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Replaced opinion relies on ‘tickets’ (not uniforms) used by valets as ‘materials’ to find FLSA enterprise coverage

By Ronald Miller, J.D.

In a supplemental opinion on rehearing, the Eleventh Circuit withdrew its earlier opinion of June 29, 2018, and replaced it with a new opinion. Still, the appeals court concluded that an employer was not entitled to summary judgment on the issue of “enterprise” coverage. Rather, based on the evidence, it concluded that a jury could find that the valet tickets used by the employees in their work constituted “materials” under the FLSA’s “handling clause,” thereby providing “enterprise” coverage within the meaning of Section 203(s)(1)(A)(i) of the FLSA. A jury could find that the valet tickets, rather than being incidental, were necessary to the employer to ensure inventory control in its provision of commercial parking services (Asalde v. First Class Parking Systems LLC aka 1st Class Valet Service, August 3, 2018, Jordan, A.).

The valets brought a putative collective action under the minimum-wage and overtime provisions of the FLSA. They asserted, in part, that their employment was covered by the “materials” prong of the “handling clause” under the enterprise coverage provision in the Act. The “handling clause” provides that an entity is subject to “enterprise coverage” if it “has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for interstate or international commerce by any person.”

Goods and materials. The employer moved for summary judgment, asserting, in part, that the employees could not provide evidence that any employees handled any qualifying “goods or materials.” The district court agreed, concluding the cars parked by the employees were not “materials” under the FLSA. It also ruled that “the fact that the employees handled walkie-talkies, pens, uniforms, valet tickets and other items that originated out of state” did not change the “intrastate nature of their work” because the employer was the ultimate consumer of those goods.

“Goods” and “materials” are distinct (not overlapping) categories; an object can be a “good” in certain contexts and a “material” in others, the appeals court explained. The term “goods” is defined broadly in the FLSA. The term “materials” is not defined at all. However, in Polycarpe v E & S Landscaping Serv, Inc, the Eleventh Circuit concluded that “materials” are “tools or other articles necessary for doing or making something.”

“Materials” test. The appeals court set out a test for determining whether an item constitutes a “material” under the FLSA: First, whether an item counts as “materials” depends on whether the item is serving as a material in context. Second, for the item to count as “materials” it must have a significant connection with the employer’s commercial activity. Applying the Polycarpe test, the Eleventh Circuit ruled in Rodriguez v. Gold Star, Inc., that cars parked by valets were not “materials” because they are an item on which a service is performed rather than the means of performing the service.

The district court’s ruling with respect to the vehicles was correct. Thus, the appeals court turned to consider the items used by the valets in performing their work. The employees argued that walkie-talkies, pens, uniforms, valet tickets and other items they used in their jobs were “materials.” Here, the appeals court held that there were triable issues of fact sufficient to defeat the employer’s motion for summary judgment on the issue of “enterprise” coverage. It rested its decision on the valet tickets that the employees used in their work.

Valet tickets as “materials.” At each location where the employer provided commercial valet parking, its employees used numbered valet tickets (purchased and provided by the employer) to keep track of cars they parked for customers. The appeals court concluded that a jury could find that the valet tickets used by the employer in providing commercial parking services constituted “materials” within the meaning of the FLSA’s “handling clause.” First, looking at the matter contextually, a jury could find that the tickets were “articles necessary for doing… something”—providing the commercial service of parking cars. Second, a jury could find that the valet tickets have a “significant connection” with the employer’s commercial activity.

Enterprise coverage. To show that “enterprise” coverage exists, the employees must also establish that the “materials” at issue “have been moved in or produced for interstate or international commerce by any person.” The district court appeared to accept that the evidence at summary judgment allowed a jury to find that the employees met this requirement with respect to a number of items, including the valet tickets. Here, the appeals court concluded that its review of the record confirmed there was sufficient evidence for a jury to find that the valet tickets moved in or were produced for interstate commerce.

Although the employer asserted that the valet tickets were manufactured in Florida and purchased in Florida, the employees presented in evidence a ticket that stated “PRINTED IN USA,” as well as “SOUTHLAND PRINTING, SHREVEPORT, LA.” Viewing the evidence in the light most favorable to the employees, the printing indicated that the valet ticket was manufactured in Shreveport, LA. Courts agree that a label or inscription reflecting an item’s place of manufacture is admissible evidence that generally suffices to support a jury finding as to origin. Thus, the appeals court concluded that the valet ticket was sufficient to create a jury question on movement in interstate commerce.

Accordingly, the employer was not entitled to summary judgment on the issue of “enterprise” coverage, because a jury could find that the valet tickets used by the employer constituted “materials” within the meaning of Section 203(s)(1)(A)(i). The judgment of the district court was affirmed in part, reversed in part, and remanded.