the Fair Labor Standards
Act (“FLSA”) for alleged nonpayment of overtime compensation. Defendants
moved for a Rule 50 motion to dismiss, arguing that the FLSA did not apply
because Thorne had not presented evidence at trial that he qualified for either
enterprise coverage or individual coverage under the FLSA. The district court
granted Appellees’ motion and dismissed the case, finding that “the plaintiff’s
activities were local in nature and really did not affect interstate commerce in
general.” R44 at 163. Thorne appeals only the district court’s finding that he did
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not prove individual coverage under the FLSA.
At trial, Thorne testified that during his employment for ARS, he primarily
performed mold and water damage restoration work for residential and
commercial properties. He also performed ministerial work for ARS, which
included making purchases of goods for the company. Thorne testified that two to
three times per week, he used Appellees’ VISA credit card to purchase gas for
Appellees’ truck. R44 at 83. Thorne also testified that he used Appellees’ Home
Depot credit card two to three times per week to purchase goods and materials as
part of his employment. R44 at 83. Thorne testified that he believed the Home
Depot bills came from Atlanta. R44 at 84. However, Thorne later testified that
his activities were purely local without any affiliation to matters outside the state
of Florida. R44 at 124, 132.
II. DISCUSSION
Thorne argues that he qualifies for individual coverage under the FLSA
because as part of his employment he was (1) engaged in commerce, and (2)
engaged in the production of goods for commerce. Under FLSA, an employer is
required to pay overtime compensation if the employee can establish enterprise
coverage1 or individual coverage. For individual coverage to apply under FLSA,
1
Appellant Thorne did not raise the issue of enterprise coverage on appeal.
3
Thorne must have provided evidence at trial that he was (1) engaged in commerce
or (2) engaged in the production of goods for commerce. 29 U.S.C. § 207(a)(1)
(2005) (stating “no employer shall employ any of his employees who . . . is
engaged in commerce or in the production of goods for commerce . . . for a
workweek longer than forty hours unless such employee received compensation . .
. at a rate no less than one and one-half times the regular rate”). After discussing
the standard for review, the Court will address each prong in turn.
A. Standard for Review
The Court reviews the grant of a Rule 50 motion de novo and “applies the
same standards employed by the district court.” Abel v. Dubberly, 210 F.3d 1334,
1337 (11th Cir. 2000). The standard for judgment as a matter of law mirrors that of
summary judgment in that the non-movant must do more than raise some doubt as
to the existence of facts but must produce evidence that would be sufficient to
require submission of the issue to a jury. Matsushita Elec. Ind. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). Although we look at the evidence in the
light most favorable to the non-moving party, “the non-movant must put forth
more than a mere scintilla of evidence suggesting that reasonable minds could
reach differing verdicts.” Abel, 210 F.3d at 1337. Therefore, a substantial
conflict in the evidence is required before a matter will be sent to the jury, and the
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grant of a Rule 50 motion is proper when the evidence is so weighted in favor of
one side that that party is entitled to succeed in his or her position as a matter of
law. Id. The Court finds that Appellant Thorne has failed to raise a substantial
conflict in the evidence that his activities were inherently local. Accordingly,
Appellees were entitled to judgment as a matter of law.
B. Engaged in Commerce
Thorne argues that he was individually engaged in interstate commerce
because he regularly used Defendants/Appellees’ credit cards in the course of his
employment. Appellees respond that the trial court was correct in finding that
Thorne was not individually covered by FLSA because his credit card activities
did not involve interstate commerce. The Court is persuaded by Appellees’
argument, and the Court finds that Thorne did not produce sufficient evidence at
trial that his credit card use involved interstate commerce.
The Supreme Court has articulated that it is the intent of Congress to
regulate only activities constituting interstate commerce, not activities merely
affecting commerce. McLeod v. Threlkeld, 319 U.S. 491, 497. Therefore, for an
employee to be “engaged in commerce” under the FLSA, he must be directly
participating in the actual movement of persons or things in interstate commerce
by (i) working for an instrumentality of interstate commerce, e.g., transportation or
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communication industry employees, or (ii) by regularly using the instrumentalities
of interstate commerce in his work, e.g., regular and recurrent use of interstate
telephone, telegraph, mails, or travel. 29 C.F.R. §776.23 (d)(2) (2005); 29 C.F.R.
§776.24 (2005). See, e.g., McLeod, 319 U.S. at 493-98 (finding that plaintiff’s
activities were purely local, and he was not engaged in commerce when he merely
cooked and cleaned for railroad workers). In the case at issue, there was no
evidence at trial that Thorne worked for an instrumentality of interstate commerce,
and Thorne only argues that he regularly used the instrumentalities of interstate
commerce in his work by using Appellees’ credit cards to make purchases for the
business.
Thorne argues that he engaged in interstate commerce both when he used an
instrumentality of interstate commerce, i.e. a credit card, to transact business, and
also when he purchased goods which had traveled in interstate commerce.
However, Thorne’s argument that he engaged in interstate commerce fails because
he did not produce sufficient evidence of interstate transactions.
First, Thorne cites no binding authority which holds that credit card
transactions constitute an instrumentality of interstate commerce. C.f. Kitchings v.
Florida United Methodist Children's Home, Inc., 393 F.Supp.2d 1282, 1293
(M.D.Fla., 2005) (denying individual coverage under FLSA when plaintiff
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houseparents at Children’s Home purchased personal items for Residents at local
stores using Children's Home's credit card). Thorne relies on a Department of
Labor opinion letter, which states that “[e]mployees . . . are individually covered
under the FLSA if, in the performance of their duties, they are engaged in
interstate commerce. . . . Such employees include those who regularly handle
interstate mail and telephone calls, engage in banking or credit card transactions,
or receive or handle goods or materials from or destined for out-of-state sources.”
Opinion Letter, FLSA, 1999 WL 1002373 (March 5, 1999).
Even assuming, without deciding, that credit card transactions alone could
constitute an instrumentality of interstate commerce, Thorne did not produce
sufficient evidence of interstate activity to overcome Defendants/Appellees’ Rule
50 motion. Thorne did not produce evidence that he corresponded with merchants
outside the state of Florida using the mail, phone, or fax, and nor did he produce
evidence that he made purchases of goods from out-of-state vendors. Rather, the
only evidence Thorne produced at trial which implicated interstate activity was
that bills for purchases made locally at a Home Depot may have been sent from
Georgia. Thorne testified that the Home Depot bills, “[i]f I’m not mistaken, I
think they come from out of Atlanta.” R44 at 84. However, Thorne later testified
at trial that he “didn’t do anything that had anything to do with any matter outside
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of the state.” R44 at 132. This Court finds that Thorne’s testimony, stating he
believed credit card bills came from Atlanta for purchases made at a local Home
Depot was not sufficient evidence of engagement in interstate commerce to require
submission of the issue to a jury.
Moreover, the fact that some of the tools he purchased may have crossed
state lines at a previous time does not in itself implicate interstate commerce.
When goods reach the customer for whom they were intended, the interstate
journey ends and employees engaged in any further intrastate movement of the
goods are not covered under the Act. McLeod, 319 U.S. at 493. 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.
In Dunlop v. Industrial America Corporation, 516 F.2d 498, 499 (5th Cir.
1975),2 the court was faced with the question of whether a business which
2
Decisions of the United States Court of Appeals for the Fifth Circuit on and before
September 30, 1981 are binding precedent for the Eleventh Circuit. Bonner v. City of Prichard,
661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
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consumes gasoline and oil in the process of providing services to its customers is
the "ultimate consumer" of those goods, and therefore not subject to FLSA
coverage. The defendant corporation operated a wholly intrastate garbage
removal service, and its only tie to interstate commerce was that its employees
used gasoline and oil products which had moved in interstate commerce in
operating and maintaining the company's trucks. The court held that the defendant
was not covered because it was an “ultimate consumer” of the goods. Id. at 499-
502.
Similar to the defendant in Dunlop, ARS operates exclusively within the
state of Florida, and its customers are located instate. Under the precedent of
Dunlop, ARS’s activities were not rendered interstate commerce simply because
ARS, an ultimate consumer, purchased goods which had previously moved in
interstate commerce. Accordingly, the Court finds that Thorne did not produce
sufficient evidence that he engaged in interstate commerce to overcome
Defendants’ Rule 50 motion.
C. Engaged in the Production of Goods for Commerce
Thorne argues he was individually covered under the FLSA not only
because he was engaged in commerce, but also because his restoration work was
9
directly essential to the production of goods in commerce. Employees whose
work is closely related and directly essential to the production of goods for
commerce are individually covered under the FLSA. 29 C.F.R. § 776.18 (2005).
Congress has indicated that individual coverage under the FLSA includes even
maintenance employees of an independent employer who performs work directly
essential to producers of commerce. 29 C.F.R. § 776.18 (b). Typical of the
employees in this covered group are those who repair or maintain the machinery or
buildings used by the producer in his production of goods for commerce and
employees of a security force that protects the producer's premises. Id. For
example, in Kirschbaum v. Walling, 316 U.S. 517, 518-526, (1942), the Supreme
Court held that certain maintenance employees of a clothing manufacturer were
covered under FLSA because there was “such a close and immediate tie with the
process of production for commerce.” Id.
In contrast, employees of independent contractors which provided local
services such as window cleaning, lawn maintenance, and pest control are not
included as employees doing work "closely related" to production merely because
the customers of the employer happen to include producers of goods for
commerce. 29 C.F.R. § 776.19 (b)(5). For example, employees of a local
exterminator service firm who worked wholly within the state exterminating pests
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in private homes and in buildings used to produce goods for interstate commerce
are not individually covered under FLSA. 29 C.F.R. § 776.19 (b)(5).
Similar to a local exterminator service firm, ARS was a local service firm
that performed mold and water restoration of residential and commercial buildings
entirely intrastate. Testimony at trial showed that a minority of ARS’s clients
were commercial businesses.3 The Court is not convinced that Thorne’s water
restoration work for a few commercial businesses constitutes work directly
essential to the production of goods for interstate commerce. Rather, testimony
showed that ARS was primarily a local service provider, whose services had little
effect on commercial establishments, let alone the production of goods for
commerce.4 Accordingly, the Court finds that the district court properly granted
Defendants/Appellees’ Rule 50 motion.
III. CONCLUSION
Appellant Thorne appeals the district court’s grant of Appellees’ Rule 50
motion and argues on this appeal that he produced evidence sufficient at trial to
3
Conflicting testimony showed that the majority, between fifty and ninety percent, of
ARS’s work was residential, which is not covered under FLSA. R44 at 30, 94.
4
Thorne testified that he performed restoration services for the following businesses:
Burdines department store, City Hall, offices in a high-rise complex, and a Cadillac dealership.
However, Thorne never produced evidence that these business were engaged in the production of
goods for interstate commerce.
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invoke individual coverage under the FLSA. After de novo review, the Court
finds that Appellant Thorne failed to raise a substantial conflict in the evidence at
trial that his activities were inherently local. Finding no error, we AFFIRM the
district court’s grant of Appellees’ Rule 50 motion and dismissal of this case.
AFFIRMED.
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