Mederos v. Ace Protection - Order Granting Motion for Summary Judgment

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

Case No. 09-22842-Civ-TORRES

CONSENT CASE

JULIO CESAR MEDEROS,

Plaintiff,

vs.

YOLANDA GARCIA d/b/a ACE PROTECTION AGENCY,TOP GUARD SECURITY PROTECTION SERVICES, INC., and YOLANDA GARCIA,

Defendants.__________________________________/

ORDER ON DEFENDANT’S MOTIONS FOR FINAL SUMMARY JUDGMENT AND RULE 11 SANCTIONS

This matter is before the Court on Defendant Yolanda Garcia d/b/a Ace

Protection Agency’s Motion for Final Summary Judgment [D.E. 24] and Motion for

Rule 11 Sanctions [D.E. 27]. The Court has reviewed the motions, responses, reply,

relevant authority, supplemental filings and the record evidence submitted in support

for or in opposition to the motions. Based upon a thorough review of the record, we

find that there are no genuine issues of material fact to preclude final summary

judgment. For the following reasons, the final summary judgment motion will be

GRANTED. But, we find that Plaintiff’s claim is not objectively frivolous and,

therefore, the Rule 11 Sanctions motion will be DENIED.

Case 1:09-cv-22842-EGT Document 53 Entered on FLSD Docket 03/18/2011 Page 1 of 24

For convenience’s sake, we will refer to Garcia and Ace Protection1

interchangeably. Nevertheless, these monikers each refer equally to movant YolandaGarcia d/b/a Ace Protection Agency.

It is undisputed that Ace Protection does not manufacture goods. [D.E. 25 ¶ 1;2

D.E. 46-1 ¶ 1].

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I. BACKGROUND

Defendant Yolanda Garcia d/b/a Ace Protection Agency (“Garcia”) is the owner

and sole proprietor of Ace Protection Agency (“Ace Protection”) located in Miami,

Florida. She started Ace Protection in 2007 as a service-oriented company providing1

unarmed security services for residential and commercial areas. In its first year, Ace2

Protection generated no revenue. During 2008 and 2009, the company’s gross revenue

was $108,292.00 and $304,292.06, respectively. [D.E. 25-1 at ¶¶ 9-11]. It is undisputed

that Ace Protection never earned gross revenue greater than $500,000.00 during the

relevant time period. [D.E. 46-1 at ¶ 4].

Plaintiff Julie Cesar Mederos (“Mederos”) was a security guard who worked for

Ace Protection from June 2008 through July 2009. [D.E. 30 at 2]. While working for

Ace Protection, Mederos provided security services primarily at Royal Palm

Condominiums (“Royal Palm”). Mederos also provided security services for other Ace

Protection contracts and for Garcia’s mother’s company Top Guard Security Protection

Services, Inc. (“Top Guard”). However, the record is undisputed that Mederos spent

the majority of his time at Royal Palm. [D.E. 25-1 at 26].


Marta Navarro is the director and executive director of Royal Palm. [D.E. 46-2,3

at 20].

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Royal Palm is owned by a single nonprofit corporation that operates Royal Palm

to provide housing for the elderly. [D.E. 46-2, Marta Navarro Deposition at 9]. Royal3

Palm is financed, at least in part, through federal funding from the U.S. Department

of Housing and Urban Development (“HUD”). Royal Palm qualifies for HUD funding

because its residents are at least sixty two (62) years old and earn income no greater

than 50% of the median for their area. Id. Generally speaking, each resident pays rent

equivalent to 30% of their monthly income and then HUD subsidizes the remainder.

Id. at 9-10. HUD also grants nonprofit organizations financing to construct these

buildings. Then, assuming the organization operates the building in compliance with

HUD regulations, the grant is forgiven after a set period of time. Id. at 26. Royal Palm

is a recently constructed building financed through a HUD grant. Id. at 29.

At Royal Palm, Mederos was responsible for keeping unauthorized individuals

from entering the building and to report any suspicious activities. He would also

intermittently inspect areas within the building to ensure the safety of the residents.

However, his primary duty was to check to see who would enter the building and

therefore the majority of his time was spent at this post outside the main entrance.

[D.E. 25-1 at 13-14].

On September 23, 2009, Mederos filed this action against Garcia to recover

overtime wages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207(a)(1).

Thereafter, on May 10, 2010, he filed an amended complaint adding Top Guard


Yolanda [E.] Garcia and Top Guard failed to respond to the amended complaint.4

The clerk entered a Default against these defendants on June 25, 2010. [D.E. 42, 43].

4

Security Protection Services, Inc. (“Top Guard”) and Yolanda [E.] Garcia (Garcia’s

mother) asserting that, in effect, these defendants and Ace Protection (collectively

“Defendants”) jointly employed Mederos and failed to compensate him for overtime

wages. Like his complaint, Mederos’s amended complaint alleges that he worked an4

average of 70 hours per week for Defendants during his tenure and received an initial

hourly rate of $7.00 per hour and then (according to the amended complaint) received

a raise to $7.25 per hour in February 2009. However, Mederos alleges that he was

never paid overtime wages as required by the FLSA for any of the hours that he

worked in excess of forty hours weekly. Mederos also alleges that the Defendants

“willfully and intentionally refused to pay [Mederos] the overtime wages” for which he

claims entitlement to liquidated damages plus an award of reasonable attorneys fees,

court costs and interest. [D.E. 1, 30].

Ace Protection seeks final summary judgment arguing that Mederos cannot

invoke FLSA jurisdiction on several grounds, including: 1) Ace Protection is a local,

wholly intrastate, company that earned a gross revenue of less than $500,000.00 at all

times applicable and, therefore, it is not an “enterprise;” 2) Mederos never “engaged in

commerce” or the “production of goods for commerce” and thus no individual coverage

exists; and, 3) Ace Protection and Top Guard are not joint employers for purposes of

combining their gross revenues to meet the $500,000.00 threshold.


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Mederos opposes this motion arguing that “the entities that [Mederos] guarded

are covered under the FLSA, therefore [Mederos] who guarded said facilities is covered

under the FLSA.” [D.E. 46 at 2]. Notably, Mederos’s response makes no argument that

Ace Protection is itself an enterprise “engaged in commerce” or that it accomplished

gross revenue greater than $500,000.00. Moreover, Mederos makes no argument that

his services as a local unarmed security guard, in and of itself, qualify as “engaged in

commerce” or the “production of goods for commence” to trigger individual coverage.

Rather, Mederos contends that Ace Protection is liable because Mederos guarded Royal

Palm, a purported covered “enterprise” engaged in commerce. As such, Mederos is

afforded individual coverage under the statute and Ace Protection is liable as his

employer. Additionally, notwithstanding Mederos’s lack of evidence supporting that

Ace Protection is an “enterprise,” he argues that Ace Protection and Top Guard are

joint employers to satisfy the $500,000.00 prong of 29 U.S.C. § 203(s)(1)(A).

II. ANALYSIS

A. Summary Judgment Standard

“The court shall grant summary judgment if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgement as a

matter of law.” Fed. R. Civ. P. 56(a). A party asserting that a fact cannot be or is

genuinely disputed must support the assertion by “citing to particular parts of

materials in the record, including depositions, documents, electronically stored

information, affidavits or declarations, stipulations (including those made for purposes

of the motion only), admissions, interrogatory answers or other materials; or showing


6

that materials cited do not establish the absence or presence of a genuine dispute, or

that an adverse party cannot produce admissible evidence to support the fact.” Id. at

56(c)(1). “In determining whether summary judgment is appropriate, the facts and

inferences from the facts are viewed in the light most favorable to the non-moving

party, and the burden is placed on the moving party to establish both the absence of

a genuine material fact and that it is entitled to judgment as a matter of law.”

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).

In opposing a motion for summary judgment, the non-moving party may not rely

solely on the pleadings, but must show by affidavits, depositions, answers to

interrogatories, and admissions that specific facts exist demonstrating a genuine issue

for trial. See Fed. R. Civ. P. 56(c), (e); see also Celotex Corp. v. Catrett, 477 U.S. 317,

323-24 (1986); Gonzalez v. Lee County Hous. Auth, 161 F.3d 1290, 1294 (11 Cir. 1998).th

Further, the existence of a “scintilla” of evidence in support of the non-movant’s

position is insufficient; there must be evidence on which the jury could reasonably find

for the non-movant. Andersen v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

Likewise, a court need not permit a case to go to a jury when the inferences that are

drawn from the evidence, and upon which the non-movant relies, are “implausible.”

Matsushita, 475 U.S. at 592-94; Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 743

(11 Cir. 1996). th


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B. Governing FLSA Principles

The FLSA requires an employer to pay one-and-one-half times the regular rate

of pay to each employee for all time worked in excess of forty hours in a week, so long

as that employee is “engaged in commerce or in the production of goods for commerce,

or is employed in an enterprise engaged in commerce or the production of goods for

commerce.” 29 U.S.C. § 207(a). Put differently, an employee may establish a claim for

overtime compensation under the FLSA by establishing either individual or enterprise

coverage. Scott v. K.W. Max Invs., Inc., 256 F. App’x 244, 247 (11th Cir. 2007).

To establish individual coverage a plaintiff must demonstrate that he was “(1)

engaged in commerce or (2) engaged in the production of goods for commerce.” Thorne

v. All Restoration Servs., Inc., 448 F.3d 1264, 1266 (11th Cir. 2006); 29 U.S.C. § 207

(a)(1). The United States Supreme Court has established that the phrase “engaged in

commerce” under the Act should be “construed liberally to apply to the furthest reaches

consistent with congressional action.” Mitchell v. Lublin, McGaughy & Assocs., 358

U.S. 207, 211 (1959). In making this determination, courts must focus on “the

activities of the employee[ ] and not on the business of the employer.” Id. at 211; see

also Johnston v. Spacefone Corp., 706 F.2d 1178, 1180 (11th Cir. 1983). However,

whether an employee is “engaged in commerce” under the FLSA is “whether the work

is so directly and vitally related to the functioning of an instrumentality or facility of

interstate commerce to be, in practical effect, a part of it, rather than isolated, local

activity.” Mitchell v. C.W. Wollmer & Co., 349 U.S. 427, 429 (1955).


8

To establish enterprise coverage, a plaintiff must demonstrate that his employer

is an enterprise “engaged in commerce or the production of goods for commerce.” See

29 U.S.C. § 207(a)(1); Thorne, 448 F.3d at 1266. The FLSA provides, in pertinent part,

that a covered enterprise is one that:

(A)(I) has employees engaged in commerce or in theproduction of goods for commerce, or that has employeeshandling, selling, or otherwise working on goods ormaterials that have been moved in or produced forcommerce by any person; and (ii) is an enterprise whoseannual gross volume of sales made or business done is notless than $500,000 (exclusive of excise taxes at the retaillevel that are separately stated);

(B) is engaged in the operation of a hospital, an institutionprimarily engaged in the care of the sick, the aged, or thementally ill or defective who reside on the premises of suchinstitution, ... ;

(C) is an activity of a public agency.

29 U.S.C. § 203(s)(1).

In addition, “an enterprise ... will be considered to have employees engaged in

commerce or in the production of goods for commerce, including the handling, selling

or otherwise working on goods that have been moved in or produced for commerce by

any person, if ... it regularly and recurrently has at least two or more employees

engaged in such activities. On the other hand, it is plain that an enterprise that has

employees engaged in such activities only in isolated or sporadic occasions, will not

meet this condition. See Scott, 256 F. App’x at 248 (citing C.F.R. § 779.238 (1970))

(emphasis added).


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D. Ace Protection is not an Enterprise under 29 U.S.C. § 203(s)(1)(A)

As noted above, the FLSA delineates two prongs that an employee must satisfy

to establish “enterprise” coverage. In short, the employer must engage in interstate

commerce and earn gross revenue greater than $500,000. In her motion, Garcia argues

there is no genuine dispute of material fact relating to either prong and that Ace

Protection is not an “enterprise” under the FLSA. Her motion sets forth the following

supported facts: 1) Ace Protection’s “sole function was to provide unarmed security

services” to various properties and buildings in Miami-Dade and Broward counties

[D.E. 24 at 6; D.E. 25 at ¶ 1; D.E. 25-1,Garcia Aff. ¶¶ 4,12]; 2) Ace Protection “does not

manufacture any goods” [D.E. 25-1,Garcia Aff. ¶ 4]; and, 3) Ace Protection’s employees

do not handle, sell or otherwise work on goods or materials that have been moved in

or that have been produced for commerce by any person on a regular or recurrent basis”

[D.E. 25 at ¶ 11; D.E. 25-1,Garcia Aff. ¶ 13].

In response, however, Mederos fails to dispute these supported facts or otherwise

fails to demonstrate a genuine factual dispute for trial. In fact, in his full response,

Mederos simply admits Ace Protection is a local company without interstate contacts

[D.E.46-1 at ¶1] and “that Ace [Protection] does not have contracts with out of state

businesses.” [D.E. 46-1 at ¶11]. But by doing so, Mederos effectively admits the

remaining factual assertions or, put differently, acquiesces to them through silence.

Regardless, Mederos’s failure to “show by affidavits, depositions, answers to

interrogatories, and admissions that specific facts exist demonstrating a genuine issue

for trial” warrants our conclusion that no such dispute to a genuine material fact


10

exists. See Fed. R. Civ. P. 56(c), (e). Moreover, [a]ll material facts set forth in the

movant’s statement filed and supported by the record will be deemed admitted unless

controverted by the opposing party’s statement ... .” S.D. Fla. L.R. 7.5 (d); see also Head

v. Cornerstone Residential Management, Inc., No. 05-80280-CIV, 2010 WL 3781288, at

*2 n. 2 (S.D. Fla. Sept. 22, 2010) (finding that under this local rule, “[u]nless a

particular undisputed fact from Defendants is directly addressed by Plaintiffs,

Defendants’ statements which are supported by evidence in the record, are deemed

admitted.”)

Thus, upon finding that Mederos fails to controvert Ace Protection’s supported

evidence, we conclude that Ace Protection: 1) is a local company providing services only

to local businesses; 2) does not manufacture goods; and, 3) does not have employees

who handle, sell, or otherwise work on goods or materials that have been moved in or

that have been produced for commerce by any person on a regular or recurrent basis.

Therefore, Mederos has failed to demonstrate a dispute of material fact relating to the

first “enterprise” prong under the FLSA. Notwithstanding this result, our conclusion

finds additional support in analogous case law. See Velasquez v. All Florida Security

Corp., 07-23159-CIV, 2008, WL 5232916 (S.D. Fla. Dec. 15, 2008) (holding a wholly

local security company that does not produce or manufacture goods and whose

employees do not handle or sell goods is not subject to enterprise coverage).

Turning to the second prong, it is likewise undisputed that Ace Protection

earned gross revenue less than $500,000 for all times relevant hereto. See [D.E. 25 at


11

¶ 4; D.E. 46-1 at ¶4]. Therefore, Mederos cannot establish that Ace Protection satisfies

the second “enterprise” prong under the FLSA. Id. Based on the evidence, we conclude

that there is an insufficient factual basis in the record for the trial of fact to determine

that Ace Protection is an “enterprise” subject to liability under the FLSA.

E. Individual Coverage

After effectively conceding that Ace Protection is not an “enterprise”, Mederos

focuses his response on the existence of individual coverage. The crux of Mederos’s

argument is that Ace Protection assigned him to guard Royal Palm a purported covered

“enterprise” and, therefore, Ace Protection is subject to liability under the FLSA

through the individual coverage avenue. In the past, courts have accepted this

argument but, unlike here, only when the employee guarded his employer’s building.

See Russell Co., Inc. v. McComb, 187 F.2d 524, 524-25 (5th Cir. 1951) (night watchman

guarding his employer’s wholesale grocery company, including the loading platform, the

interstate shipments loaded in freight cars and trucks, as well as a warehouse building

in which a percentage of coffee and rice was prepared for interstate shipment were

sufficient to bring the watchman within coverage of the FLSA); Fernandez v.

Silverstone Investments, Inc., No. 04-21392-Civ-Graham, 2005 U.S. Dist. LEXIS 45311,

at *9-10 (S.D. Fla. Sept. 7, 2005) (court concluded employee’s guarding of his employer’s

building had sufficient interstate character to bring him within the coverage of the

FLSA). However, when Judge King considered a factually analogous case, he flatly

rejected this argument. See Velasquez, 2008 WL 5232916, at *1-2 (security guard cases


12

where employees actually guard their employer’s buildings or premises are inapposite

to a case where an employee works for a security company providing guards to local

businesses).

Notwithstanding the degree of separation and Velasquez, Mederos pushes

forward with his position. To buttress his argument, Mederos relies on case law

suggesting that it should make no difference whether an employee guards his

employer’s building or his employer’s client’s building as long as the subject of his

guard is within the FLSA. See Rodilla v. TFC-RB, LLC, No. 08-21352-CIV-AMS, 2009

WL 3720892, at *8 (S.D. Fla. Nov. 4, 2009) (citing Kirschbaum v. Walling, 316 U.S. 517

(1942); Walling v. Jacksonville Papers Co., 317 U.S. 564 (1943)). In light of this, and

acknowledging that Velasquez (while indeed negative) is not binding precedent, we will

turn to the substance of Mederos’s argument.

To establish that Royal Palm is an “enterprise,” Mederos focuses on § 203

(s)(1)(C) and (B) arguing that he guarded either: 1) a public agency; or, 2) an institution

primarily engaged in the care of the aged. After careful review of the record, we

disagree with Mederos and find that Royal Palm is not a covered enterprise under

either subsection.

1. Public Agency

Mederos asserts that Royal Palm is a “public agency” because “the creation of

these apartments were solely funded by HUD which is a federally funded program and

paid directly to the building and not through the individual tenants, these enterprises


While Mederos refers to the “buildings” and “enterprises” here in the plural, we5

are solely concerned with a single enterprise, Royal Palm, where Mederos admittedlyspent the vast majority of his time.

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running said buildings must be construed to be enterprises covered under the FLSA

as these buildings are activities by public agencies as defined by 29 U.S.C. 203

(s)(1)(C).” [D.E. 46 at 6]. Mederos further supports his argument on the basis that5

Royal Palm must comply with certain HUD regulations to receive its federal funding.

Mederos’s “public agency” argument fails because he misstates the relevant facts and,

tellingly, neither includes the FLSA’s definition of “public agency” nor cites a single

case to support his position.

As noted above, Royal Palm provides housing for the elderly. The salient facts

relating to Royal Palm are undisputed: 1) it receives funding partially from HUD and

partially from its residents; 2) it houses residents who are at least 62 years old and

who are considered “low-income” residents; 3) to maintain its financing, it is inspected

by HUD once every two or three years; and, 4) it received a HUD grant to construct the

building. As explained below, those facts demonstrate that, while Royal Palm receives

some federal funding and influence from HUD, it is not considered a “public agency”

or an activity of a “public agency” under the FLSA.

As a starting point, the FLSA defines a “public agency” as “the Government of

the United States; the government of a State or political subdivision thereof; any

agency of the United States (including the United States Postal Service and Postal

Rate Commission), a State, or a political subdivision of a state; or any interstate


14

governmental agency.” 29 U.S.C. § 203(x). There is no question that Royal Palm is

none of these governmental or political entities.

Mederos asserts, however, that as Royal Palm receives HUD funding and

complies with certain HUD regulations these facts somehow transform it into a public

agency. These conclusory and unsupported arguments are meritless. Indeed, it is

settled that a nonprofit organization that receives federal funding or must comply with

government regulations to receive said funding does not turn into a public agency. See

Williams v. Eastside Mental Health Center, Inc., 669 F.2d 671, 679 (11th Cir. 1982)

(“we find it difficult to distinguish [nonprofit] Eastside from a variety of private

corporations and professional individuals that are subject to similar state control

pursuant to licencing statutes. Such controls are normal means by which states

effectuate public policies through the regulation of private entities. These licensing

controls do not, however, somehow magically transform the fundamental nature of the

licensed entity into a public agency or official.”); see also Powell v. Tucson Air Museum

Foundation of Pima County, 771 F.2d 1309, 1312 (9th Cir. 1985) (court rejected the

argument that a nonprofit corporation that was contractually subject to certain state

government regulations was converted into a public agency for FLSA purposes); Briggs

v. Chesapeake Volunteers in Youth Services, Inc., 68 F. Supp. 2d 711, 715 (E.D. Va.

1999) (court rejected the argument that receipt of governmental funding converts a

nonprofit organization into public agency for FLSA purposes).


15

Thus, it is abundantly clear that the receipt of state or federal funding alone is

insufficient to determine an organization is a “public agency” under the FLSA. Rather,

courts look to several factors when determining whether a private party, such as a not-

for-profit organization, is a public agency, including: 1) “whether the entity is directly

responsible to public officials or to the general public,” and, 2) “whether the parties'

contracts designate[ ]them as independent contractors, not state agencies... .” Powell,

771 F.2d at 1312.

Here, Mederos makes no argument - nor sets forth any evidence - to suggest that

Royal Palm is directly responsible to a public official or the general public. Further,

his argument is devoid of any evidence (or even an inference) to suggest that Royal

Palm is designated as a governmental agency in its contracts. To the contrary, the

record is undisputed that Royal Palm is controlled by a board of directors and is

otherwise an independently owned and operated nonprofit corporation. See [DE 46-2

at 6-7]. Mederos thus again fails to create a genuine issue of fact to support his

argument that Royal Palm is a “public agency” or an activity of a “public agency”

pursuant to 29 U.S.C. § 203 (s)(1)(C).

2. Primarily Engaged in the Care of the Aged

Mederos next asserts that Royal Palm “is engaged in the operation of ... an

institute primarily engaged in the care of the sick, the aged, or the mentally ill or

defective who reside on the premises of such an institution....” See 29 U.S.C. § 203

(s)(1)(B). In support of this argument, Mederos latches onto the requirement that each

Royal Palm occupant must be at least 62 years old. While this is true, the fact alone


16

is insufficient to satisfy this statute because, importantly, the operative works are

“primarily” and “care” rather than simply “aged.” See Dole v. Odd Fellows Home

Endowment Board, 912 F.2d 689 (4th Cir. 1990) (court found defendant was an

“enterprise” because by providing services it was clear that defendant was primarily

engaged in caring for the aged and not a “mere boarding housing.”) (emphasis added).

Indeed, several federal court cases support the conclusion that § 203(s)(1)(B) applies

to institutions whose primary focus is on providing care to the aged (or other applicable

groups) rather than, as is our case, merely providing housing.

For instance, in Kitchings v. The Florida United Methodist Children’s Home,

Inc., 393 F. Supp. 2d 1282 (M.D. Fla. 2005), the court examined whether this statute

applied to a nonprofit employer that provided residential care and treatment to

children who also received mental health-related services. In Kitchings, the court held

that the employer operated as a “region-based organization that takes a holistic

approach to working with [r]esidents in a variety of ways, and which provides many

more services than merely psychological or psychiatrist treatment.” Id. at 1297

(emphasis added). Thus, the court concluded that the institution was not primarily

engaged in the care of the mentally ill as those services were incidental to its primary

purpose of caring for children. Id. at 1296-97.

Likewise, in Brennan v. Harrison County, Miss., 505 F.2d 901 (5th Cir. 1975),

the court declined to extend FLSA coverage for employees at the Harrison County

Home for the Poor concluding that the home was primarily engaged in providing


17

residences to the indigent, not the aged or ill. Id. at 903. While Brennan notes that

many residents were old or ill, it found this was an incidental, not a primary factor. Id.

at 904.

Conversely, where the relevant facts demonstrate that an institution is

primarily engaged in the care of the sick, aged, mentally ill or defective, courts find the

FLSA applies. See, e.g., Marshall v. Sunshine & Leisure, Inc., 496 F. Supp. 354, 356-

58 (M.D. Fla. 1980) (rest home was an institution primarily engaged in the care of the

aged under § 203(s)(1)(B) where all residents of the home were aged, the services it

provided constituted care for the aged, and the reasons given for choosing the home

arose out of the frailties associated with persons of advanced aged). Importantly, in

Marshall, the court recognized that the employees provided various services to the

residents including: assistance with walking and bathing; handling laundry

obligations; making doctor and beauty appointments; attending to personal needs;

giving haircuts; preparing food; providing maid services; house cleaning; and, assisting

with personal hygiene. Id. at 365.

Unlike Marshall, Royal Palm is more akin to Brennan and, to a lesser degree,

Kitchings, because Royal Palm is primarily engaged in providing a residence for

persons who are aged, nothing more. Regardless, as those cases make clear, this issue

will turn on the relevant facts relating to Royal Palm.

To support his position, Mederos testified: “I observed several nurses during

every morning enter at [Royal Palm]. Once a week, I observed another nurse enter the


18

building. Almost every day that I worked at [Royal Palm], a driver would arrive to pick

up several patients and take them to their doctor visits.” [D.E. 46-4 at ¶ 11]. Taking

Mederos’s testimony is true, as we must, and giving him every reasonable inference,

we find his observations fail to rise above mere speculation and, more importantly,

they fail to demonstrate that Royal Palm was primarily engaged in caring for the aged.

Mederos’s testimony gives no indication that the nurses worked for Royal Palm. Nor

does his testimony indicate he observed a recurring group of nurses (to suggest they

are Royal Palm staff). Nor does his testimony indicate (or provide a basis to infer) that

Royal Palm derives income from these nurses or drivers. Simply put, Mederos’s

testimony fails to otherwise indicate that these individuals are affiliated with Royal

Palm.

That being said, even assuming Royal Palm was affiliated with these nurses, we

still would conclude that Mederos’s evidence fails to raise a genuine issue of material

fact that Royal Palm was primarily engaged in the of the aged.

The term “primarily” is not defined in the FLSA. However, the FLSA Advisor

issued a report on this subject which provides guidance in this area: the phrase

institution primarily engaged in the care of the sick, the aged, the mentally ill or

developmentally disabled who live on the premises means an institution (other than

a hospital) primarily engaged in (i.e. more that (sic) 50% of the income is attributable

to) providing care to the individuals who reside on the premises. See Chacon v. El

Milagro Child Care Center, No. 07-22835-CIV-AMS, 2009 WL 2059910, at *5 (S.D. Fla.

July 9, 2009) (citations omitted). Thus, to raise a genuine issue of fact, Mederos must


19

provide sufficient evidence to suggest that at least 50% of Royal Palm’s income is

derived from services providing care to the aged. However, as noted above, Mederos’s

observations are insufficient to raise an issue of material fact as to whether or not more

than 50% of Royal Palm’s revenue is derived from these purported services.

Furthermore, Mederos’s offers no evidence, outside of his own testimony, to otherwise

demonstrate that Royal Palm derives 50% - or any - of its revenue from primarily

caring for the aged.

Furthermore, the testimony of Marta Navarro of Royal Palm bolsters our

conclusion that Royal Palm is not an institution primarily engaged in the care of the

aged. She consistently testified that Royal Palm: 1) is not an assisted living facility;

2) provides no social or medical services to its residents; 3) only approves residents able

to live independently; and, 4) only provides housing. See [D.E. 46-2 at 9, 12, 16, 22 and

24]. We find Ms. Navarro’s testimony is undisputed in this record and, importantly, in

accord with Mederos’ testimony. Indeed, while Royal Palm does not provide care, there

is nothing preventing its residents from receiving care at home or securing

transportation to visit their doctors as Mederos observed. Therefore, we conclude that

there is insufficient evidence on this issue to support a positive finding from the trier

of fact.

F. Joint Employers

As noted above, we conclude that the undisputed facts demonstrate that Ace

Protection is not an “enterprise” for liability purposes under the FLSA. More

specifically, we find that Mederos is unable to satisfy either prong of 29 U.S.C. §


20

203(s)(1)(A). Nevertheless, Mederos asserts that Defendants Ace Protection and Top

Guard are joint employers because they “seem[ ] to be a family run business which is

run out of the same location with two separate names.” [D.E. 46 at 7,9]. Mederos

argues joint employer status to “combine the income of both corporation[s] to meet the

$500,000.00 threshold” pursuant to 29 U.S.C. § 203(s)(1)(A)(ii). Id.

Ignoring for a moment that Mederos cannot establish the first prong of §

203(s)(1)(A), we need not consider the merits of this issue because, even assuming Ace

Protection and Top Guard are joint employers, Mederos presents no factual support

that Top Guard earned gross revenues sufficient to total $500,000.00 when combined

with Ace Protection. Mederos asserts that he was unable to take discovery relating to

Top Guard because Top Guard defaulted and failed to otherwise participate in

discovery. [D.E. 46 at 9]. While this may be true, the mere fact that Top Guard

defaulted does not permit Mederos to assume a combined gross revenue of $500,000.00.

Ultimately, the FLSA applies where an employee satisfies this second prong and, in

the absence of supporting evidence, we cannot speculate as to its satisfaction.

Simply put, the record is devoid of any evidence to establish Top Guard’s gross

revenue. Accordingly, we find that Mederos has failed to raise a genuine issue of

material fact as to whether Ace Protection (individually or combined with Top Guard)

earned gross revenues exceeding $500,000.00 in any year relevant to Mederos

employment. Therefore, as a matter of law, Mederos has failed to establish enterprise

coverage under the FLSA. See Scott, 256 F. App’x at 250 (affirming summary judgment

where plaintiff failed to introduce sufficient evidence that defendants, individually or


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combined, grossed greater than $500,000.00 to support a finding of enterprise

coverage); see also Flores v. Nuvoc, Inc., 610 F. Supp. 2d 1349, 1356-1358 (S.D. Fla.

2008) (plaintiff’s failure to establish sufficient evidence of defendant’s gross sales

exceeding $500,000 warrants judgment as a matter of law), rev’d on other grounds sub

nom, Polycarpe v. E&S Landscaping Services, Inc., 616 F.3d 1217, 1229 (11th Cir.

2010).

G. Sanctions

Ace Protection filed a Rule 11 sanctions motion contemporaneously with its final

summary judgment motion raising all of the same arguments. Mederos responded in

kind and, thereafter, filed an amended complaint naming defendant Top Guard in an

attempt to establish the requisite $500,000.00 for enterprise coverage through a joint

employer argument.

Federal Rule of Civil Procedure 11 allows a court to impose “appropriate

sanctions,” after notice and reasonable opportunity to respond, when a party presents

to the court a pleading, written motion or other paper that is not based in fact, is not

legally tenable, or is submitted in bad faith for an improper purpose. Fed. R. Civ. P.

11(c); see also Riccard v. Prudential Ins. Co., 307 F.3d 1277, 1294 (11th Cir. 2002). The

Eleventh Circuit has developed a two-step inquiry for Rule 11 sanctions that examines

(1) whether the claims are objectively frivolous, and (2) whether the person who signed

the pleadings should have been aware that the claims were frivolous. See Baker v.

Alderman, 158 F.3d 516, 524 (11th Cir. 1998); Byrne v. Nezhat, 261 F.3d 1075, 1105


Three types of conduct satisfy the objective prong of the test (1) when a party6

files a pleading, written motion or other paper that has no reasonable factual basis; (2)when a party files a pleading, written motion or other paper that is based on a legaltheory that has no reasonable chance of success and that cannot be advanced as areasonable argument to change existing law; and (3) when a party files a pleading,written motion or other paper in bad faith for an improper purpose. Id.

22

(11th Cir. 2001). The first prong of this inquiry is an objective standard for assessing

conduct, which takes into account the “reasonableness under the circumstances” and

“what was reasonable to believe at the time” the representation to the Court was made.

Aetna Ins. Co. v. Meeker, 953 F.2d 1328, 1331 (11th Cir. 1992); Donaldson v. Clark, 819

F.2d 1551, 1556 (11th Cir. 1987). Moreover, sanctions are warranted when a party6

demonstrates a “deliberate indifference to obvious facts,” but not when the evidence is

merely weak or the case is brought as a result of “poor judgment.” Davis v. Carl, 906

F.2d 533, 537 (11th Cir. 1990). In other words, Rule 11 is intended to “deter claims

with no factual or legal basis at all.” Benavides v. Miami Atlanta Airfreight, Inc., 612

F. Supp. 2d 1236, 1238 (S.D. Fla. 2008) (citing Davis, 906 F.2d at 538).

In effect, Ace Protection seeks the imposition of sanctions against Mederos’s

counsel for filing a frivolous lawsuit. In this Order, the Court agreed with Ace

Protection’s argument that no genuine issue of material fact existed with which to

sustain Mederos’s claim that he is a covered employee owed overtime wages under the

Fair Labor Standards Act. Ace Protection argues that the claim was entirely frivolous

from the inception of the litigation, or at least after discovery commenced and it

became clear that, among other arguments, Mederos could not demonstrate that Ace

Protection grossed over $500,000.00.


23

Upon reviewing the same record that led the Court to grant summary judgment

in Defendant’s favor, we are convinced that the claim was not objectively frivolous,

thus negating the first element required for the entry of Rule 11 sanctions. Clearly,

the evidence was overwhelming that Ace Protection was not a covered enterprise or

grossed greater than $500,000.00, or that Mederos was individually covered for

guarding Royal Palm - that being the reasons why summary judgment was entered.

But that is not the standard for Rule 11.

The question is whether there was any factual or legal basis for the claim. Here,

there was a factual and legal basis for individual coverage given that Royal Palm

provides housing to the aged and that Mederos observed nurses entering Royal Palm.

Furthermore, had Mederos provided evidence relating to Top Guard’s gross revenue

then Mederos, as a threshold matter, could have made a colorable argument to satisfy

§ 203(s)(1)(A)(ii). Further, as our order on summary judgment shows, he did provide

some testimony to support his claim. However, Ace Protection’s evidence thoroughly

and convincingly demonstrated that any inference in Mederos’s favor was simply too

implausible to overcome summary judgment. But, ultimately, that is not enough for

us to find that there was zero factual support for his claim.

Moreover, the law on which the Court relied is not necessarily settled in the

Eleventh Circuit. Though it is clearly, in our view, the correct application of law under

the FLSA, the absence of controlling authorities on these issues in this circuit leaves

open some room for argument. As a result, the Court cannot find that Mederos’s legal

position taken in the case is objectively frivolous.


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Hence the Court cannot grant the pending motion because the essential

prerequisite for sanctions has not been satisfied. The case was clearly weak, too weak

in fact to survive summary judgment given Mederos’s evidence. But that is not what

Rule 11 was intended to address.

III. CONCLUSION

For the reasons stated above, it is hereby ORDERED AND ADJUDGED that

Defendant Yolanda Garcia d/b/a Ace Protection Agency’s Final Summary Judgment

Motion [D.E. 24] is GRANTED. However, we find that Mederos’s position was not

objectively frivolous and, therefore, Defendant Yolanda Garcia d/b/a/ Ace Protection

Agency’s Rule 11 Sanctions Motion [D.E. 27] is DENIED. Final judgment shall be

entered in Defendant Yolanda Garcia d/b/a Ace Protection Agency’s favor by separate

order.

DONE AND ORDERED in Chambers at Miami, Florida, this 18th day of

March, 2011.

/s/ Edwin G. Torres EDWIN G. TORRESUnited States Magistrate Judge


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Mederos v. Ace Protection - Order Granting Motion for Summary Judgment

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