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MIHAIL RADULESCU v. MOLDOWAN

March 2, 1994

MIHAIL RADULESCU, FRANK SIBLA, and MIKE COSOVIC, Plaintiffs,
v.
ELIAS MOLDOWAN, d/b/a/ ELIAS MOLDOWAN REAL ESTATE INVESTMENTS AND MANAGEMENT, Defendant.


MORAN


The opinion of the court was delivered by: JAMES B. MORAN

Plaintiffs Mihail Radulescu, Frank Sibla, and Mike Cosovic brought this action against defendant Elias Moldowan, doing business as Elias Moldowan Real Estate Investments & Management ("Moldowan"), under the Fair Labor Standards Act ("FLSA" or "Act"), 29 U.S.C. §§ 201-219, to recover unpaid overtime compensation, liquidated damages, costs and reasonable attorney's fees. Plaintiffs allege that for certain periods of time between 1988 and 1991 they worked as janitors in apartment buildings managed by defendant, *fn1" and that the gross rent attributable to those buildings is at least $ 1,248,000 a year. Further, they claim that their duties included collecting rent checks, doing plumbing and electrical work, taking care of the grounds, planting grass, clearing snow from the sidewalks, replacing locks and door entry systems, collecting garbage, and cleaning and showing vacant apartments to prospective tenants. Plaintiffs state that as part of their job they handled and used materials and goods, including soap, detergent, waxes, light bulbs, grass seed, and other cleaning supplies, that were manufactured outside of Illinois.

 Moldowan has filed his motion to dismiss for lack of subject matter jurisdiction. The essence of defendant's position is that he is not an "enterprise engaged in commerce or in the production of goods for commerce," as defined by 29 U.S.C. § 203(s). Defendant contends that because his management of apartment buildings is purely a local intrastate activity it falls outside the reach of the FLSA. For the following reasons, this court denies defendant's motion to dismiss.

 DISCUSSION

 When a Rule 12(b)(1) challenge is raised to the factual basis for federal subject matter jurisdiction, the burden of proving subject matter jurisdiction is on the plaintiff. Richmond, Fredericksburg & Potomac Railroad v. United States, 945 F.2d 765, 768 (4th Cir. 1991). In resolving a motion under Federal Rules of Civil Procedure 12(b)(1) challenging the district court's subject matter jurisdiction, the court is not restricted to the face of the pleadings, but may review any evidence such as affidavits and testimony to resolve factual disputes concerning the existence of jurisdiction to hear the action. Gibbs v. Buck, 307 U.S. 66, 72, 83 L. Ed. 1111, 59 S. Ct. 725, (1939); Western Transportation v. Couzens Warehouse, 695 F.2d 1033, 1038; (7th Cir. 1982); Gervasio v. United States, 627 F. Supp. 428, 430 (N.D.Ill. 1986); Trentacosta v. Frontier Pacific Aircraft, 813 F.2d 1553, 1558 (9th Cir. 1987).

 Employees Under the FLSA

 Employees who are "engaged in commerce" or "in the production of goods for commerce" are entitled to protection under the FSLA. 29 U.S.C. §§ 206(a), 207(a)(1). The scope of the Act was enlarged by a 1961 amendment which added another basis for coverage, commonly called "enterprise" coverage, whereby the minimum wage and overtime protection of the Act was extended to each and every employee of an "enterprise engaged in commerce or in the production of goods for commerce," unless specifically exempted. H.R.Rep. No.93-913, 93rd Congress, 2d Sess. 2 (1974). The Act defines "enterprise engaged in commerce or in the production of goods for commerce" as

 
an enterprise that has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person. *fn2"

 29 U.S.C. § 203(s)(1)(A)(i) (as amended, 1989).

 Thus, under an "enterprise" application a plaintiff need not himself be involved in an activity which affects interstate commerce. If the gross volume requirement is met, *fn3" all employees are covered under the Act if some are (1) engaged in commerce, (2) engaged in the production of goods for commerce, or (3) engaged in handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce. Defendant argues that plaintiffs are not entitled to an "enterprise" application of the Act because he is not an "enterprise engaged in commerce or in the production of goods for commerce," as defined under the Act. The question before this court, therefore, is whether this enterprise (Moldowan) is an enterprise with employees engaged in commerce or in the production of goods for commerce within the provisions of the FLSA.

 Construction of 29 U.S.C. § 203(s)

 A clear understanding of the resolution of the issue currently before the court requires an examination of prior congressional interpretation of § 203(s), the specific statutory provision at issue in this case. Prior to the 1974 amendment, the section provided:

 
Enterprise engaged in commerce or in the production of goods for commerce means an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling or otherwise working on goods that have been moved in or produced for commerce by any person, and which . . . is an ...

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