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Acosta v. La Piedad Corp.

United States Court of Appeals, Eighth Circuit

July 3, 2018

R. Alexander Acosta, Secretary of Labor Plaintiff- Appellee
v.
La Piedad Corporation, doing business as El Mezcal Mexican Restaurant Defendant-Appellant

          Submitted: February 13, 2018

          Appeal from United States District Court for the Western District of Missouri - Kansas City

          Before LOKEN, BENTON, and ERICKSON, Circuit Judges.

          LOKEN, Circuit Judge.

         The Department of Labor (DOL) is investigating possible violations of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et. seq. (FLSA), by La Piedad Corporation (La Piedad), doing business in Harrisonville, Missouri, as El Mezcal Mexican Restaurant (El Mezcal). In June 2016, DOL issued an administrative subpoena requesting documents. When La Piedad did not respond, the district court granted DOL's petition to enforce the subpoena and ordered La Piedad to comply. La Piedad produced documents in December 2016 and provided additional information in January 2017. In February 2017, DOL filed a motion to hold La Piedad in civil contempt for failing to produce documents identifying other businesses owned by La Piedad's shareholders. The district court granted the motion and tolled the statute of limitations for actions brought by DOL until La Piedad fully complies. La Piedad appeals. Concluding that DOL failed to meet its burden to introduce evidence that would support a subpoena to produce documents not in La Piedad's possession, custody, or control, we reverse.

         I. Background

         In January 2016, DOL's Wage and Hour Division opened an investigation into La Piedad's compliance with the FLSA. DOL investigators interviewed employees and examined payroll records at the restaurant in early February. On March 14, DOL sent La Piedad's attorney a letter requesting, inter alia, a list of all owners and their percentage of ownership, names and addresses of any other locations owned or partially owned by the owners, and the annual dollar volume of sales for each location. When La Piedad did not respond, DOL served an administrative subpoena on June 1, 2016, requesting twenty-two categories of documents. At issue on this appeal is Request No. 2 which requested -

All documents showing the names and addresses of all other businesses that are partially and/or fully owned by any of the owners of La Piedad Corporation and the percentage of ownership.

         La Piedad did not produce documents at the time and place demanded. DOL filed a petition to enforce the subpoena; La Piedad responded with a motion to dismiss, arguing it is not subject to the FLSA's wage and hour requirements because it is "an enterprise whose annual gross volume of sales" is less than $500, 000. See 29 U.S.C. § 203(s)(1)(A)(ii). On October 20, after a hearing, the district court denied La Piedad's motion to dismiss, properly concluding "that a subpoena enforcement proceeding is not the proper forum in which to litigate the question of [FLSA] coverage." Donovan v. Shaw, 668 F.2d 985, 989 (8th Cir. 1982). The court granted DOL's motion to enforce the subpoena and ordered La Piedad to provide the documents within sixty days.

         On December 20, La Piedad produced its internal tax returns, which showed the percentage ownership of its "members," plus Data Entry Worksheets and Payroll Journals, time cards, a list of names and addresses of employees, and a written response that answered Request No. 2, "N/A." Three days later, DOL sent an email requesting "missing payroll documents" and documents responsive to Request No. 2. On January 11, 2017, La Piedad produced additional payroll records but not missing time cards, which had been destroyed, or documents responsive to Request No. 2. DOL objected, threatening further judicial action. On January 25, La Piedad's attorney responded, "No additional documents responsive to the subpoena exist," and explained that a manager had thrown away the missing time cards. DOL then filed a motion seeking an order holding La Piedad in civil contempt for violating the district court's order to produce documents responsive to Request No. 2. Without a hearing, the district court issued its order finding La Piedad in contempt of the October 2016 enforcement order for failing to respond to Request No. 2. The court ordered La Piedad to provide within twenty-one days -

corporate records, secretary of state filings, tax records, partnership or LLC agreements, articles of incorporation, liquor licenses, other business operation licenses, or any other documents that show businesses owned by any of the owners of La Piedad Corporation.

(Emphasis in original.) The court also tolled the FLSA statute of limitations "from June 1, 2016 to the date that [La Piedad] fully responds to the subpoena." La Piedad appeals the court's contempt finding and tolling decision.

         II. Discussion

         We deal with a narrow question, judicial enforcement of an administrative subpoena. Section 11(a) of the FLSA grants the Administrator of DOL's Wage and Hour Division broad authority to investigate wages, hours, and conditions of employment in covered industries and possible FLSA violations. 29 U.S.C. § 211(a). Section 9 (29 U.S.C. § 209) grants the Administrator the investigative powers and duties provided in sections 9 and 10 of the Federal Trade Commission Act, 15 U.S.C. §§ 49, 50. That Act grants the Federal Trade Commission the "power to require by subpoena" the production of documents "relating to any matter under investigation," and the power to "invoke the aid of any court of the United States in requiring . . . production of documentary evidence." 15 U.S.C. § 49. District courts are authorized, "in case of contumacy or refusal to obey a subpoena," to issue an order to produce documentary evidence, and failure to obey "may be punished by such court as a contempt thereof." Id.; s ...


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