Harlas v. The Barn

• Court: Court of Appeals for the Tenth Circuit
• Decided: April 28, 2021
• Docket: 20-1181
• Status: Unpublished

Opinion

FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT April 28, 2021 _________________________________ Christopher M. Wolpert Clerk of Court LINDA HARLAS,

Plaintiff - Appellant,

v. No. 20-1181 (D.C. No. 1:18-CV-02320-RM-NYW) THE BARN, LLC, a Colorado limited (D. Colo.) liability company; M AND R ENTERPRISES, LLC, a Colorado limited liability company; CATHERINE HAIGH, an individual,

Defendants - Appellees. _________________________________

ORDER AND JUDGMENT* _________________________________

Before MATHESON, BRISCOE, and CARSON, Circuit Judges. _________________________________

Linda Harlas appeals the district court’s order granting summary judgment for

The Barn, LLC (“The Barn”), M and R Enterprises, LLC (“M and R”), and Catherine

Haigh (“Haigh”) on her claim for unpaid wages under the Fair Labor Standards Act

* After examining the briefs and appellate record, this panel has determined unanimously to honor the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. (“FLSA”), 29 U.S.C. § 206.1 Exercising jurisdiction under 28 U.S.C. § 1291, we

affirm.

I. BACKGROUND

The parties are familiar with the facts found by the district court and we repeat

them only briefly. The Barn “is a commercial landlord and property management

service that leases space to retail tenants in an old lumber barn located in Castle

Rock, Colorado.” Aplee. Suppl. App., Vol. 3 at 592. “The physical property is

separately owned by . . . M and R” and “commonly referred to as The Barn Antique

and Specialty Shops.” Id. at 592-93 (quotations omitted). Ms. Haigh is the sole

member of the LLCs, The Barn and M and R. “The Barn leases [the retail space]

from . . . M and R and provides landlord services to tenants/merchants who lease

space . . . and sell their merchandise, but [The Barn] does not sell its own

merchandise.” Id. at 593.

“Tenant/merchants, colloquially referred to as Barnies, lease space . . . on a

month-by-month basis,” and The Barn in turn “uses the Barnies’ rent payments as its

own lease payment to . . . M and R.” Id. (quotations omitted). “Either party could

unilaterally decide to discontinue the lease arrangement—the Barny could simply not

pay rent,” or The Barn “could notify the Barny that the Barny’s lease will expire

within thirty days.” Id.

1 The district court declined to exercise supplemental jurisdiction over Ms. Harlas’s state court claims and dismissed them without prejudice. Harlas does not assign any error to the court’s decision.

2 Ms. Harlas “began her tenancy . . . in 2010. Until her eviction in May 2018,

[Ms. Harlas] and her business Sunday Afternoon Antiques . . . leased space . . . under

a month-by-month lease agreement.” Id. (citation and quotations omitted). Under

the lease, she “also agreed to operate the cash register [at The Barn] four days per

month, which increased periodically throughout the years to eight days per month in

February 2017 when [she] leased additional space.” Id. at 594. Ms. Harlas “worked

the cash register about 126.5 days between September 2015 and May 2018.” Id.

(quotations omitted). As in previous years, and like the other Barnies, she was not

paid for working the cash register.

“In June 2018, [The Barn] informed [Ms. Harlas] she would not be allowed to

work her designated workdays [at the cash register] in June 2018 and that [it] was

terminating her tenancy as of June 30, 2018 due to alleged misconduct involving

other Barnies.” Id. at 595. She requested her “unpaid wages and commissions [for

working the cash register].” Id. The Barn refused to pay, and Ms. Harlas sued under

the FLSA.

Ms. Harlas moved for partial summary judgment, which the district court

denied. The court then notified her that she needed to present evidence that the

FLSA covered her cash-register work. When she failed to present any such evidence,

the court granted summary judgment under Rule 56(f)(3) of the Federal Rules of

Civil Procedure for The Barn, M and R, and Ms. Haigh. Ms. Harlas appeals.

3 II. DISCUSSION

A. Standard of Review

Federal Rule of Civil Procedure 56(f)(3) permits a district court, after giving

notice and a reasonable time to respond, to “consider summary judgment on its own

after identifying for the parties material facts that may not be genuinely in dispute.”

See also A.M. v. Holmes, 830 F.3d 1123, 1136 (10th Cir. 2016) (“The court may

grant summary judgment sua sponte so long as the losing party was on notice that it

had to come forward with all of its evidence.” (brackets and quotations omitted)).

“We review the district court’s summary judgment decision de novo, applying

the same standard as the district court.” Ellis v. J.R.’s Country Stores, Inc., 779 F.3d

1184, 1191 (10th Cir. 2015) (quotations omitted). Summary judgment is appropriate

when the record, viewed in the light most favorable to the nonmovant, reveals “that

there is no genuine dispute as to any material fact and the [other party] is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a).

B. Legal Background

An employee who seeks to invoke the FLSA must satisfy the requirements for

either enterprise or individual coverage.2 Tony & Susan Alamo Found. v. Sec’y of

Lab., 471 U.S. 290, 295 n.8 (1985) (“Employment may be covered under the [FLSA]

pursuant to either ‘individual’ or ‘enterprise’ coverage.”); Josendis v. Wall to Wall

Residence Repairs, Inc., 662 F.3d 1292, 1298-99 (11th Cir. 2011) (same); Reagor v.

2 We assume without deciding that Ms. Harlas was an employee of The Barn.

4 Okmulgee Cnty. Fam. Res. Ctr., Inc., 501 F. App’x 805, 808 (10th Cir. 2012) (same)

(cited for its persuasive value under Fed. R. App. P. 32.1; 10th Cir. R. 32.1(A)).

“For enterprise coverage, there must be an ‘[e]nterprise engaged in commerce

or in the production of goods for commerce.’” Reagor, 501 F. App’x at 809 (quoting

29 U.S.C. § 203(s)(1)). “[E]ngaged in commerce” means the enterprise has (1) two

or more employees who are directly engaged in commerce or handling goods or

materials that have been moved in commerce and (2) an annual gross volume of sales

over $500,000. See 29 U.S.C. § 203(s)(1)(A)(i), (ii).

“For individual coverage, an employee must directly participate in the actual

movement of persons or things in interstate commerce.” Reagor, 501 F. App’x

at 809 (brackets and quotations omitted). “To be engaged in commerce . . . an

employee must be actually engaged in the movement of commerce, or the services he

performs must be so closely related thereto as to be for all practical purposes an

essential part thereof.” Id. (brackets and quotations omitted). Under this theory, the

employer need not engage in interstate commerce. Rather, “[i]t is the work of the

employee which is decisive.” McLeod v. Threlkeld, 319 U.S. 491, 497 (1943); see

also Reagor, 501 F. App’x at 809 (“To determine whether an employee is engaged in

commerce we look at her activities, not the business of her employer.”)

5 C. Analysis

1. Enterprise Coverage

Ms. Harlas does not address the district court’s rationale for its finding that she

failed to establish enterprise coverage—the lack of any evidence that The Barn’s

gross rents as a commercial landlord exceeded $500,000 annually. Instead, for the

first time on appeal, she advances a new theory for enterprise coverage—that “The

Barn . . . is better conceptualized as a leased department than as a commercial

landlord.” Aplt. Opening Br. at 9.

It is unclear how this new theory would afford coverage under the FLSA. In

any event, Ms. Harlas forfeited the argument by failing to raise it in the district court

and has waived the argument on appeal by failing to argue that the court’s failure to

consider the new theory was plain error. See Richison v. Ernest Grp., Inc., 634 F.3d

1123, 1127-30 (10th Cir. 2011).

2. Individual Coverage

Ms. Harlas’s argument for individual coverage misses the mark. Instead of

focusing on whether she regularly used instruments of interstate commerce as part of

her duties while working at the cash register, she relies on the instruments of

interstate commerce that she allegedly used in her own business—Sunday Afternoon

Antiques. The relevant focus must be on Ms. Harlas’s work at the cash register—not

her work for Sunday Afternoon Antiques or the nature of The Barn’s business—to

determine whether she was engaged in interstate commerce. See McLeod, 319 U.S.

at 497; Reagor, 501 F. App’x at 809.

6 We therefore agree with the district court that Ms. Harlas has not shown she

was engaged in interstate commerce when she staffed The Barn’s cash register to ring

up sales of merchandise. “In assessing individual . . . coverage, Congress intends to

regulate only activities constituting interstate commerce, not activities merely

affecting commerce.” Reagor, 501 F. App’x at 809 (quotations omitted).

“[E]mployees who handle goods after acquisition by a merchant for general local

disposition are not [engaged in commerce].” McLeod, 319 U.S. at 494.

III. CONCLUSION

We affirm the district court’s judgment.

Entered for the Court

Scott M. Matheson, Jr. Circuit Judge