John Catsimatidis Held Individually Liable For FLSA Wage Violations

The Second Circuit recently held, in Irizarry v. Catsimatidis, that John Catsimatidis – the chairman, president, and CEO of defendant Gristede’s Foods, Inc. (and, of course, New York City mayoral candidate) – was an “employer” within the meaning of the Fair Labor Standards Act (FLSA) and was hence individually liable for damages in a lawsuit to recover unpaid wages.

Notably, the court reached this conclusion notwithstanding the absence of evidence that Catsimatidis was responsible for the FLSA violations, or even that he directly managed or dealt with the individual plaintiffs.

Applying the standards set forth in Carter v. Dutchess Community College, 735 F.2d 8 (2d Cir. 1984) and Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) for determining “employer” status, the court reasoned:

There is no question that Gristede’s was the plaintiffs’ employer, and no question that Catsimatidis had functional control over the enterprise as a whole. His involvement in the company’s daily operations merits far more than the symbolic or ceremonial characterization he urges us to apply. Unlike the defendant in [another case], who visited his company’s facilities only a few times a year, Catsimatidis was active in running Gristede’s, including contact with individual stores, employees, vendors, and customers. Catsimatidis dealt with customer complaints, in-store displays and merchandising, and the promotion of store personnel. That he may have done so “only occasionally” does not mean that these actions are irrelevant … especially when considered in the context of his overall control of the company.

Although there is no evidence that he was responsible for the FLSA violations — or that he ever directly managed or otherwise interacted with the plaintiffs in this case — Catsimatidis satisfied two of the Carter factors[]: the hiring of managerial employees, and overall financial control of the company. … This involvement meant that Catsimatidis possessed, and exercised, “operational control” over the plaintiffs’ employment in much more than a “but-for” sense. His decisions affected not only Gristede’s bottom line but individual stores, and the personnel and products therein.

We recognize that the facts here make for a close case, but we are guided by the principles behind the liquidated damages provision of the FLSA in resolving the impact of the totality of the circumstances described herein. The Supreme Court has noted that liquidated damages as authorized by the FLSA are not penalties but rather compensatory damages for the retention of a workman’s pay which might result in damages too obscure and difficult of proof for estimate other than by liquidated damages. …

[T]he purpose of the FLSA is not to punish an employer but to remunerate aggrieved employees. Considered in the context of the expansive interpretation that courts have afforded the statute, this policy reasoning particularly counsels in favor of finding that Catsimatidis was an “employer” given the failure of the settlement between the corporate defendants and the plaintiff employees. Catsimatidis was not personally responsible for the FLSA violations that led to this lawsuit, but he nonetheless profited from them. And although the Gristede’s Supermarkets business entity appears to have been larger than other businesses discussed in the cases that have considered this question, the company was not so large as to render Catsimatidis’s involvement a legal fiction. The company is not public. Its stores, in which Catsimatidis actively exercised his influence, are all in the New York City metropolitan area, as are the company headquarters, where he worked almost daily. In sum, as the district court concluded, it is pellucidly clear that he is the one person who is in charge of the corporate defendant.

Although we must be mindful, when considering an individual defendant, to ascertain that the individual was engaged in the culpable company’s affairs to a degree that it is logical to find him liable to plaintiff employees, we conclude that this standard has been met here. Catsimatidis’s actions and responsibilities — particularly as demonstrated by his active exercise of overall control over the company, his ultimate responsibility for the plaintiffs’ wages, his supervision of managerial employees, and his actions in individual stores — demonstrate that he was an “employer” for purposes of the FLSA. 

The court therefore affirmed summary judgment in plaintiffs’ favor as to the FLSA “employer” issue.  However, it vacated the grant of summary judgment in plaintiffs’ favor on the New York Labor Law claims, and remanded that issue to the district court.

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