Gristedes Owner Takes FLSA Liability Fight To High Court

Law360 Abigail Rubenstein
December 11, 2013

The owner of New York City grocery chain Gristedes Foods Inc. on Friday asked the U.S. Supreme Court to overturn the Second Circuit’s ruling that he could be held personally liable as an employer ” under the Fair Labor Standards Act.

Grocery magnate John Catsimatidis filed a petition for certiorari, seeking review of the appeals court’s July 9 decision, which put him on the hook to pay more than $2 million of a $3.5 million settlement in a wage-and-hour class action against the store. The appeals court’s decision affirmed a New York federal court ruling in September 2011 that Catsimatidis was individually responsible for the settlement payments to some 500 department managers after the chain claimed it lacked the funds to continue paying out.

The petition asserts that the high court should take the case to decide whether an individual may be held personally liable for a corporation’s violation of the FLSA because the individual had general control over corporate affairs but exercised no personal responsibility ” over the conduct that caused the violation.

The rule applied by the Second Circuit cannot be squared with the text of the FLSA, common-law principles of limited liability or multiple precedents of this court, ” Catsimatidis’ petition to the high court said.
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Because the issue reached the Second Circuit on appeal from a summary judgment motion concerning Catsimatidis’ personal liability, the case would put the question squarely before the court with no extraneous disputes, the petition argues.

The suit against Gristedes dates to 2004, when Carlos Torres filed a class action seeking damages on behalf of hundreds of the grocery chain’s managers for unpaid overtime in violation of the FLSA and New York labor law.

Gristedes subsequently had trouble paying the settlement and asked the court to modify the terms of the deal, saying it had recently incurred significant losses and that the settlement payments had put the company in arrears.

Shortly thereafter, U.S. District Judge Paul A. Crotty said that if Gristedes was not going to pay the settlement costs, Catsimatidis would have to pick up the slack.

Catsimatidis appealed, but the Second Circuit agreed that he could be considered an employer under the FLSA….
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Now Catsimatidis is asking the high court to overturn the Second Circuit’s decision, but an attorney for the plaintiffs told Law360 that the Second Circuit was correct to consider the CEO and sole owner an employer.

We think the Second Circuit got it right, and we hope that this nine-year litigation will someday reach its end, ” said Justin M. Swartz of Outten & Golden LLP, who represents the plaintiffs.

Swartz said the plaintiffs have already received the settlement funds.

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The plaintiffs are represented by Justin M. Swartz and Molly A. Brooks of Outten & Golden LLP and Deepak Gupta of Gupta Beck PLLC.

The case is John Catsimatidis v. Bobby Irizarry, et al., case number 13-683, in the U.S. Supreme Court.