Irizarry v. Catsimatidis
2013 U.S. App. LEXIS 13796, 20 Wage & Hour Cas.2d (BNA) 1674, 722 F.3d 99 (2013)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An individual corporate officer qualifies as an 'employer' subject to personal liability under the Fair Labor Standards Act (FLSA) if the 'economic reality' of the situation shows they possessed and exercised significant operational control over the company's affairs in a manner that directly affected the nature or conditions of employment.
Facts:
- John Catsimatidis was the chairman, president, and CEO of Gristede’s Foods, Inc., a supermarket chain.
- Catsimatidis was the ultimate owner and corporate head of all implicated Gristede's companies, reporting to no one.
- He exercised high-level control, making 'big picture' merchandising decisions, determining whether to open or close stores, and handling the company's banking and real estate.
- Catsimatidis hired and promoted managerial employees, including a store manager and the director of payroll and human resources.
- He regularly visited individual stores, commented on merchandising displays, and sometimes gave instructions to store managers.
- Catsimatidis personally addressed customer complaints, forwarding them to responsible parties with comments like 'What the hell is happening?' to ensure problems were fixed.
- He had ultimate financial control over Gristede's, monitoring payroll as a line item on profit and loss statements, and his electronic signature appeared on employee paychecks.
Procedural Posture:
- Current and former Gristede's employees sued Gristede's corporate entities and John Catsimatidis in the U.S. District Court for the Southern District of New York for wage-and-hour violations.
- The district court certified a plaintiff class.
- The district court granted summary judgment for the plaintiffs against the corporate defendants on their FLSA and NYLL claims.
- The parties entered into a settlement agreement, which the corporate defendants later defaulted on.
- Plaintiffs moved for partial summary judgment in the same district court, seeking to hold Catsimatidis personally liable as an 'employer'.
- The district court granted the motion, finding Catsimatidis was an 'employer' under the FLSA and personally liable for damages.
- John Catsimatidis, as appellant, appealed the district court's grant of partial summary judgment to the U.S. Court of Appeals for the Second Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a high-level corporate officer, such as a CEO and owner, qualify as an 'employer' personally liable for damages under the Fair Labor Standards Act (FLSA) when he possesses and exercises significant operational control over the company, including hiring managers and maintaining ultimate financial control, even if he does not directly supervise the plaintiff employees?
Opinions:
Majority - Wesley, Circuit Judge
Yes. A high-level corporate officer is an 'employer' under the FLSA where the totality of the circumstances demonstrates sufficient operational control over the enterprise in a manner that affects the conditions of employment. The court applied the 'economic reality' test, guided by the four factors from Carter v. Dutchess Community College. The court found Catsimatidis satisfied the first factor (power to hire and fire) by hiring managerial employees and the third factor (determining rate and method of payment) through his ultimate financial control and the presence of his signature on paychecks. Beyond these factors, Catsimatidis's overall involvement—including visiting stores, directing merchandising, addressing customer complaints, and being the ultimate decision-maker—showed he was not merely a symbolic figurehead but had functional control over the plaintiffs' employment. The FLSA's broad remedial purpose supports holding individuals who profit from labor violations liable, even if they were not personally complicit in those violations.
Analysis:
This decision solidifies the standard for individual liability for high-level corporate officers under the FLSA in the Second Circuit. It clarifies that 'operational control' does not require day-to-day supervision of the affected employees or direct involvement in the specific FLSA violations. The ruling emphasizes that ultimate authority, financial control, and active involvement in the company's operations are sufficient to establish 'employer' status. This precedent broadens the scope of personal liability for owners and top executives, making it more difficult for them to shield themselves behind the corporate form in wage-and-hour disputes.
