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Jacobs v. New York Foundling Hospital

April 16, 2007


The opinion of the court was delivered by: Azrack, United States Magistrate Judge


Plaintiffs are former employees of defendant New York Foundling Hospital ("Foundling"), who allege, inter alia, that they worked overtime without compensation in violation of the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201, et seq. Plaintiffs claim that Foundling's employees are entitled to overtime pay under the FLSA because (1) Foundling is an enterprise engaged in commerce or, in the alternative, (2) Foundling's individual employees are engaged in commerce. Plaintiffs also assert a state labor law claim, arguing that Foundling employees were not properly compensated for their overtime work as required under New York law.

Plaintiffs commenced this action on March 3, 2004. Plaintiffs moved to certify a collective action and authorize notice to plaintiffs similarly situated on December 13, 2004. I granted the motion to authorize notice to class members on December 23, 2004. Plaintiffs then moved for partial summary judgment on September 15, 2006, and defendant opposed plaintiffs' motion and responded with a cross motion for partial summary judgment on September 19, 2006. The parties primarily dispute whether, as a matter of law, defendant is subject to coverage under the FLSA. They consented to have me preside over this case for all purposes including entry of judgment pursuant to 28 U.S.C. § 636(c). For the reasons set forth below, the defendant's summary judgment motion is granted in part and plaintiffs' summary judgment motion is denied in whole.


The following facts are taken from the parties' Local Civil Rule 56.1 Statements and the affidavits of William Baccaglini, Jr., Executive Director of Foundling, and are undisputed unless otherwise noted. New York Foundling Hospital is a non-profit organization providing foster care, adoption and family services and related programs to children and families in the New York City area. (Def.'s 56.1 Stmt. ¶ 1.) Plaintiffs in this action are former employees of Foundling who are suing on behalf of themselves and all others similarly situated. Plaintiffs Linda Jacobs and Wendy Slaughter were employed as social workers, and plaintiff Kenneth Brown was employed as a security escort. (Def.'s Rule 56.1 Stmt. ¶ 4.)*fn1 All plaintiffs worked in Foundling's Foster Boarding Home program ("Foster Home"); Jacobs also worked at the Boarding Home program ("Boarding Home"). (Def.'s Rule 56.1 Stmt. ¶ 4.) Approximately seventy employees and former employees of Foundling have signed "opt-in" notices in this collective action. (Def.'s Memo. in Supp. of Summ. J. 17 n. 8; Dkt. Nos. 28-46, 49, 50.) Defendants contend that these "opt-in" plaintiffs encompass nineteen different job titles with substantially different duties, and that they are employed in programs that have various geographic locations. (Def.'s Memo. in Supp. of Summ. J. 17 n. 8).

The Commissioner of the New York City Administration for Children's Services ("ACS") is charged with the administration of all child welfare services in New York City, but he may provide these services through an agency such as Foundling in accordance with New York Social Security Law. (Pls.' 56.1 Stmt. Ex. A at 1.) All of the children who are provided services through the Foster Home and Boarding Home programs are referred by ACS, which reimburses Foundling for the cost of services provided to the children placed in its care. (Def.'s 56.1 Stmt. ¶ 17.) In fact, plaintiffs contend that "most of defendant's [programs] are not accessible to the public in absence of a referral by ACS." (Pls.' 56.1 Stmt. ¶ 3.)

Foundling's Foster Home program is a "regular" foster boarding program, designed to care for abused or neglected children without special needs who have been removed from their biological families and placed with foster families. (Aff. of William F. Baccaglini, Jr. taken August 4, 2006 ("Baccaglini Affidavit Aug. 4.") ¶ 8.) This program serves approximately 150 abused or neglected children placed in foster boarding homes in Queens, all of which are private residences maintained by non-employees. (Id.) The Boarding Home program serves abused and neglected children who could not be placed in private residences with foster parents. (Baccaglini Affidavit Aug. 4 ¶ 10.) These children reside in one of the congregate care boarding homes operated by Foundling. (Id.) Neither the Foster Home nor the Boarding Home programs are specifically geared towards caring for children with severe mental illness. (Baccaglini Affidavit Aug. 4 ¶ 21.) These are not "hard-to-place" programs: a child need not be specifically designated as "hard-to-place" by ACS in order to participate in these programs. (Baccaglini Affidavit ¶¶ 11, 21; see also Pls.' 56.1 Stmt. Ex. A at 10.)

The relationship between ACS and Foundling is delineated in a series of contracts which set forth in detail the scope of the services to be provided by Foundling. The contracts provide that "[Foundling] through its executive staff, shall manage its affairs and programs and have the responsibility for the day-to-day provision of Services to and for each child placed with it in accordance with this Agreement." (Pls.' 56.1 Stmt. Ex. A at 16.) In fact, these contracts explicitly state that ACS has no direct control over Foundling employees:

All experts or consultants or employees of [Foundling] who are employed by [Foundling] to work under this agreement are neither employees of the City nor under contract to the city and [Foundling] alone is responsible for the work, direction, compensation and personal conduct while engaged under this agreement.

In addition, Foundling can unilaterally terminate its contracts with ACS in whole or in part with thirty days notice. (Def.'s 56.1 Stmt. ¶ 8.)

At the same time, however, ACS exercises considerable oversight with respect to the services offered by Foundling. For example, Foundling must recruit the number and variety of prospective foster parents that ACS outlines is necessary for a particular neighborhood. (Pls.' 56.1 Stmt. Ex. A at 8.) In addition, Foundling must accept all children referred to it by ACS, unless Foundling demonstrates there is a legitimate lack of vacancy in a particular area. (Id. at 9.) Foundling must establish procedures through which recipients of their services may file grievances, and if Foundling decides against the recipients they have a right to appeal this decision directly to ACS. (Id. at 17.) ACS then has the right to make a final decision on the matter. (Id.) ACS has the additional right to review all program activities and duplicate any of Foundling's records as necessary. (Id. at 22.) If Foundling institutes court proceedings to free a child and the Commissioner of ACS does not directly participate, Foundling must keep ACS advised of all developments during the course of the proceedings. (Id. at 13.) Finally, Foundling must advise ACS in advance of the hiring or firing of any chief executive officer, chief fiscal officer, or program director of foster care services and explain the reasons for this decision. (Id. at 16.)

Foundling's funding is almost exclusively derived from federal, state and local reimbursement grants and charitable donations. (Def.'s 56.1 Stmt. ¶ 18.) Foundling was not, however, created by any governmental authority or public agency, nor is it administered by a board responsible to public officials or the general electorate. (Aff. of William F. Baccaglini, Jr. taken August 29, 2006 ("Baccaglini Aff. Aug. 29") ¶ 2.) In fact, Foundling's Board of Directors operates independently of ACS, there is no ACS representative on the Board, and neither ACS nor any other public agency has the power to approve or remove any Board member or executive officer of Foundling. (Def.'s 56.1 Stmt. ¶¶ 16-18.)


1. Summary Judgment Standard

The standard for granting summary judgment is well established. Summary judgment should be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986). "[T]he burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists," Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994), but "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "An issue of fact is 'material' for these purposes if it 'might affect the outcome of the suit under the governing law,'" while "[a]n issue of fact is 'genuine' if 'the evidence is such that a reasonable jury could return a verdict for the non-moving party.'" Konikoff v. Prudential Ins. Co. of Am., 234 F.3d 92, 97 (2d Cir. 2000) (quoting Anderson, 477 U.S. at 248).

In determining whether any material facts are in dispute, the court "must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor." Am. Cas. Co. of Reading, Pa. v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir. 1994) (quoting Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 572 (2d Cir.1993)); see also Anderson, 477 U.S. at 255. To defeat a properly supported motion for summary judgment, the non-moving party must "'set forth specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P. 56(e)). The non-moving party, however, "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. at 586 (citations omitted). Mere conclusory allegations, speculation or conjecture will not avail a party resisting summary judgment. See Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998); Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996). The non-moving party must come forth with "significant probative evidence" demonstrating that a factual dispute does in fact exist. Anderson, 477 U.S. at 249. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-250 (citations omitted).

2. The Statutory Scheme

Individual and Enterprise Coverage Under the FLSA Congress' purpose in passing the FLSA as a whole was "to protect all covered workers from substandard wages and oppressive working hours, 'labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well being of workers.'" Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 739 (1981) (quoting 29 U.S.C. § 202(a)). Courts construe the FLSA "liberally to apply to the furthest reaches consistent with congressional direction." Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 296 (1985) (internal quotation marks and citation omitted). In addition, any employer who claims an exemption under the Act has the burden of showing that it applies. 29 C.F.R. § 779.101.

This litigation concerns section 7 of the FLSA, which requires employers subject to the statute to provide their workers with overtime premium pay. 29 U.S.C. § 207(a)(1). Section 7 provides that:

[N]o employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce for a workweek longer than forty hours unless such employee receives an overtime premium wage.

29 U.S.C. § 207(a)(1). Thus, an employer is subject to the overtime wage provision if either (1) their employee individually was "engaged in commerce" or (2) the employer was an "enterprise engaged in commerce." Id.; see also Bowrin v. Catholic Guardian Society, 417 F. Supp. 2d 449, 457 (S.D.N.Y. 2006), (citing Joles v. Johnson County Youth Serv. Bureau, Inc., 885 F. Supp. 1169, 1173-74 (S.D. Ind. 1995)). These two types of coverage are called "individual" and "enterprise" coverage, respectively. See Bowrin, 417 F. Supp. at 457, (citing Tony & Susan Alamo Found., 471 U.S. at 295 n. 8).

The FLSA's individual coverage provision provides that any individual employee "engaged in commerce or in the production of goods for commerce" is covered by the Act, regardless of whether his or her employer is an enterprise. 29 U.S.C. § 203(r)(1). According to the Department of Labor, individual employees are engaged in commerce "when they are performing work involving or related to the movement of persons or things (whether tangibles or intangibles, and including information and intelligence)" between states. 29 C.F.R. § 779.103. For example, an employee could be engaged in commerce by regularly using the mail or the telephone between states, or traveling across state lines. Id.; see also Bowrin, 417 F. Supp. 2d at 465. To determine whether an individual employee is engaged in commerce, courts conduct a fact-specific inquiry into the employment actions of each and every employee asserting a claim under the Act. See Divins v. Hazeltine Electronics Corp., 163 F.2d 100, 100 (2d Cir. 1947); Bowrin, 417 F. Supp. 2d at 468-471; Boekemeier v. Fourth Universalist Society in the City of New York, 86 F. Supp. 2d 280, 287 (S.D.N.Y. 2000).

Enterprise coverage was established after individual coverage, when Congress amended section 7 to include enterprises engaged in commerce, and then specifically delineated what types of employers would be considered enterprises under the statute. See Tony & Susan Alamo Found., 471 U.S. at 296; 29 U.S.C. § 203(r)(1). An "enterprise" is defined under the FLSA as "the related activities performed . . . by any person or persons for a common business purpose." 29 U.S.C. § 203(r)(1). The statute goes on to deem certain activities to be "performed for a common business purpose." 29 U.S.C. § 209(r)(2). Activities performed "in connection with the operation of a hospital, an institution primarily engaged in the care of the sick, the mentally ill, or the aged that reside on the premises of the institution," and activities performed "in connection with a public agency" are activities performed for a ...

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