Hugler v. EuroAmerican Propoagators, LLC et al

Filing 25

ORDER Denying Defendant Gerald Church's 15 Motion for Summary Judgment. Signed by Judge Marilyn L. Huff on 8/14/2017. (ag)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 13 R. ALEXANDER ACOSTA, Secretary of Labor, United States Department of Labor,1 14 Plaintiff, 12 15 ORDER DENYING DEFENDANT GERALD CHURCH’S MOTION FOR SUMMARY JUDGMENT v. 16 Case No.: 17-cv-00131-H-RBB EUROAMERICAN PROPAGATORS, LLC, a California corporation; JOHN RADER, individually and as managing agent of the corporate defendant; GERALD CHURCH, individually and as managing agent of the corporate defendant, 17 18 19 20 [Doc. No. 15.] Defendants. 21 22 On June 8, 2017, Defendant Gerald Church filed a motion to dismiss Plaintiff R. 23 24 25 Alexander Acosta’s first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 15.) On June 28, 2017, the Court took the matter under submission 26 27 28 1 The Court substitutes R. Alexander Acosta in place of Edward Hugler as the Plaintiff in this action pursuant to Federal Rule of Civil Procedure 25(d). 1 17-cv-00131-H-RBB 1 and notified the parties that the Court would consider the evidence attached to Defendant 2 Church’s motion in deciding the motion and convert the motion to dismiss into a motion 3 for summary judgment. (Doc. No. 16.) On July 17, 2017, Plaintiff filed its opposition to 4 Defendant Church’s motion. (Doc. No. 22.) On July 24, 2017, Defendant Church filed his 5 reply. (Doc. No. 23.) For the reasons below, the Court denies Defendant Church’s motion. 6 Background 7 Defendant EuroAmerican Propagators, LLC is a California limited liability company 8 that during the relevant period, was operating and maintaining a wholesale plant nursery 9 facility in Bonsall, California. (Doc. No. 12, FAC ¶ 5; Doc. No. 15-2, Church Decl. ¶ 2.) 10 Defendants John Rader and Gerald Church founded EuroAmerican in 1992 and were 50/50 11 owners of the company. (Doc. No. 15-2, Church Decl. ¶¶ 2-3; Doc. No. 22-1, Rader Decl. 12 ¶ 2.) Plaintiff alleges that starting with the pay period beginning on November 28, 2016, 13 Defendants have employed up to 238 employees to make and produce plants for their 14 wholesale nursery, who have not been paid any wages for the work performed. (Doc. No. 15 12, FAC ¶ 13.) EuroAmerican filed for bankruptcy in January 2017. (Doc. No. 22-1, 16 Rader Decl. ¶ 3.) 17 On January 24, 2017, Plaintiff filed a complaint against Defendants EuroAmerican, 18 Rader, and Church, alleging causes of action for: (1) violation of the Hot Goods Provisions 19 of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 215(a)(1); (2) failure to pay 20 minimum wages in violation of 29 U.S.C. §§ 206 and 215(a)(2); and (3) violation of 29 21 U.S.C. § 215(a)(3). (Doc. No. 1, Compl. ¶¶ 16-24.) On May 8, 2017, Defendant Church 22 filed a motion to dismiss Plaintiff’s complaint for failure to state a claim. (Doc. No. 6.) 23 In response to Defendant Church’s motion to dismiss, on May 26, 2017, Plaintiff 24 filed a first amended complaint against Defendants, alleging the same three causes of action 25 as in the original complaint and adding a claim for violation of the Migrant and Seasonal 26 Agricultural Worker Protection Act (“MSPA”), 29 U.S.C. § 1862(c) and 29 C.F.R. § 27 500.81. (Doc. No. 12, FAC ¶¶ 21-30.) In light of the FAC, the Court denied as moot 28 Defendant Church’s motion to dismiss Plaintiff’s original complaint. (Doc. No. 14.) 2 17-cv-00131-H-RBB 1 On June 8, 2017, Defendant filed a motion to dismiss Plaintiff’s FAC for failure to 2 state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 15.) 3 Defendant Church argues that all of the claims in the FAC against him should be dismissed 4 because he is not an “employer” under the FLSA or the MSPA. (Doc. No. 15-1 at 2.) In 5 support of his motion to dismiss, Defendant Church attached certain evidence to his 6 motion. (See Doc. Nos. 15-2, 15-3, 15-4, 15-5.) Accordingly, on June 28, 2017, the Court 7 notified the parties that it would consider this evidence in deciding Defendant’s motion, 8 and the Court converted Defendant Church’s motion to dismiss into a motion for summary 9 judgment. (Doc. No. 16.) See Fed. R. Civ. P. 12(d); Swedberg v. Marotzke, 339 F.3d 10 1139, 1146 (9th Cir. 2003); San Pedro Hotel Co. v. City of Los Angeles, 159 F.3d 470, 11 477 (9th Cir. 1998). 12 13 Discussion I. Legal Standards for Summary Judgment 14 Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil 15 Procedure if the moving party demonstrates that there is no genuine issue of material fact 16 and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. 17 v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing 18 substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 19 477 U.S. 242, 248 (1986); Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., 20 Inc., 618 F.3d 1025, 1031 (9th Cir. 2010). “A genuine issue of material fact exists when 21 the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” 22 Fortune Dynamic, 618 F.3d at 1031 (internal quotation marks and citations omitted); 23 accord Anderson, 477 U.S. at 248. “Disputes over irrelevant or unnecessary facts will not 24 preclude a grant of summary judgment.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors 25 Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). 26 A party seeking summary judgment always bears the initial burden of establishing 27 the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving 28 party can satisfy this burden in two ways: (1) by presenting evidence that negates an 3 17-cv-00131-H-RBB 1 essential element of the nonmoving party’s case; or (2) by demonstrating that the 2 nonmoving party failed to establish an essential element of the nonmoving party’s case that 3 the nonmoving party bears the burden of proving at trial. Id. at 322-23; Jones v. Williams, 4 791 F.3d 1023, 1030 (9th Cir. 2015). Once the moving party establishes the absence of a 5 genuine issue of material fact, the burden shifts to the nonmoving party to “set forth, by 6 affidavit or as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine 7 issue for trial.’” T.W. Elec. Serv., 809 F.2d at 630 (quoting former Fed. R. Civ. P. 56(e)); 8 accord Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007). To carry 9 this burden, the non-moving party “may not rest upon mere allegation or denials of his 10 pleadings.” Anderson, 477 U.S. at 256; see also Behrens v. Pelletier, 516 U.S. 299, 309 11 (1996) (“On summary judgment, . . . the plaintiff can no longer rest on the pleadings.”). 12 Rather, the nonmoving party “must present affirmative evidence . . . from which a jury 13 might return a verdict in his favor.” Anderson, 477 U.S. at 256. 14 When ruling on a summary judgment motion, the court must view the facts and draw 15 all reasonable inferences in the light most favorable to the non-moving party. Scott v. 16 Harris, 550 U.S. 372, 378 (2007). The court should not weigh the evidence or make 17 credibility determinations. See Anderson, 477 U.S. at 255. “The evidence of the non- 18 movant is to be believed.” Id. Further, the Court may consider other materials in the record 19 not cited to by the parties, but the Court is not required to do so. See Fed. R. Civ. P. 20 56(c)(3); Simmons v. Navajo Cnty., 609 F.3d 1011, 1017 (9th Cir. 2010). 21 II. Analysis 22 Defendant Church argues that he is entitled to summary judgment of Plaintiff’s 23 claims because he is not an “employer” under the FLSA or the MSPA. (Doc. No. 15-1 at 24 8-17.) In response, Plaintiff argues that Defendant Church’s motion should be denied 25 because there is at least a factual dispute as to whether he was an “employer” during the 26 relevant period. (Doc. No. 22 at 6-15.) 27 /// 28 /// 4 17-cv-00131-H-RBB 1 2 A. Legal Standards for Determining Whether a Person is an “Employer” under the FLSA and the MSPA 3 The FLSA defines “employer” to “include[] any person acting directly or indirectly 4 in the interest of an employer in relation to an employee . . . .” 29 U.S.C. § 203(d). “[T]he 5 definition of ‘employer’ under the FLSA is not limited by the common law concept of 6 ‘employer,’ but ‘is to be given an expansive interpretation in order to effectuate the FLSA’s 7 broad remedial purposes.’” Lambert v. Ackerley, 180 F.3d 997, 1011–12 (9th Cir. 1999) 8 (en banc); see also Hale v. State of Ariz., 993 F.2d 1387, 1393 (9th Cir. 1993) (“The 9 Supreme Court has instructed that courts are to interpret the term “employ” in the FLSA 10 expansively.”). “The determination of whether an employer-employee relationship exists 11 does not depend on ‘isolated factors but rather upon the circumstances of the whole 12 activity.’” Boucher v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009) (quoting Rutherford 13 Food Corp. v. McComb, 331 U.S. 722, 730 (1947)). “The touchstone is the ‘economic 14 reality’ of the relationship.” Id. 15 “Where an individual exercises ‘control over the nature and structure of the 16 employment relationship,” or “economic control’ over the relationship, that individual is 17 an employer within the meaning of the [FLSA], and is subject to liability.” Lambert, 180 18 F.3d at 1012. “Th[e Ninth] [C]ircuit, in deciding if an employer-employee relationship 19 exists, has applied an ‘economic reality’ test which identifies four factors: whether the 20 alleged employer (1) had the power to hire and fire the employees, (2) supervised and 21 controlled employee work schedules or conditions of employment, (3) determined the rate 22 and method of payment, and (4) maintained employment records.” Gilbreath v. Cutter 23 Biological, Inc., 931 F.2d 1320, 1324 (9th Cir. 1991) (quoting Bonnette v. California 24 Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983)). “While these factors 25 ‘provide a useful framework for analysis . . . , they are not etched in stone and will not be 26 blindly applied.’” Hale, 993 F.2d at 1394. Whether a defendant is an “employer” under 27 the FLSA is a question of law based on underlying facts. See Bonnette, 704 F.2d at 1469 28 (“Although the underlying facts are reviewed under the clearly erroneous standard the legal 5 17-cv-00131-H-RBB 1 effect of those facts—whether appellants are employers within the meaning of the FLSA— 2 is a question of law.”); Solis v. Velocity Exp., Inc., No. CV 09-864-MO, 2010 WL 3 2990293, at *2 (D. Or. July 26, 2010). 4 The MSPA defines the term “agricultural employer” as “any person who owns or 5 operates a farm, ranch, processing establishment, cannery, gin, packing shed or nursery, or 6 who produces or conditions seed, and who either recruits, solicits, hires, employs, 7 furnishes, or transports any migrant or seasonal agricultural worker.” 29 U.S.C. § 1802(2). 8 “The term ‘employ’ has the same meaning under the [MS]PA as under the FLSA.” Torres- 9 Lopez v. May, 111 F.3d 633, 639 (9th Cir. 1997) (citing 29 U.S.C. § 1802(5)). Thus, courts 10 also apply the “economic reality” test in determining whether an employer-employee 11 relationship exist under the MSPA. See id.; Moreau v. Air France, 356 F.3d 942, 947 (9th 12 Cir. 2004). 13 B. 14 In his motion, Defendant Church explains that he and Rader were 50/50 owners of 15 EuroAmerican. (Doc. No. 15-1 at 3; see Doc. No. 15-2, Church Decl. ¶ 3.) Church further 16 explains that although he shared the day-to-day management duties of EuroAmerican with 17 Rader from 1997 to 2014, in or around December 2014, he relinquished the day-to-day 18 duties to Rader. (Doc. No. 15-1 at 3; see Doc. No. 15-2, Church Decl. ¶¶ 4-7, 10.) Church 19 argues that because he, thereafter, had no day-to-day management duties or any direct 20 operational control of significant aspects of EuroAmerican, he was not an “employer” 21 under the FLSA or MSPA during the relevant period. (Doc. No. 15-1 at 14-17.) Analysis 22 In response, Plaintiff has presented the Court with evidence from which a reasonable 23 fact finder could conclude that Defendant Church had the power to hire and fire employees. 24 Former Regional Sales Broker Ruben Suarez states in his declaration that Church 25 specifically approved his hiring in 2016. (Doc. No. 22-5, Suarez Decl. ¶¶ 3-4.) In addition, 26 both Defendant Rader and Tom Foley, Chief Operations Officer of EuroAmerican, state in 27 declarations that Church was involved in the firing of employee Minerva Ramirez and the 28 elimination of her department in August 2016. (Doc. No. 22-1, Rader Decl. ¶ 6; Doc. No. 6 17-cv-00131-H-RBB 1 22-2, Foley Decl. ¶ 7.) Foley and Suarez further state in their declarations that in early 2 2017, Church directed many of the employees at issue to leave the company and told them 3 that they would not be paid. (Doc. No. 22-2, Foley Decl. ¶ 11; Doc. No. 22-5, Suarez Decl. 4 ¶¶ 3-4.) Church admits to this specific interaction in his declaration. (Doc. No. 15-2, 5 Church Decl. ¶ 18.) 6 Further, Plaintiff has presented the Court with evidence from which a reasonable 7 fact finder could conclude that Defendant Church had authority over some of the conditions 8 of employment. Ruben Suarez states in his declaration that “Church continuously and on 9 a regular basis during 2016 and 2017 toured the nursery and interviewed and directed 10 employees as to their job assignments.” (Doc. No. 22-5, Suarez Decl. ¶ 9; see also Doc. 11 No. 22-4, Flint Decl. ¶¶ 5-6.) 12 In addition, Plaintiff has presented the Court with evidence from which a reasonable 13 fact finder could conclude that Defendant Church had authority over employee pay. Kristi 14 Hill, a staff accountant for EuroAmerican, states in her declaration that in mid-to-late 2016, 15 Defendant Church made various contributions to and directed payments to the employee 16 payroll. (Doc. No. 22-3, Hill Decl. ¶¶ 4-7.) Foley also states in his declaration that in late 17 2016, he observed Church direct finance department employees to prioritize certain 18 expense payments over employee pay. (Doc. No. 22-2, Foley Decl. ¶ 10.) Further, Rader 19 states in his declaration that Church refused to sign a Wells Fargo line of credit guarantee, 20 which had a negative impact on EuoAmerican’s ability to continue its business and meet 21 its payroll obligations. 2 (Doc. No. 22-1, Rader Decl. ¶ 4.) The Ninth Circuit has explained 22 that a defendant that has “control over the purse strings” has “substantial” power over the 23 employment relationship. Bonnette, 704 F.2d at 1470. In addition, the Court notes that it 24 is undisputed that Church was a 50/50 owner in the company along with Mr. Rader, (see 25 Doc. No. 15-2, Church Decl. ¶ 3; Doc. No. 22-1, Rader Decl. ¶ 2), and “an ownership stake 26 27 28 2 In his reply brief, Defendant Church admits that he refused to sign the line of credit guarantee, and that he advised Rader that EuroAmerican should declare bankruptcy. (Doc. No. 23 at 3.) 7 17-cv-00131-H-RBB 1 [i]s highly probative of an individual’s employer status, as it suggests a high level of 2 dominance over the company’s operations” (citation omitted)). Manning v. Boston Med. 3 Ctr. Corp., 725 F.3d 34, 48 (1st Cir. 2013). In sum, this evidence presented by Plaintiff is 4 sufficient to raise genuine issues of fact as to whether Defendant Church had authority over 5 employee hiring/firing, conditions of employment, and employee pay, and, thus, as to 6 whether Defendant Church was an “employer” under the FLSA and the MSPA. 7 Defendant Church disputes much of the above evidence and offers contradictory 8 evidence in support of his motion. For example, Defendant Church argues and provides 9 evidence that, in January 2017, he simply told the employees at issue that EuroAmerican 10 did not have money to pay them for their work, but he did not make the decision to 11 terminate their employment. (Doc. No. 15-1 at 14-15; see Doc. No. 15-2, Church Decl. ¶ 12 18; Doc. No. 15-4, Raisty Decl. ¶ 11.) But in deciding a motion for summary judgment, 13 the Court must view the facts and draw all reasonable inferences in the light most favorable 14 to the non-moving party, here Plaintiff. Scott, 550 U.S. at 378. And “[t]he evidence of the 15 non-movant is to be believed.” Anderson, 477 U.S. at 255. Defendant Church’s evidence 16 at best only creates genuine disputes of fact as to whether he had authority over employee 17 hiring/firing, conditions of employment, and employee pay. Moreover, because the facts 18 underlying the determination of whether Church was an “employer” under the FLSA and 19 MSPA are in dispute, the Court cannot decide this issue as a matter of law at the summary 20 judgment stage. 21 Church also argues that Plaintiff only proffers evidence of isolated or sporadic 22 instances of economic or operational control by Church over the employment relationship. 23 (Doc. No. 23 at 2.) But “‘[employer] status [under the FLSA] does not require continuous 24 monitoring of employees, looking over their shoulders at all times, or any sort of absolute 25 control of one’s employees. Control may be restricted, or exercised only occasionally, 26 without removing the employment relationship from the protections of the FLSA.’” 27 Irizarry v. Catsimatidis, 722 F.3d 99, 110 (2d Cir. 2013) (quoting Herman v. RSR Sec. 28 Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999)); see also Chao v. Pac. Stucco, Inc., No. 8 17-cv-00131-H-RBB 1 2:04CV0891-RCJ-GWF, 2006 WL 2432862, at *5 (D. Nev. Aug. 21, 2006) (“It is well 2 established that a corporate officer without direct daily supervisory responsibilities over 3 employees can still qualify as an employer under the FLSA.”). 4 In sum, there are a genuine disputes of fact as to the facts underlying the 5 determination of whether Defendant Church was an “employer” under the FLSA and the 6 MSPA. Accordingly, Defendant Church is not entitled to summary judgment on this issue 7 at this stage in the proceedings. 8 9 10 11 12 13 14 Conclusion For the reasons above, the Court denies Defendant Church’s motion for summary judgment. IT IS SO ORDERED. DATED: August 14, 2017 MARILYN L. HUFF, District Judge UNITED STATES DISTRICT COURT 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 17-cv-00131-H-RBB

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