Perez v. TLC Residential Inc et al

Filing 215

ORDER DENYING 185 MOTION FOR PARTIAL SUMMARY JUDGMENT by Judge William Alsup. (whalc2, COURT STAFF) (Filed on 12/12/2017)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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R. ALEXANDER ACOSTA, Secretary of
Labor, United States Department of Labor,
Plaintiff,

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No. C 15-02776 WHA

v.

ORDER DENYING MOTION
FOR PARTIAL SUMMARY
JUDGMENT

TLC RESIDENTIAL, INC., and
FRANCISCO MONTERO,
Defendants.
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INTRODUCTION

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In this action under the FLSA, the Secretary moves for the second time for partial

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summary judgment. The motion is DENIED.

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STATEMENT

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Defendant Francisco Montero owns TLC Residential, Inc., a for-profit business in

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Northern California that operates sober living homes where residents live in “family units” to

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recover from substance abuse. One resident at each home is a house “parent” or “manager”

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who assumes additional household and administrative duties in exchange for waived or

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discounted rent. The central question in this action is whether or not house parents are

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“employees” within the meaning of the Fair Labor Standards Act — an issue on which both

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sides have previously moved for summary judgment (Dkt. Nos. 70, 89). A prior order

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adjudicated one relevant factor, finding that “defendants and their house parents have a

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compensation agreement whereby the house parents ‘assume certain responsibilities’ in

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exchange for free or discounted housing,” but otherwise denied both motions (Dkt. No. 106 at

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5, 8). Undeterred, the Secretary moves again for summary adjudication of this issue based on

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substantially the same arguments (Dkt. No. 185). This order follows full briefing.

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ANALYSIS
In his prior motion for summary adjudication, the Secretary primarily argued that this

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action involves “vulnerable workers” and an uneven “playing field” of the type the FLSA was

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intended to address, and that house parents are employees under the “economic reality” test set

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forth in Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28 (1961) (Dkt. No. 89 at 11–19).
These foundational points have since been refined and fleshed out with more factual detail and

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For the Northern District of California

United States District Court

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legal argument but do not substantially alter the considerations that informed the prior order

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denying summary adjudication.

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As just one example, the Secretary’s new motion relies on the same binding authorities

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considered in the prior order (see Dkt. No. 185 at 6–16). As explained in that order, however,

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none of those authorities weigh so clearly in the Secretary’s favor as to warrant summary

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adjudication of defendants’ liability under the FLSA (Dkt. No. 106 at 3–7 (discussing Tony &

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Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290 (1985), Walling v. Portland Terminal Co.,

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330 U.S. 148 (1947), and Williams v. Strickland, 87 F.3d 1064 (9th Cir. 1996))). As another

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example, although the prior order specifically pointed out the importance of taking into account

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the “family household” arrangement at issue here, and further noted that the nature of the house

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parents’ work might change over time (see id. at 8), the Secretary’s new motion does not come

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to grips with either issue (despite acknowledging that the “economic reality” test takes into

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account all circumstances of the work activity). The reply brief contains some attorney

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argument that TLC is neither a “family” nor a “landlord” (see Dkt. No. 190 at 3 n.1, 7), but

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these attempts to take a second bite at the apple do not alter the landscape of factual issues that

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prevented summary judgment the first time around. These examples are not exhaustive but

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highlight why summary adjudication in the Secretary’s favor remains unwarranted here.

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decision describing the appended “summary judgment opinion” as “uphold[ing] the Department

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of Labor’s finding that purported ‘volunteers’ were in fact employees under the FLSA” (Dkt.

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No. 202). See Rhea Lana, Inc. v. U.S. Dep’t of Labor, __ F. Supp. 3d __ (D.D.C. 2017) (Judge

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Christopher Cooper). In Rhea Lana, however, a business sued the DOL under the

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Administrative Procedure Act to challenge the DOL’s determination that the business’s

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purported “volunteers” were employees under the FLSA. The plaintiff business bore the burden

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of proof and the district court was limited to “arbitrary and capricious review” on the

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administrative record. Under those very different conditions, the district court concluded that

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the DOL’s determination “was not arbitrary and capricious.” But our case is not an APA case,

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For the Northern District of California

After briefing completed on his motion, the Secretary filed a statement of recent

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United States District Court

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defendants do not bear the burden of proof, and this Court is not limited to “arbitrary and

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capricious review” on an administrative record of the DOL’s novel theory here. In short, Rhea

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Lana does not support the DOL’s attempt to prevail on summary judgment in our case.

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CONCLUSION
For the foregoing reasons, the Secretary’s second motion for partial summary judgment
is DENIED.

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IT IS SO ORDERED.

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Dated: December 12, 2017.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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