Perez v. Gulf Coast Management Company, LLC et al
ORDER granting 14 Motion for Default Judgment; the Secretary of Labor shall recover from defendants a total of $2,848,37, representing back wages owed to the employees listed in the appendix (attached) and an equal sum as liquidated damages for a total monetary award of $5,696.74; Clerk is directed to serve this order, the injunction, and final judgment on defendants by certified mail. Signed by Magistrate Judge Katherine P. Nelson on 3/3/2015. (Attachments: # 1 Appendix) (srr) (Additional attachment(s) added on 3/3/2015: # 2 certified mail receipt) (srr).
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
THOMAS E. PEREZ,
Secretary of the United States
Department of Labor,
GULF COAST MANAGEMENT
COMPANY, LLC, d/b/a HAMPTON
INN SARALAND, and
ANAND PATEL, individually,
) CIVIL ACTION NO. 14-00426-N
This action is before the Court on the Motion for Default Judgment (Doc. 14)
filed by Plaintiff Thomas E. Perez, Secretary of the United States Department of
Labor (hereinafter, “the Secretary”). Upon consideration, and for the reasons stated
herein, the Court finds that the motion is due to be GRANTED, as set out.1
case has been randomly assigned to the undersigned United States Magistrate Judge
for all purposes, including trial (see Doc. 4), in accordance with the Court’s Standing Order
No. 24 (www.alsd.uscourts.gov/documents/forms/STDO24.pdf). Inasmuch as no party, to
date, has returned to the Clerk of Court a Request for Reassignment to a United States
District Judge (see Doc. 4 at 1 (“The parties have the right to have this action reassigned to
a United States District Judge for trial and disposition. Any party may request
reassignment by emailing the attached Request for Reassignment to a United States
District Judge to email@example.com. Do not electronically file the
document.”)), there presently exists implicit consent to the undersigned conducting all
proceedings in this case. See Roell v. Withrow, 538 U.S. 580, 123 S. Ct. 1696, 1703, 155 L.
Ed. 2d 775 (2003) (“We think the better rule is to accept implied consent where, as here, the
litigant or counsel was made aware of the need for consent and the right to refuse it, and
still voluntarily appeared to try the case before the Magistrate Judge. Inferring consent in
these circumstances thus checks the risk of gamesmanship by depriving parties of the
luxury of waiting for the outcome before denying the magistrate judge’s authority. Judicial
efficiency is served; the Article III right is substantially honored.”).
The Secretary commenced this action on September 12, 2014, by filing a
Complaint (Doc. 1) against the Defendants alleging violations of the Fair Labor
Standards Act of 1938, as amended, 29 U.S.C. § 201, et seq. (“the FLSA”). On
October 23, 2014, Defendant Anand Patel (“Patel”) executed a waiver of service in
this District that was sent on September 24, 2014 (see Doc. 6; Doc. 8 at 2, ¶ 4); thus,
his responsive pleading was due November 24, 2014. See Fed. R. Civ. P. 4(d)(3),
12(a)(1)(A)(ii), & 6(a)(1)(C).
A process server served Defendant Gulf Coast
Management Company, LLC (“GCMC”), through its registered agent Ramon Patel,
on November 8, 2014 (see Doc. 7; Doc. 8 at 2, ¶ 5); thus, its responsive pleading was
due December 1, 2014. See Fed. R. Civ. P. 12(a)(1)(A)(i) & 6(a)(1)(C). To date,
neither Defendant has appeared, filed a responsive pleading, or otherwise defended
in this action.
On January 12, 2015, upon application by the Secretary (see Doc. 11), the
Clerk of Court entered default against both Defendants under Federal Rule of Civil
(See Doc. 12).
On February 5, 2015, the Secretary filed the
present Motion for Default Judgment (Doc. 14) under Federal Rule of Civil
Procedure 55(b)(2) against both Defendants, requesting that the Court “enter
judgment as prayed for in the Complaint.”2
The Court questions whether the Defendants have been served with notice of the
Entry of Default and (at least for GCMC) the Motion for Default Judgment. Neither was
served on GCMC at the address of its registered agent. (Compare Docs. 13 and 14 at 3
(indicating that the entry of default and motion were both served on GCMC at 1320
Industrial Parkway, Saraland, Alabama) with Doc. 7 (indicating that process was served on
GCMC’s registered agent at 6401 Canebrake Road, Mobile, Alabama)). The registered mail
In this Circuit, “default judgments are disfavored. Courts prefer adjudication
on the merits. Since this case involves a default judgment there must be strict
compliance with the legal prerequisites establishing the court's power to render the
judgment.” Varnes v. Local 91, Glass Bottle Blowers Ass'n of U.S. & Canada, 674
F.2d 1365, 1369 (11th Cir. 1982) (internal citation omitted).
See also In re
Worldwide Web Sys., Inc., 328 F.3d 1291, 1295 (11th Cir. 2003) (“[T]here is a strong
receipts for the notices of Entry of Default mailed to the Defendants were both signed by
“Sherri Jacobi,” who did not indicate that she was signing them as an agent of either
Defendant. (See Doc. 13).
Nevertheless, Rule 55 does not specify that entry of default need be noticed on a
party, and a “ ‘defendant who fails to answer within the time specified by the rules is in
default even if that fact is not officially noted.’ ” Perez v. Wells Fargo N.A., -- F.3d --, No. 1313853, 2014 WL 7229271, at *6 (11th Cir. Dec. 18, 2014) (quoting 10A Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure § 2692 at 85 (3d ed. 2004)). Moreover,
under the current version of Rule 55(b)(2), a party against whom default judgment is
sought is only required to be served with written notice of the application if that party “has
appeared personally or by representative…” See also Fed. R. Civ. P. 5(a)(2) (“No service is
required on a party who is in default for failing to appear…”). Neither Defendant has
appeared in this action.
“The appearance required by [Rule 55(b)(2)] has been broadly defined, and not
limited to a formal court appearance.” Charlton L. Davis & Co., P. C. v. Fedder Data Ctr.,
Inc., 556 F.2d 308, 309 (5th Cir. 1977) (citing cases indicating that a “letter,” “letters and
phone calls,” and a “claim and cost bond” could constitute “appearance”) (“The plaintiff
knew Financial had a clear purpose to defend the suit. The knowledge came from a phone
call and a letter responsive to plaintiff's formal Court action.” (quotation omitted)). See also
Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc) (adopting as
binding precedent in this Circuit all decisions of the former Fifth Circuit handed down prior
to close of business on September 30, 1981); S.E.C. v. Getanswers, Inc., 219 F.R.D. 698, 700
(S.D. Fla. 2004) (While Rule 55(b)(2)’s notice requirement “only applies when the defendant
has ‘appeared,’ the defendant does not have to make a formal appearance to trigger the
notice requirement. The defendant must simply manifest a clear intention to defend.”). The
Secretary has represented that, after he mailed notice of this action and a request for
waiver of service to both Defendants, on October 22, 2014, Patel “telephone [counsel for the
Secretary] and advised that he would sign the waivers and overnight them to the
[Secretary].” (Doc. 8 at 2, ¶ 3). This lone phone call does not manifest a clear intent to
defend by Patel, and nothing else in the record supports a determination that either
Defendant has “appeared” in this action (e.g. filings, attempts to contact the Court).
policy of determining cases on their merits and we therefore view defaults with
Subject Matter Jurisdiction
“It is . . . axiomatic that the inferior federal courts are courts of limited
jurisdiction. They are ‘empowered to hear only those cases within the judicial power
of the United States as defined by Article III of the Constitution,’ and which have
been entrusted to them by a jurisdictional grant authorized by Congress.” Univ. of
S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v.
Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). Accordingly, “it is well settled that a
federal court is obligated to inquire into subject matter jurisdiction sua sponte
whenever it may be lacking.” Id.
Under 28 U.S.C. § 1345, “[e]xcept as otherwise provided by Act of Congress,
the district courts shall have original jurisdiction of all civil actions, suits or
proceedings commenced by the United States, or by any agency or officer thereof
expressly authorized to sue by Act of Congress.” “This suit was brought not by the
United States but by the Secretary of Labor. Therefore, the issue is not whether the
United States could initiate such a suit in the district court but whether the
Secretary can…[F]or section 1345 jurisdiction to exist over this action, the Secretary
must be expressly authorized to sue.” Marshall v. Gibson's Products, Inc. of Plano,
584 F.2d 668, 676 (5th Cir. 1978).3
In Marshall, the Secretary of Labor had brought suit “to enjoin the defendant…to submit
to inspection under section 8(a) of the Occupational Safety and Health Act of 1970 (OSHA),
29 U.S.C. s 657(a) (1976).” 584 F.2d at 670. “After submission of the case[ on appeal], the
court directed both parties to file briefs stating the basis of federal court jurisdiction and
The Secretary has asserted claims that the Defendants have violated the
minimum wage and overtime compensation requirements of 29 U.S.C. §§ 206 and
207, respectively, which also constitute violations of 29 U.S.C. § 215(a)(2) (making it
“unlawful for any person to violate any of the provisions of section 206 or section
207 of this title…”).
The Secretary has demanded damages under 29 U.S.C. §
216(c), which expressly provides that the “Secretary is authorized to supervise the
payment of the unpaid minimum wages or the unpaid overtime compensation owing
to any employee or employees under section 206 or section 207 [and] may bring an
action in any court of competent jurisdiction to recover the amount of unpaid
minimum wages or overtime compensation and an equal amount as liquidated
damages.” See Mitchell v. Robert De Mario Jewelry, Inc., 260 F.2d 929, 932 (5th Cir.
1958) (“In the drafting of the 1949 [Fair Labor Standards Amendments] there was
included as Section 16(c) the provision that, with the exceptions stated, the
Administrator, now the Secretary, could sue with the consent of the employees for
unpaid minimum wages and unpaid overtime compensation. Thus was created a
cause of action in the Secretary. Suits by him under the statute are, in effect, suits
by the United States.”), rev'd on other grounds, Mitchell v. Robert DeMario Jewelry,
Inc., 361 U.S. 288 (1960).
discussing the right of the Secretary to commence the action. Both parties insisted that the
court had federal question jurisdiction and that the Secretary had ample authority under
the Act to maintain the suit.” Id. at 678 n.1 (Tuttle, J., dissenting). Without addressing
whether federal question jurisdiction applied, the panel majority found “that the district
court lacked subject matter jurisdiction to entertain the Secretary's suit…”
Considering the reasoning of the majority in Marshall, the Court is left in doubt as to
whether subject matter jurisdiction over the Secretary’s present action, admittedly under a
different statutory scheme, can be premised solely on federal question jurisdiction under 28
U.S.C. § 1331.
The Secretary has also requested injunctive relief under 29 U.S.C. § 217,
which provides that the “district courts… shall have jurisdiction, for cause shown,
to restrain violations of section 215 of this title, including in the case of violations of
section 215(a)(2) of this title the restraint of any withholding of payment of
minimum wages or overtime compensation found by the court to be due to
employees under this chapter…” The Eleventh Circuit has held that “the Secretary
of Labor has the exclusive right to bring an action for injunctive relief” under the
FLSA. Powell v. State of Fla., 132 F.3d 677, 678 (11th Cir. 1998) (per curiam).
Thus, because the FLSA has expressly authorized the Secretary to sue for the relief
requested, this Court has subject matter jurisdiction under § 1345.
Personal Jurisdiction and Venue4
The Secretary’s Complaint alleges that both Defendants conduct business in
Mobile County, Alabama, and that all relevant actions occurred in this district.
These uncontested allegations indicate that the Court can properly exercise
personal jurisdiction over both Defendants and that venue is proper in this District.
Sufficiency of the Complaint
“An allegation – other than one relating to the amount of damages – is
admitted if a responsive pleading is required and the allegation is not denied.” Fed.
R. Civ. P. 8(b)(6). “While ‘a default is not treated as an absolute confession by the
See Tyco Fire, 218 F. App'x at 864 (“A defaulted defendant…can defend by challenging the
jurisdiction of the court to enter judgment against him. Thus, for example, a defendant in
default still can…contest the court's exercise of personal jurisdiction over him.”); United
States v. Hall, Civil Action No. 13-326-KD-N, 2013 WL 6844099, at *2 (S.D. Ala. Dec. 30,
2013) (sua sponte addressing whether venue and personal jurisdiction were sufficiently
shown in granting uncontested motion for default judgment).
defendant of his liability and of the plaintiff's right to recover,’ a defaulted
defendant is deemed to ‘admit[ ] the plaintiff's well-pleaded allegations of fact.’ The
defendant, however, ‘is not held to admit facts that are not well-pleaded or to admit
conclusions of law.’
Thus, before entering a default judgment for damages, the
district court must ensure that the well-pleaded allegations in the complaint, which
are taken as true due to the default, actually state a substantive cause of action and
that there is a substantive, sufficient basis in the pleadings for the particular relief
sought.” Tyco Fire & Sec., LLC v. Alcocer, 218 F. App'x 860, 863 (11th Cir. 2007)
(per curiam) (unpublished) (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank,
515 F.2d 1200, 1206 (5th Cir. 1975)) (footnote omitted). See also Chudasama v.
Mazda Motor Corp., 123 F.3d 1353, 1371 n.41 (11th Cir. 1997) (“[A] default
judgment cannot stand on a complaint that fails to state a claim.” (citing
Nishimatsu Constr., 515 F.2d at 1206 (“See Nishimatsu Constr. Co. v. Houston Nat'l
Bank, 515 F.2d 1200, 1206 (5th Cir.1975) (“A default judgment is unassailable on
the merits but only so far as it is supported by well-pleaded allegations, assumed to
The FLSA currently provides that, subject to certain inapplicable exceptions,
“[e]very employer shall pay to each 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,
wages” in the amount of $7.25 an hour. 29 U.S.C. § 206(a)(1)(C). The FLSA also
provides that, subject to certain inapplicable exceptions, “no 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 compensation for his employment in
excess of the hours above specified at a rate not less than one and one-half times the
regular rate at which he is employed. 29 U.S.C. § 207(a)(1). It is “unlawful for any
person…to violate any of the provisions of section 206 or section 207…” 29 U.S.C. §
By failing to answer the allegations in the Complaint, Patel has admitted
that, at all relevant times, he “acted directly or indirectly in the interest of” GCMC
“in relation to their employees,” as he “makes final decisions on the operation of the
enterprise, is responsible for maintaining compliance with the Hilton franchise
agreement, and the general manager answers directly to him.” (Id. at 2). Thus,
Patel deemed an “employer” for purposes of the FLSA. See 29 U.S.C. § 203(d) (“
‘Employer’ includes any person acting directly or indirectly in the interest of an
employer in relation to an employee…”).
Moreover, by failing to answer the allegations in the Complaint, both
Defendants have admitted that they “engaged in related activities performed either
through unified operation or common control for a common business purposes” (Doc.
1 at 2), which constitutes an “enterprise” under the FLSA. See 29 U.S.C. § 203(r)(1)
(“ ‘Enterprise’ means the related activities performed (either through unified
operation or common control) by any person or persons for a common business
purpose…”)). They have also admitted that this “enterprise” “employed employees
engaged in commerce or in the production of goods for commerce, or employees
handling, selling or otherwise working on goods or materials that have been moved
in or produced for commerce; and…ha[s] an annual gross volume of sales made or
business done of not less than $500,000 (exclusive of excise taxes at the retail level
which are separately stated)” (Doc. 1 at 3), thus making it an “enterprise engaged in
commerce or in the production of goods for commerce” for purposes of the FLSA.
See 29 U.S.C. § 203(s)(1)(A). As such, the Defendants have admitted that their
employees were employed in an “enterprise engaged in commerce or in the
production of goods for commerce” and were thus subject to the minimum wage and
overtime requirements of §§ 206 and 207, respectively.
The Secretary’s Complaint alleges that, “since May 7, 2011,” the Defendants
have “repeatedly and willfully” violated §§ 206, 207, and 215(a)(2) by failing to pay
their employees the required minimum wage and overtime. 5 “Specifically, the
“[T]he statute of limitations applicable to civil actions to enforce the Fair Labor
Standards Act (FLSA)…provides that such actions must be commenced within two years
‘except that a cause of action arising out of a willful violation may be commenced within
three years after the cause of action accrued.’ ” McLaughlin v. Richland Shoe Co., 486 U.S.
128, 129 (1988) (quoting 29 U.S.C. § 255(a)). Moreover, § 217 bars injunctions restraining
withholding of back wages for “sums which employees are barred from recovering, at the
time of the commencement of the action to restrain the violations, by virtue of the
provisions of section 255…”
However, because the Defendants are in default, the Court need not determine
whether any of the Secretary’s claims may have been filed beyond the statute of limitations,
as this is a procedural defense that the Defendants must assert. See Tyco Fire, 218 F.
App'x at 864 (“Other than the narrow exceptions [of contesting jurisdiction and the
sufficiency of the complaint and its allegations to support the judgment sought], a
defendant, once a default has been entered against him, is not entitled to raise any other
defenses. Accordingly, procedural defenses, such as a motion to dismiss for forum non
conveniens…are lost.”); Hodgson v. Humphries, 454 F.2d 1279, 1283-84 (10th Cir. 1972)
(holding that 29 U.S.C. § 255 “ was intended as a limitation on the remedy available, not on
Defendants did not provide compensation for all hours worked and the
compensation they did pay did not equal at least the minimum wages for all hours
worked[,]” and “the Defendants did not provide employees overtime compensation
unless they recorded more than 80 hours in payroll in a bi-weekly pay period and
payroll records did not record all hours worked by employees.” (Doc. 1 at 3-4). By
failing to contest these allegations, the Defendants have admitted to them, and the
allegations sufficiently demonstrate that the Defendants are in violation of §§ 206,
207, and 215(a)(2).
The FLSA further provides that “[e]very employer subject to any provision of
this chapter or of any order issued under this chapter shall make, keep, and
preserve such records of the persons employed by him and of the wages, hours, and
other conditions and practices of employment maintained by him, and shall
preserve such records for such periods of time…” 29 U.S.C. § 211(c). Additionally,
under 29 U.S.C. § 211(d), the Department of Labor’s Administrator of the Wage and
Hour Division 6 “is authorized to make such regulations and orders regulating,
restricting, or prohibiting industrial homework as are necessary or appropriate to
prevent the circumvention or evasion of and to safeguard the minimum wage rate
prescribed in this chapter…” It is “unlawful for any person…to violate any of the
provisions of section 211(c)…, or any regulation or order made or continued in effect
the right to bring the action, and must be pleaded as an affirmative defense”); Mumbower v.
Callicott, 526 F.2d 1183, 1187 n.5 (8th Cir. 1975) (same); Ott v. Midland-Ross Corp., 523
F.2d 1367, 1370 (6th Cir. 1975) (“[W]e hold that s 255 establishes only a procedural
limitation period under the Act. It is not like a statute which imposes a liability and
provides the remedy which must be exercised in strict conformity to the statute.”).
See 29 U.S.C. § 204(a).
under the provisions of section 211(d)…, or to make any statement, report, or record
filed or kept pursuant to the provisions of such section or of any regulation or order
thereunder, knowing such statement, report, or record to be false in a material
respect.” 29 U.S.C. § 215(a)(5).
The Secretary’s Complaint alleges that the Defendants violated §§ 211(c) and
215(a)(5), as well as relevant regulations found at 29 C.F.R. § 516, “by failing to
make, keep and preserve adequate and accurate records of the persons employed
and of the wages, hours and other conditions and practices of employment
maintained by them as prescribed in the aforesaid Regulations.” (Doc. 1 at 4). By
failing to contest these allegations, the Defendants have admitted to them, and the
allegations sufficiently demonstrate that the Defendants are in violation of §§ 211(c)
“A default judgment must not differ in kind from, or exceed in amount, what
is demanded in the pleadings.” Fed. R. Civ. P. 54(c). “A court has an obligation to
assure that there is a legitimate basis for any damage award it enters…” Anheuser
Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003).
Complaint seeks a damages award of “back wages for a period of three (3) years
prior to the commencement of this action and an additional equal amount as
liquidated damages to [the Defendants’ ]employees” under 29 U.S.C. § 216(c).7 (Doc.
1 at 4-5).
The Complaint claims that these “employees” are “named in Appendix ‘A’ attached hereto
and made a part hereof…” (Doc. 1 at 5). No such appendix is attached to the Complaint
“The court may conduct hearings…when, to enter or effectuate [default
]judgment, it needs to determine the amount of damages.”
Fed. R. Civ. P.
55(b)(2)(B). The Eleventh Circuit has stated:
An evidentiary hearing is not a per se requirement; indeed, Rule
55(b)(2) speaks of evidentiary hearings in a permissive tone. See Fed.
R. Civ. P. 55(b)(2) (“[T]he court may conduct such hearings ....”
(emphasis added)). We have held that no such hearing is required
where all essential evidence is already of record. See S.E.C. v. First
Fin. Group of Tex., Inc., 659 F.2d 660, 669 (5th Cir. 1981) (“Rule
55(b)(2) does not require the district court to hold either an evidentiary
hearing or oral argument on a motion for a default judgment.”) (citing
Thomas v. United States, 531 F.2d 746, 748 (5th Cir. 1976)
(“Taxpayer's first contention that the district court should have held an
evidentiary hearing and/or oral argument on the motion is without
merit. All the essential facts were of record.”)). Other circuits agree.
See, e.g., KPS & Assocs. v. Designs by FMC, Inc., 318 F.3d 1, 21 (1st
Cir. 2003). Other circuits also agree, however, that such hearings are
required in all but “limited circumstances,” id., as when the district
court already has a wealth of evidence from the party requesting the
hearing, such that any additional evidence would be truly unnecessary
to a fully informed determination of damages. Id. (collecting cases).
S.E.C. v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005).
The Complaint demands, pursuant to 29 U.S.C. § 216(c), to recover from the
Defendants “minimum wage and overtime compensation, together with an equal
amount as liquidated damages” (Doc. 1 at 1), but does not state a specific sum.
However, in support of his motion for default judgment, the Secretary has
submitted the affidavit of Monetta Roberts (“Roberts”), an investigator with the
Department of Labor’s Wage and Hour Division who investigated the FLSA
violations at issue in this action (Doc. 14-1). She avers that her “investigation
covered the period from April 10, 2011 through April 7, 2013” and “included
filed with the Court.
examining time, payroll and other employment records[,]” as well as speaking with
Patel and interviewing “several of Defendants’ employees…” (Id. at 1). Based in
her investigation, she determined that the Defendants “owe nine employees
$2,848.37 in back wages.”
(Id. at 3).
Attached to Roberts’s affidavit, which
incorporates it by reference, is an appendix listing the names of the nine employees
and the total back wages due to each of them. (Doc. 14-2).
Roberts, however, does not provide any specific details regarding the data or
methodology used to determine these amounts, instead simply asserting in
conclusory fashion that they are the back wages the Defendants owe. Generally,
such conclusory assertions are insufficient in this District to support a claim for
damages in a default judgment. In PNCEF, LLC v. Hendricks Building Supply
LLC, 740 F. Supp. 2d 1287 (S.D. Ala. 2010), Chief Judge Steele rejected similar
conclusory asserts as insufficient to support an award of damages on default:
In support of its Motion for Default Judgment, plaintiff offers the
Declaration of Tara Love, who is a “Lawsuit Coordinator” for PNCEF.
Love explains the Stipulated Loss Value calculation as follows:
“Pursuant to the express terms of the Lease, Defendants owe PNC
$22,584.74 in delinquent payments, $2,634.66 in late fees, $56,456.85
in future payments which are accelerated pursuant to the express
terms of the Lease, and $45,000.00 as the future market value for the
Equipment, for a total amount due and owing to PNC from Defendants
under the Lease of $126,674.25.”
The problem is that the record is devoid of evidence of how any of these
figures were calculated, but is instead confined to the conclusory Love
Declaration listing those amounts in summary fashion. Presumably, it
would be a simple matter for plaintiff to produce a ledger or other
backup documentation showing the due dates and amounts of the
delinquent payments, and to provide testimony in declaration form
explaining how the late fees and future payment amounts were
computed and demonstrating the factual and contractual basis for
each. But plaintiff has not done so, instead asking the Court to accept
on faith that the bare, unadorned payment and late fee numbers
presented in the Love Declaration are accurate. What's more, plaintiff
submits a fair market value estimate of $45,000 for the equipment,
without a trace of evidence of the factual underpinnings of this figure.
Given the current state of the record, the Court has no idea where this
$45,000 valuation originated and would be adopting it in a blind act of
guesswork and speculation. This sort of judicial leap of faith in fixing
the amount of a default judgment is fundamentally incompatible with
the bright-line requirement that a plaintiff seeking a default judgment
must prove its damages by record evidence. Rather than merely
telling the Court in summary fashion what its damages are, a
plaintiff seeking default judgment must show the Court what
those damages are, how they are calculated, and where they
come from, by reference to the lease agreement, appropriate back-up
documentation, and witness testimony as appropriate. This was not
Nor does the record, as presently formulated, provide a reasonable
evidentiary basis for computing the attorney's fee component of any
damages award. Again, the lease agreement obligated Hendricks
Building “to pay all of Lessor's costs of enforcing Lessor's rights
against Lessee ... including reasonable attorney's fees.” But the record
is devoid of evidence of the reasonable attorney's fees that PNCEF has
actually incurred in enforcing its rights in this action. Rather than
presenting such evidence, plaintiff submits the declaration of its
counsel of record, who avers, “I believe that a fee of 15% of the fund to
be collected, or $19,001.14, is reasonable” in this case. But this
evidence answers the wrong question. The Court's task is not to
ascertain what a hypothetically reasonable attorney's fee might be and
to award that amount to plaintiff, but is instead to determine PNCEF's
actual attorney's fee incurred in enforcing its rights against Hendricks
Building in this matter, and to ascertain whether that actual figure
(not a hypothetical fee untethered to PNCEF's actual financial
commitment) is a “reasonable attorney's fee” within the ambit of
Paragraph 14 of the lease agreement. On this record, the Court cannot
ascertain what PNCEF's actual legal costs have been, much less make
any judgment as to their reasonableness.
PNCEF, 740 F. Supp. 2d at 1293-94 (boldface emphasis added) (record citations
Chief Judge Steele expressly noted that he had “designated [PNCEF] for publication
However, Roberts has also averred that, “[o]n November 30, 2013, Anand
Patel signed Wage and Hour Form WH-56 agreed to pay the [stated] back wages
and an equal amount in liquidated damages; a total of $5,696.74” but “has not
complied with this agreement.” (Doc. 14-1 at 3). Patel is also averred to be the
“owner” of GCMC. (Id. at 2). Given that the Defendants have previously been made
aware of the amount of damages sought by the Secretary and (at least initially)
agreed to it, the Court will accept as competent and sufficient evidence the back
wages assessment set forth in Roberts’s affidavit and accompanying appendix (Docs.
14-1 & 14-2). The Court incorporates by reference the information contained in the
appendix (Doc. 14-2), and the Clerk of Court is DIRECTED to attach a copy of the
appendix (Doc. 14-2) to this Order upon docketing.
As such, pursuant to § 216(c), the Court will award the Secretary $2,848.37
in “unpaid minimum wages” and “overtime compensation,” plus “an equal amount
as liquidated damages[,]” for a total monetary damages award of $5,696.74.
The Secretary’s Complaint also seeks injunctive relief under 29 U.S.C. § 217.
“Section 17 of the FLSA, 29 U.S.C. § 217, authorizes the district courts to issue both
prospective and restitutionary injunctions.” Donovan v. Sabine Irrigation Co., 695
F.2d 190, 196 (5th Cir. 1983) (citing Donovan v. Brown Equipment and Service
Tools, Inc., 666 F.2d 148 (5th Cir. 1982)), abrogated on other grounds as recognized
because it addresses recurring issues concerning a plaintiff's burden and the quantum of
proof needed for a default judgment…By designating th[e] Order for publication, [Chief
Judge Steele] hope[d] that it w[ould] be instructive to other litigants of the applicable
standards and requirements with which a movant seeking default judgment must comply.”
PNCEF, 740 F. Supp. 2d at 1288 n.1.
in Reich v. Bay, Inc., 23 F.3d 110, 117 n.4 (5th Cir. 1994)). “Generally speaking, the
propriety of a grant of injunctive relief in a § 217 action is an equitable matter,
committed in the first instance to the sound discretion of the district court.” Id.
(citing Shultz v. Parke, 413 F.2d 1364 (5th Cir. 1969)).
A restitutionary injunction under section 17 is intended to accomplish
several purposes. First, and most obviously, it is intended to
compensate the affected employees for the losses they sustained as a
result of the wrongful withholding of their wages. Hodgson v. American
Can Co., 440 F.2d 916, 922 (8th Cir. 1971)…Moreover, the issuance of
the injunction against withholding back pay is indispensable to its
restitution in these cases, for once the Secretary has sought such an
injunction, the employees' right to sue for wages due is terminated.
Section 16(b), 29 U.S.C. 216(b) (Supp. III 1979). Therefore, if the court
refuses to order the payment of back wages in the Secretary's suit, the
employees “will have a legal right to that money without any means to
enforce it.” Wirtz v. Malthor, Inc., 391 F.2d 1, 3 (9th Cir. 1968).
The second major purpose is “to correct a continuing offense against
the public interest.” See, e.g., Marshall v. A&M Consolidated
Independent School District, 605 F.2d 186, 189 (5th Cir.
1979)…Therefore, a district court, in deciding whether to grant a
restitutionary injunction, may not focus only on the interests of the
parties to the suit before it. Requiring the payment of back wages is
meant both to “increase the effectiveness of the enforcement of the Act
by depriving a violator of any gains accruing to him through his
violation,” Marshall v. A&M Consolidated Independent School District,
supra, 605 F.2d at 189, quoting Wirtz v. Malthor, Inc., supra, 391 F.2d
at 3, and to protect those employers who comply with the Act's wage
requirements from having to compete unfavorably with those who fail
to comply. Wirtz v. Jones,…340 F.2d [901,] 905[ (5th Cir. 1965).]
This is not to suggest that section 17 restitutionary injunctions should
issue as a matter of course upon a finding of past wages due. Compare
Wirtz v. Malthor, Inc., supra, 391 F.2d at 3 (granting restitutionary
injunction) with Brennan v. Saghatelian, 514 F.2d 619, 621-622 (9th
Cir. 1975) (denying such an injunction). If, for example, the employer is
bankrupt, an injunction would be vain and the employer should not be
threatened with citation for contempt for not doing what he is unable
On the other hand, the trial judge's discretion should be exercised with
an eye to the purposes of the Act. See, e.g., Mitchell v. Ballenger Paving
Co., 299 F.2d 297, 300-01 (5th Cir.), cert. denied, 370 U.S. 922, 82 S.
Ct. 1565, 8 L. Ed. 2d 503 (1962). A section 17 injunction provides a
remedy for violation of national labor policy in a single suit initiated by
the Secretary on his own volition, thus avoiding potential multiplicity
of employee actions on the one hand and, on the other, the complete
abandonment of their just wages by employees apprehensive of
employer retaliation. When an injunction is explicitly authorized by
statute, proper discretion usually requires its issuance if the
prerequisites for the remedy have been demonstrated and the
injunction would fulfill the legislative purpose. See Shultz v. Parke,
supra, 413 F.2d at 1368-70 (5th Cir. 1969); Wirtz v. B. B. Saxon Co.,
365 F.2d 457, 462-63 (5th Cir. 1966). Cf. United States v. Hayes
International Corp., 415 F.2d 1038, 1044-45 (5th Cir. 1969) (Title VII).
Brown Equip., 666 F.2d at 156-57. Accord Donovan v. Grantham, 690 F.2d 453,
456-58 (5th Cir. 1982) (per curiam); Sabine Irrigation, 695 F.2d at 196-97.
The Secretary has not specifically requested a restitutionary injunction in his
Complaint (see Doc. 1). However, the Secretary’s proposed default judgment order
(Doc. 14-3), attached to the present motion, includes a provision that the
Defendants be “restrained from withholding payment of back wages in the total
amount of $2,848.37 and an additional equal amount as liquidated damages due
employees…” (id. at 5).
Considering the above reasoning in Brown Equipment,
and given that the Defendants have already reneged once after agreeing to pay
damages, see supra, the Court finds that a restitutionary injunction as to the back
wage award of $2,848.37 is appropriate. However, the Secretary’s request that the
liquidated damages also be included in the injunction is inappropriate, as “[c]ourts
are still not…authorized to require payment of liquidated damages in section 17
suits.” Brown Equip., 666 F.2d at 156. Accord Monahan v. Emerald Performance
Materials, LLC, No. C08-1511 RBL, 2009 WL 1172703, at *4 (W.D. Wash. Apr. 22,
2009) (“Liquidated damages are unavailable as a remedy in a FLSA § 217 suit.”
(citing Brown Equip., 666 F.2d at 156)). Accordingly, the Court will, by separate
document, enter an injunction stating as follows: “The Defendants are restrained
from withholding from the Plaintiff Secretary of Labor payment of back wages in
the total amount of $2,848.37 due their employees, as awarded in this action.” (Cf.
Doc. 14-3 at 5).
As to prospective injunctive relief, the Secretary’s Complaint requests that
the Court “permanently enjoin Defendants, their officers, agents, servants,
employees and all persons in active concert or participation with them from
violating” §§ 206, 207, 211(c), 215(a)(2), and 215(a)(5).
(Doc. 1 at 4-5).
“injunctive relief” section of the Secretary’s proposed order attached to his motion
for default judgment (Doc. 14-3 at 4-5) is equally general, requiring no more that
the Defendants “shall not…fail to” obey §§ 206, 207, 211(c), 215(a)(2), and 215(a)(5).
“Fed. R. Civ. P. 65(d) requires that a[n]…injunction be ‘specific in its terms’
and ‘describe in reasonable detail ... the act or acts sought to be restrained.’ ” Fla.
Ass'n of Rehab. Facilities, Inc. v. State of Fla. Dep't of Health & Rehabilitative
Servs., 225 F.3d 1208, 1222 (11th Cir. 2000).
This Circuit has held repeatedly that “obey the law” injunctions are
unenforceable. See, e.g., Burton v. City of Belle Glade, 178 F.3d 1175,
1200 (11th Cir.1999) (holding that injunction which prohibited
municipality from discriminating on the basis of race in its annexation
decisions “would do no more than instruct the City to ‘obey the law,’ ”
and therefore was invalid); Payne v. Travenol Labs., Inc., 565 F.2d 895,
The current version of Rule 65(d) requires that an injunction “state its terms specifically.”
Fed. R. Civ. P. 65(d)(1)(B).
899 (5th Cir. 1978) (invalidating injunction that prohibited defendant
from violating Title VII in its employment decisions). The specificity
requirement of Rule 65(d) is no mere technicality; “[the] command of
specificity is a reflection of the seriousness of the consequences which
may flow from a violation of an injunctive order.” Payne, 565 F.2d at
897. An injunction must be framed so that those enjoined know exactly
what conduct the court has prohibited and what steps they must take
to conform their conduct to the law. See Meyer v. Brown & Root Constr.
Co., 661 F.2d 369, 373 (5th Cir. 1981) (citing International
Longshoremen's Assoc. v. Philadelphia Marine Trade Assoc., 389 U.S.
64, 76, 88 S. Ct. 201, 208, 19 L. Ed. 2d 236 (1967)).
Id. at 1222-23. See also S.E.C. v. Sky Way Global, LLC, 710 F. Supp. 2d 1274 (M.D.
Fla. 2010) (thoroughly discussing why “obey the law” injunctions are).
However, the former Fifth Circuit, interpreting McComb v. Jacksonville
Paper Co., 336 U.S. 187 (1949), took a more lenient view for FLSA injunctions,
holding that such injunctions “may be sufficiently broad and general to enjoin any
practices which would constitute violations of the Act's provisions dealing with
minimum wages, overtime and the keeping of records. Decrees of such generality
are often necessary to prevent further violations.” Wirtz v. Ocala Gas Co., 336 F.2d
236, 240 (5th Cir. 1964) (citing McComb, 336 U.S. at 191 (internal citation and
footnote omitted).10 In Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508 (5th Cir. 1969),
the court upheld an FLSA injunction that closely tracked certain statutory
language,11 finding that
Ocala Gas held that prior precedent “stand[ing] for a more restricted view[ of injunctions]
must, with respect to the use of injunctions in Fair Labor Standards Act cases, yield to
McComb…” 336 F.2d at 243 n.6 (citing Nasif v. United States, 165 F.2d 119 (5th Cir. 1947)).
The injunction read as follows:
‘For reasons contained herein, it is ORDERED, ADJUDGED and DECREED
the injunction conformed to the requirements of F. R. Civ. P. 65(d).
Rule 65(d) requires that an injunction have specificity so that those
constrained to follow it will not want for guidance. The injunction in
question is not lacking in clarity. Its interdiction of oppressive child
labor is not vague, and its command that Gulf King keep and preserve
records is clearly understandable. If for some reason Gulf King had
doubts about the meaning of any part of the injunction, it could have
sought district court clarification. McComb v. Jacksonville Paper Co.,
1949 , 336 U.S. 187, 69 S. Ct. 497, 93 L. Ed. 599.
The fact that the decree includes specific references to sections of the
Fair Labor Standards Act is not, as here used, inconsistent with the
requirements of Rule 65(d). It is significant that the injunction does
not engraft the statute in gross, Cf. Fleming v. Salem Box Co., D.C. Or.
1940, 38 F. Supp. 997, or rely on the statute for clarification of what is
otherwise unclear in the decree itself. It merely supplements specific
instructions in the decree with the statutory authority from which the
right to issue such instructions derives. The statutory material is thus
given as a parenthetical reference, not as a substantive command.
407 F.2d at 517 (footnotes omitted). See also S.E.C. v. Goble, 682 F.3d 934, 952 n.11
(11th Cir. 2012) (“[I]n Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508, 517 (5th Cir.
1969), the former Fifth Circuit found that an injunction which required compliance
that defendant, Gulf King Shrimp Company, its agents, servants, employees
and all persons acting or claiming to act in its behalf and interest, be, and the
same are hereby permanently enjoined and restrained from violating the
provisions of sections 15(a)(4) and 15(a)(5) of the Fair Labor Standards Act of
1938, as amended, in any of the following manners:
‘Defendant shall not fail to make, keep and preserve records of its employees
and of the wages, hours or other conditions and practices of employment
maintained by it, as prescribed by the Regulations of the Administrator
issued, and from time to time amended, pursuant to Section 11(c) of the Act
and found in Title 29, Chapter v. Code of Federal Regulations, Part 516;
‘The defendant shall not, contrary to Sections 12 and 15(a)(4) of the Act,
employ any oppressive child labor (as defined in Section 3(l) of the Act) in
interstate commerce or in the production of goods for interstate commerce.’
Gulf King Shrimp, 407 F.2d at 517 n.10.
with the records requirements of the Fair Labor Standards Act satisfied Rule
Considering the lenience shown FLSA injunctions by Ocala Gas and Gulf
King Shrimp, the Court finds that the Secretary’s requested prospective injunctive
relief does not run afoul of Rule 65(d)’s specificity requirements.
Although the question of whether an injunction should issue to
restrain an employer from future FLSA violations is initially addressed
to the discretion of the trial court, the exercise of that discretion is not
unbridled. Wirtz v. Atlas Roofing Manufacturing Co., 5 Cir. 1967, 377
F.2d 112; Goldberg v. Cockrell, 5 Cir. 1962, 303 F.2d 811. Since the
FLSA itself provides for no administrative sanctions, the only remedy
of the Secretary where an employer refuses voluntary compliance with
the Act is resort to the judiciary for injunctive relief, and it is “no less
important for the judiciary to use its injunctive power to effectuate the
national policy expressed by Congress than for the executive branch to
police the Act”. Wirtz v. Graham Transfer and Storage Co., 5 Cir. 1963,
322 F.2d 650, 653.
The effect of permanently enjoining from future violations of FLSA an
employer found to have violated that Act in the past is to shift the
“responsibility for compliance onto the employer's shoulders” and to
lessen the responsibility of the Wage and Hour Division of
investigating past violators to ascertain if they are in compliance with
the provisions of the Act. Goldberg v. Cockrell, 5 Cir. 1962, 303 F.2d
811, 814. The issuance of a permanent injunction in FLSA cases does
not subject an employer against whom its runs to a penalty or a
hardship since it requires him to do “what the Act requires anyway to
comply with the law.” Mitchell v. Pidcock, 5 Cir. 1962, 299 F.2d 281,
287. Because an injunction has an administratively beneficial effect in
enforcing the FLSA, this court has not hesitated to reverse district
courts for refusing to enjoin future violations. See Shultz v. Salinas, 5
Cir. 1969, 416 F.2d 412; Mitchell v. Pidcock, supra; Mitchell v. Jax Beer
Distributors, 5 Cir. 1961, 290 F.2d 24; Mitchell v. Hausman, 5 Cir.
1958, 261 F.2d 778. In other cases where the facts have warranted
prospective injunctions we have granted such relief but limited its
duration. See, e. g., Wirtz v. Atlas Roofing Manufacturing Co., supra.
[T]he two factors properly to be considered in determining whether a
permanent injunction should be granted are the previous conduct of
the employer and the dependability of his promises for future
compliance. Shultz v. Salinas, supra; Wirtz v. Atlas Roofing
Manufacturing Co., supra; Mitchell v. Hausman, supra...[C]urrent
compliance with the requirements of FLSA is no bar to prospective
injunctive relief, see Hodgson v. Ricky Fashions, Inc., 5 Cir. 1970, 434
F.2d 1261, 1263; Gulf King Shrimp Co. v. Wirtz, 5 Cir. 1969,407 F.2d
508, especially where compliance is achieved only by the direct
scrutiny of enforcement authorities. Opelika Royal Crown Bottling Co.
v. Goldberg, 5 Cir. 1962, 299 F.2d 37, 44; Mitchell v. Hausman, supra
at 780; Mitchell v. Hodges, 5 Cir. 1956, 238 F.2d 380, 381.
Dunlop v. Davis, 524 F.2d 1278, 1280-81 (5th Cir. 1975) (footnote omitted). Accord
Sabine Irrigation Co., 695 F.2d at 197 (““In deciding whether to issue a prospective
injunction[ under the FLSA], the district court must evaluate the previous conduct
of the employer and the dependability of his promises for future compliance.”).
Considering these principals, the Dunlop court reversed the district court’s
denial of permanent injunctive relief, find, inter alia, that, even “assuming that [the
employer] had ceased violating the Act after the initial investigation by the
compliance officer, his attempts thereafter to avoid the payment of admittedly due
back wages, his falsification of the receipts for those wages, and his
misrepresentations to the Department do not demonstrate likelihood of future
voluntary compliance on his part.” Id. at 1281. The court “fail[ed] to find any
indication in these circumstances, in light of [the employer’s] proven practices and
attitude, that violations will not be resumed in the future.” Id.
As reported in the affidavit of investigator Roberts, see supra, the Defendants
had previously signed a form indicating that they agreed pay the damages amount
sought by the Secretary, but the Defendants have not kept this promise.
“previous conduct” weighs in favor of issuing a permanent injunction. Moreover,
given that the Defendants have utterly failed to defend their conduct in this action,
the Court is bereft of any “promises for future compliance” to consider. Thus, the
Court finds it appropriate to grant the prospective injunctive relief the Secretary
seeks and will issue, by separate document, an injunction stating as follows:
Defendants Gulf Coast Management Company, LLC d/b/a Hampton
Inn Saraland and Anand Patel, their officers, agents, servants, and
employees, and other persons who are in active concert or participation
with any of the foregoing
shall not, contrary to §§ 7 and 15(a)(2) of the Fair Labor
Standards Act of 1938, 29 U.S.C §§ 207 and 215(a)(2), employ
any employee in commerce or in the production of goods for
commerce, or in an enterprise engaged in commerce or in the
production of goods for commerce, within the meaning of the
Act, for more than 40 hours in a workweek unless such employee
is compensated for such hours in excess of 40 at an overtime rate
of at least one and one-half times the regular rate at which such
employee is employed;
shall not, contrary to §§ 6 and 15(a)(2) of the Act, 29 U.S.C. §§
206 and 215(a)(2), fail to pay employees employed in an
enterprise engaged in commerce or in the production of goods for
commerce, the applicable minimum hourly rate; and
shall not, contrary to §§ 11(c) and 15(a)(5) of the Act, 29 U.S.C.
§§ 211(c) and 215(a)(5), fail to make, keep and preserve
adequate and accurate employment records as prescribed by
Regulation found at 29 C.F.R. § 516.
(See Doc. 14-3 at 5).12 Upon consideration, the Court will set this prospective
injunctive relief to expire after one year from the date of the injunction’s issuance.
The Court declines the Secretary’s invitation that he be enjoined to exercise his
obligations under § 216(c) (“Any sums thus recovered by the Secretary of Labor on behalf of
an employee pursuant to this subsection shall be held in a special deposit account and shall
be paid, on order of the Secretary of Labor, directly to the employee or employees affected.
Any such sums not paid to an employee because of inability to do so within a period of three
years shall be covered into the Treasury of the United States as miscellaneous receipts.”).
(See Doc. 14-3 at 5). The Court has no reason to believe that the Secretary will fail to do so
In accordance with the foregoing analysis, and under Federal Rule of Civil
Procedure 55(b)(2), it is ORDERED that the Secretary’s Motion for Default
Judgment (Doc. 14) is GRANTED as follows:
Pursuant to 29 U.S.C. § 216(c), the Secretary is awarded and shall recover
from the Defendants, jointly and severally, a total of $2,848.37, representing
back wages owed to the employees listed in appendix attached hereto for the
periods set forth therein, and an equal sum as liquidated damages, for a
total monetary award of $5,696.74.
Pursuant to 29 U.S.C. § 217, the Court, by separate document, shall issue an
injunction against the Defendants in conformance with Section II.E. of this
Final judgment in accordance with this Order and Federal Rule of Civil
Procedure 58 shall issue separately.
The Clerk of Court is DIRECTED to serve copies of this Order, the
injunction, and the final judgment on the Defendants by certified mail at the
The Secretary has also requested that the Court include in this Order the provision that
“court costs of this action hereby are taxed to Defendants for which execution may issue.”
(Doc. 14-3 at 6). The Court declines to do so. The Secretary may apply for an award of
costs in accordance with Federal Rule of Civil Procedure 54(d)(1), SD ALA LR 54.1
(www.alsd.uscourts.gov/documents/forms/local-rules.pdf), and SD ALA Standing Order No.
Gulf Coast Management Company, LLC
d/b/a Hampton Inn Saraland
c/o Ramon Patel
6401 Canebrake Rd.
Mobile, AL 36695
Gulf Coast Management Company, LLC
d/b/a Hampton Inn Saraland
1320 Industrial Parkway
Saraland, AL 36571
1320 Industrial Parkway
Saraland, AL 36571
DONE and ORDERED this the 3rd day of March 2015.
/s/ Katherine P. Nelson
KATHERINE P. NELSON
UNITED STATES MAGISTRATE JUDGE
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