N.D.Ind.: Employee Of Used Car Business, Who Purchased Cars From Other States At Auto Auctions, Subject To Individual Coverage Of FLSA

Kelley v. Stevens Auto Sales

Plaintiff sued Defendants alleging violations of the Fair Labor Standards Act, (FLSA) 29 U.S.C. § 201, et seq., and several Indiana statutes. This matter is before the Court on cross motions for summary judgment. Of interest, as discussed here, the Defendants argued that neither they, nor Plaintiff, individually was subject to FLSA coverage. The Court denied Defendants’ Motion, finding that Plaintiff could be entitled to individual coverage based on his duties while working for Defendants.

The following facts were relevant to the Court’s inquiry on the coverage issue:

“Defendant Dave Stevens is the president of Defendant Dave Stevens Auto Sales, Inc. (SAS). In 2007, SAS was in the business of selling used cars in Peru, Indiana. Plaintiff worked for SAS for part of that year as its only employee. His duties included traveling to Fort Wayne, Indiana, to buy used cars at auction establishments and reselling them to customers at the SAS sales lot in Peru. According to Defendant Stevens, some of the vehicles SAS purchased at the auctions were titled to owners from states other than Indiana. Stevens was Plaintiff’s boss; he determined how Plaintiff was compensated.”

Denying Defendants’ Motion as to the individual coverage issue the Court stated:

“The FLSA requires employers to pay a minimum wage if the employer is a covered enterprise or the employee is a covered individual within the meaning of the Act. 29 U.S.C. § 206(a). A covered enterprise is one that (1) “has employees engaged in commerce or the production of goods for commerce or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person” and (2) “is an enterprise whose annual gross volume of sales made or business done is not less than $500,000.” 29 U.S.C. § 203(s)(1)(A) (i-ii). If enterprise coverage applies, all of the enterprise’s employees are protected under the FLSA, even if they are not personally involved in interstate commerce. See Boekemeier v. Fourth Universalist Soc’y in the City of New York, 86 F.Supp.2d 280, 284 (S.D.N.Y.2000). The FLSA also protects individual employees who are “engaged in commerce or in the production of goods for commerce,” 29 U.S.C. § 207(a)(1), regardless of whether their employers qualify as covered enterprises. See, e.g., Marshall v. Whitehead, 463 F.Supp. 1329, 1341 (M.D.Fla.1978).

Plaintiff concedes that SAS is not a covered enterprise, but maintains that he qualifies for individual coverage because he was engaged in interstate commerce when he worked for SAS. To determine whether an employee is engaged in interstate commerce in this context, the focus is on what the employee actually does. It is not enough that the employee’s activities affect or indirectly relate to interstate commerce: they must be “actually in or so clearly related to the movement of the commerce as to be a part of it.”   McLeod v. Threlkeld, 319 U.S. 491, 497 (1943). For example, handlers of goods for a wholesaler who moves them interstate are engaged in interstate commerce, while those employees who handle goods after acquisition by a merchant for local distribution are not. Id. At 494, (citin g Walling v. Jacksonville Paper Co., 317 U.S. 564 (1943); Higgins v. Carr Bros. Co., 317 U.S. 572 (1942)). An interruption in the movement of goods that have traveled interstate does not remove them from interstate commerce simply because they do not again cross state lines; they remain in interstate commerce until they reach the customers for whom they are intended. Jacksonville Paper Co., 317 U.S. at 335.

Neither party has directed the Court to cases in any jurisdiction with facts similar to those presented here, nor has the Court’s independent research uncovered any. However, applying the general principals discussed above, the Court must deny Defendants’ motion for summary judgment. The Court concludes that buying vehicles titled to out-of-state owners at auction, for resale to the ultimate consumer, constitutes engaging in interstate commerce, even if the vehicles did not cross a state line again after the purchase. Plaintiff has designated enough evidence that he engaged in interstate commerce as an employee of SAS to create a question of fact for trial. Moreover, the Court must also deny Plaintiff’s motion for summary judgment on the issue of whether he is a covered employee, because the evidence does not establish as a matter of law that at all times relevant to his claim he was engaged in interstate commerce.”