Solis v. Melt Brands Stores, LLC et al
Filing
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ORDER ENTERING DEFAULT AGAINST DEFENDANTS MELT BRANDS SOTRES, LLC AND DAVID FISHER. Plaintiff Hilda Solis's 13 , 18 Motions for Default Judgment are granted. By Judge Christine M. Arguello on 2/2/12.(mnfsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 11-cv-00292-CMA-BNB
HILDA SOLIS, Secretary of Labor, United States Department of Labor,
Plaintiff,
v.
MELT BRANDS STORES, LLC, a corporation, and
DAVID FISHER, individually,
Defendants.
ORDER ENTERING DEFAULT JUDGMENT AGAINST DEFENDANTS MELT
BRANDS STORES, LLC, AND DAVID FISHER
This matter is before the Court pursuant to Plaintiff’s Motions for Default
Judgment (Doc. ## 13, 18) against Defendants Melt Brands Stores, LLC (“Melt
Brands”), and David Fisher. For the reasons discussed below, default judgment shall
be entered against Defendants.
I. BACKGROUND
A.
FACTS
Plaintiff Hilda Solis, the Secretary of Labor at the United States Department of
Labor, initiated this action on February 3, 2011, asserting violations of the Fair Labor
Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201, et seq. (Doc. # 1.) The violations
stem from Defendants’ alleged failure to pay back wages to several employees. (Id.)
Michael Jones, an investigator with the Wage Hour Division of the Department
of Labor, conducted two investigations of Defendants for compliance with the FLSA.
(Doc. ## 1, 20-5.) During the first investigation, Plaintiff discovered that Defendants
had “failed to pay minimum wage and/or overtime compensation totaling $14,589.55
to [fifteen] employees” from June 2009 to December 2009.1 (Id.) According to Plaintiff,
Defendants subsequently paid $2,898.10, but still owe $11,691.34. 2
Plaintiff initiated the second investigation after Defendants failed to pay the
majority of the back wages due. (Doc. # 20 at 3.) During that investigation, Plaintiff
discovered that “for the period January 2010 to the end of June 2010, Defendants failed
to pay minimum wage and/or overtime compensation totaling $33,1965.82 [sic].”3 (Doc.
# 1 at 3.) Also during that investigation, Defendants allegedly failed “to produce records
from which Investigator Jones could calculate back wages.” (Doc. # 20 at 4.) As a
result, Jones relied on interview statements from employees “to reconstruct the amount
of back wages due for missed/bounced paychecks and to calculate overtime due for
misclassified employees.” (Id.) Interviews with the employees revealed that they
“did not work overtime and were paid an hourly rate only slightly higher than minimum
1
In his affidavit, Jones clarifies that the investigation “covered approximately July 2008 (when
Melt [Brands] was established) through January 2010.” (Doc. # 20-5.)
2
In the November 29, 2011 Supplemental Memorandum, Plaintiff corrected the amount due
in back wages to $11,691.45. (Doc. # 20-5 at 3.) Based on Plaintiff’s exhibits, Defendants
owe (1) Dane Cherry $10,197.00; (2) Gloria Delgadillo $52.20; (3) Jackie Fontain $181.25;
(4) Michael Mantooth $1,000.00; and (5) Stacy Webb $261.00 in back wages. (Doc. # 20-6.)
3
In the November 29, 2011 Supplemental Memorandum, Plaintiff asserts that $33,965.82
reflects the amount of back wages due after the second investigation. (Doc. # 20 at 1-2.)
2
wage.”4 (Id. at 5.) To calculate back wages for these employees, Jones applied the
minimum wage rate for all hours worked regardless of their regular rate.5 (Id. at 7.)
Jones also discovered that Defendants failed to pay certain employees overtime
for their forty-five hour workweek.6 (Doc. # 20-5 at 5.) Defendants treated these
employees “as exempt and paid them straight time for hours worked over [forty].” (Id.)
Plaintiff asserts that, for employees who work overtime, “Wage Hour calculates hours
worked at that employee’s regular hourly rate and back wages at time-and-a-half that
regular hourly rate.” (Id. at 7.) Jones calculated the amount due to management-level
employees accordingly.
4
Jones calculated back wages at the minimum wage rate for Kelly Berry, Nicole Bland, Katelyn
Brooks, Olivia Chambers, Connie Chavez, Joshua Dionne, Megan Eliland, Gabriella Gonzales,
Randi Holland, Julia Hurd, Elizabeth Kaan, Rachelle Kaan, Bridgett Keller, Shannon Keller,
Mark Lucas, Mary Mulikin, Seth Pacheco, Kori Pothour, Amanda Rist, Margaret Wilson, and
Michelle Womack. (Doc. ## 20-5, 20-10.)
5
Thus, Jones multiplied $7.25 by the number of hours the employee worked. (Doc. # 20-5 at 7.)
According to Jones, he used the minimum wage to calculate the back wages owed because the
“Klinghoffer Rule” applied in this case. (Id.) He asserts that this rule “provides that if an
employee is paid more than minimum wage, but does not work overtime in the workweek in
which back wages are due, Wage Hour can only calculate back wages at the minimum wage
rate rather than the employee’s regular hourly rate.” (Id.) Plaintiff does not cite, nor is the Court
aware of, any decision applying the Klinghoffer Rule in the context of default judgments.
Rather, the Tenth Circuit has held that “[t]he regular rate is the hourly rate actually paid for the
normal, non-overtime workweek.” Chavez v. City of Albuquerque, 630 F.3d 1300, 1304-05
(10th Cir. 2011) (internal quotation marks and citation omitted). Because Plaintiff seeks only
compensation at the minimum wage, however, the Court will not disturb her request.
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Jones calculated overtime wages for Bethany Crocker, Shannon Glorioso, Melissa Hakes,
Sara Hanaman, John Hennig, Tessa Mayo, Daniel Tuttle, and Chase Whitmore. (Doc. # 20-5
at 5.) He conducted interviews with the employees to determine whether or not they worked
overtime during the weeks Defendants did not pay them. (Id.)
3
As a result of the two investigations, Plaintiff requests: (1) back wages of
$45,657.27;7 (2) an additional $45,657.27 in liquidated damages; and (3) a permanent
injunction enjoining Defendants and their officers, agents, servants, and employees
from violating sections 6, 7, 11(c), 15(a)(2), and 15(a)(5) of the FLSA. (See Doc.
## 13-1, 18-1, 20.)
B.
PROCEDURAL HISTORY
Defendants were served with a summons and copy of the Complaint in March
2011. None of the Defendants responded to the Complaint or otherwise appeared in
this matter.
On Plaintiff’s motion, the Clerk of Court entered default against Fisher on June
15, 2011 (Doc. # 10), and against Melt Brands on August 23, 2011 (Doc. # 17). On
August 5, 2011, Plaintiff moved for entry of default judgment as to Fisher with
supporting affidavits and exhibits. (Doc. # 13.) Likewise, on September 2, 2011,
Plaintiff moved for entry of default as to Melt Brands with supporting affidavits and
exhibits. (Doc. # 18.) On November 8, 2011, the Court directed Plaintiff to substantiate
the damages it requested in a supplemental memorandum. (Doc. # 19.) On November
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Broken down as follows: (1) Kelly Berry $391.50; (2) Nicole Bland $59.83; (3) Katelyn Brooks
$587.40; (4) Olivia Chambers $903.42; (5) Connie Chavez $137.75; (6) Bethany Crocker
$898.33; (7) Joshua P. Dionne $449.50; (8) Megan Eliland $253.75; (9) Shannon B. Glorioso
$3,848.89; (10) Gabriella Gonzales $543.75; (11) Melissa D. Hakes $1,345.30; (12) Sara
Hanaman $785.26; (13) John Hennig $8,794.89; (14) Randi Holland $290.00; (15) Julia
Hurd $789.82; (16) Elizabeth Kaan $391.50; (17) Rachelle Kaan $391.50; (18) Bridgett
Keller $196.55; (19) Shannon Keller $1,087.50; (20) Mark Lucas $870.00; (21) Tessa Mayo
$1,891.00; (22) Mary Mulikin $652.50; (23) Seth Pacheco $217.50; (24) Kori Pothour $424.13;
(25) Amanda Rist $181.25; (26) Daniel Tuttle $544.85; (27) Bryan C. Whitmore $6,806.15;
(28) Margaret Wilson $159.50; and (29) Michelle S. Womack $72.50. (Doc. # 20-10.)
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29, 2011, Plaintiff submitted such a memorandum, along with supporting affidavits.
(Doc. # 20.)
The Court has reviewed the Motions, the exhibits and affidavits, the entire record,
and the applicable law, and is sufficiently advised on the issues involved. Plaintiff’s
Motions for Entry of Default Judgment are granted.
II. STANDARD OF REVIEW
Default must be entered against a party who fails to appear or otherwise defend
a lawsuit. Fed. R. Civ. P. 55(a). Pursuant to Fed. R. Civ. P. 55(b)(1), default judgment
must be entered by the clerk of court if the claim is for a “sum certain.” In all other
cases, however, “the party must apply to the court for a default judgment.” Fed. R.
Civ. P. 55(b). “[D]efault judgment must normally be viewed as available only when
the adversary process has been halted because of an essentially unresponsive party.
In that instance, the diligent party must be protected lest he be faced with interminable
delay and continued uncertainty as to his rights. The default judgment remedy serves
as such a protection.” In re Rains, 946 F.2d 731, 732-33 (10th Cir. 1991) (internal
quotation marks and citation omitted). Further, “when a default judgment is entered on
a claim for an indefinite or uncertain amount of damages, facts alleged in the complaint
are taken as true, except facts relating to the amount of damages, which must be
proven in a supplemental hearing or proceeding.” United States v. Craighead, 176 Fed.
App’x. 922, 925 (10th Cir. 2006) (unpublished) (quoting Am. Red Cross v. Cmty. Blood
Ctr. of the Ozarks, 257 F.3d 859, 864 (8th Cir. 2001)).
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When “ruling on a motion for default judgment, the court may rely on detailed
affidavits or documentary evidence to determine the appropriate sum for the default
judgment.” Seme v. E & H Prof’l Sec. Co., Inc., No. 08-cv-01569, 2010 WL 1553786, at
*11 (D. Colo. Mar. 19, 2010) (unpublished); see also Hennecke, Inc. v. Advanced Bldg.
Composites, LLC, No. 10-2054, 2010 WL 2464842, at *2 (D. Kan. June 4, 2010)
(unpublished) (“A plaintiff cannot satisfy the certainty requirement simply by requesting
a specific amount. [The plaintiff] must also establish that the amount requested is
reasonable under the circumstances.” (internal quotation marks and citation omitted));
but see OTO Software, Inc. v. Highwall Techs., LLC, No. 08-cv-01897, 2011 WL
3236049, at *5 n.5 (D. Colo. July 5, 2011) (unpublished) (“While a plaintiff cannot
recover damages that are speculative, an injured party is not required to prove
damages with absolute certainty.”).
III. CONCLUSIONS OF LAW
A.
FLSA VIOLATIONS
The FLSA provides covered workers a minimum wage and guarantees overtime
compensation for hours worked in excess of forty hours per week. 29 U.S.C. § 201,
et seq. Employers are liable to their employees for unpaid minimum wages, unpaid
overtime compensation, and in an additional equal amount as liquidated damages.
29 U.S.C. § 216(b). This provision, therefore, essentially doubles the plaintiff’s
damages award. Mumby v. Pure Energy Servs., 636 F.3d 1266, 1272 (10th Cir. 2011).
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1.
Back Wages
Under the FLSA, employers are required to “make, keep, and preserve” records
of their employees including “wages, hours, and other conditions and practices of
employment.” 29 U.S.C. § 211(c). An employer’s compliance with section 211(c)
“determines the burden of proof faced by a plaintiff in establishing the number of
overtime hours worked.” McGrath v. Central Masonry Corp., No. 06-cv-00224, 2009
WL 3158131, at *6 (D. Colo. Sept. 29, 2009) (unpublished).
[W]here the employer’s records are inaccurate or inadequate and the
employee cannot offer convincing substitutes[,] a more difficult problem
arises . . . . In such a situation . . . an employee has carried out his
burden if he proves that he has in fact performed work for which he was
improperly compensated and if he produces sufficient evidence to show
the amount and extent of that work as a matter of just and reasonable
inference. The burden then shifts to the employer to come forward with
evidence of the precise amount of work performed or with evidence to
negative the reasonableness of the inference to be drawn from the
employee's evidence. If the employer fails to produce such evidence, the
court may then award damages to the employee, even though the result
be only approximate.
Id. (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-88 (1946),
superseded by statute on other grounds as stated in Carter v. Panama Canal Co., 463
F.2d 1289, 1293 (D.C. Cir. 1972)). Thus, when an employer does not comply with
section 211(c), a plaintiff need only meet the “just and reasonable inference” burden
of proof. Id.
During the first investigation, Defendants provided information and agreed to
pay back wages. (See Doc. # 20-6.) Defendants, however, paid only a portion of the
promised amount. (Doc. # 20-7.) During the second investigation, Defendants did not
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respond to Plaintiff’s requests for information. Thus, Jones based the damages
calculations on interviews with the employees. In a few instances, employees provided
him with time cards. Comparing the information obtained from the various documents
and interviews, Jones calculated the employees’ back wages and the managementlevel employees’ overtime compensation. Accordingly, the Court finds that Plaintiff’s
estimates of the hours worked and wages earned is sufficient evidence from which an
award of damages under the FLSA may be made. See Mt. Clemens Pottery Co., 328
U.S. at 687-88 (approving the use of employee estimates of uncompensated time where
the employer failed to maintain accurate records); Hodgson v. Humphries, 454 F.2d
1279, 1283 (10th Cir. 1972) (affirming the investigator’s use of employees’ estimations
of the amount of hours worked); McGrath, 2009 WL 3158131, at *7 (concluding that the
plaintiff’s estimation of the number of overtime hours he worked on a weekly basis
satisfied the deferential standard in Mt. Clemens Pottery Co.); Chao v. First Nat’l
Lending Corp., 516 F. Supp. 2d 895, 902 (N.D. Ohio Mar. 31, 2006) (finding that when
the defendants did not provide records to calculate back wages, comparing the
information gained from interviews of employees provided sufficient evidence).
Accordingly, Defendants owe: (1) $11,691.45 in back wages from the first
investigation8 and (2) $33,965.82 from the second investigation, 9 for a total of
$45,657.27 in compensatory damages.
8
See n.2, supra.
9
See n.7, supra.
8
2.
Liquidated Damages
In addition to unpaid wages and unpaid overtime compensation, an employer
who violates the FLSA may be liable for liquidated damages, in an amount equal to
unpaid wages and overtime compensation. 29 U.S.C. § 216(b). Liquidated damages
can be avoided, however, if the employer shows that it acted in good faith and had
reasonable grounds for believing that the act or omission giving rise to the violation was
not contrary to the FLSA. 29 U.S.C. § 260; see Renfro v. City of Emporia, Kan., 948
F.2d 1529, 1540 (10th Cir. 1991) (recognizing that the “court may eliminate or reduce
the award of liquidated damages only if the employer shows both that he acted in good
faith and that he had reasonable grounds for believing that his actions did not violate the
Act”). Defendants have defaulted and the Court finds that Defendants should be held
liable for $45,657.27 in liquidated damages.
3.
Injunctive Relief
District courts may issue injunctions against violations of the FLSA. See 29
U.S.C. § 217. Plaintiff bears the burden of showing that an injunction is necessary to
prevent future violations. See Mitchell v. Hertzke, 234 F.2d 183, 187 (10th Cir. 1956).
Courts assess several factors when deciding whether to grant an injunction, including
“the employer’s previous conduct, its current conduct, and the reliability of its promises
of future compliance.” Metzler v. IBP, Inc., 127 F.3d 959, 963 (10th Cir. 1997). If an
employer has violated the FLSA previously, the court balances the finding of a violation
“against factors indicating a reasonable likelihood that the violation will not recur, such
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as the employer’s intent to comply, extraordinary efforts taken to prevent recurrence,
the absence of repetitive violations, and the absence of bad faith.” Id. at 963-64.
Here, Plaintiff satisfies her burden of proving that an injunction is necessary to prevent
future violations. There is no indication that Defendants will cease from violating
provisions of the FLSA and, at present, Defendants are not in compliance. Further,
after the first investigation, although Defendants promised to pay the full amount of back
wages due, they defaulted on the majority of the payment. Based on Defendants’ past
and present noncompliance, an injunction is appropriate to prevent future violations of
the FLSA.
IV. CONCLUSION
Based on the foregoing analysis, it is ORDERED that Plaintiff Hilda Solis’s
Motions for Entry of Default Judgment (Docs. ## 13, 18) as against Defendants Melt
Brands Stores, LLC and David Fisher are GRANTED.
It is FURTHER ORDERED that Defendants are permanently enjoined from
further violations of sections 6, 7, 11(c), and 15(a)(5) of the Fair Labor Standards Act of
1938 (“FLSA”). Defendants shall not, contrary to sections 6 and 15(a)(2) of the FLSA,
fail to pay its employees engaged in commerce or the production of goods for
commerce or in an enterprise engaged in commerce or the production of goods for
commerce, within the meaning of the FLSA, wages at rates not less than $7.25, or any
rate subsequently made applicable by amendment to the FLSA, for every hour worked
by Defendants’ employees.
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Defendants shall not, contrary to sections 7 and 15(a)(2) of the Act, employ any
employees in commerce or in the production of goods for commerce, or an enterprise
engaged in commerce or in the production of goods for commerce, for workweeks
longer than forty hours without compensating such employees for his or her employment in excess of forty hours per workweek at a rate not less than one-and-one-half
times the regular rate at which he or she is employed.
Defendants shall not, contrary to sections 11(c) and 15(a)(5) of the FLSA, fail
to make, keep, and preserve adequate and accurate records of its employees, and of
the wages, hours, and other conditions and practices of employment maintained by
Defendants as prescribed by section 11(c) of the FLSA. Defendants shall make its
records available at all reasonable times to representatives of the Plaintiff.
It is FURTHER ORDERED that Defendants Melt Brands Store, LLC and David
Fisher are held jointly and severally liable in the amount of $91,314.54 in unpaid
minimum wage and overtime compensation due its employees (reflecting the back
wages owed of $45,657.16 from two investigations and an additional, equal amount in
liquidated damages). Post judgment interest shall accrue at the rate set for federal civil
judgments, pursuant to 28 U.S.C. § 1961, at the current legal rate of 0.12% from the
date of entry of this Judgment.
It is FURTHER ORDERED that Defendants shall pay these back wages and
liquidated damages by issuing a cashier’s check in the amount of $91,314.54 by no
later than February 16, 2012. The check shall be made payable to “U.S. Dept. of Labor
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– Wage-Hour” and shall be mailed to DOL WHD, Denver District Office, 1999
Broadway, Suite 710, Denver, CO 80202. If the payment is more than five (5) days late,
Defendants shall be subject to the assessment of interest as specified in this order, and
penalty interest and collection costs, as provided for by the Debt Collection Improvement Act of 1996.
Upon receipt of full payment, Plaintiff’s counsel shall file with the Court a
certificate of payment and representatives of the Plaintiff shall distribute such amounts
less appropriate deductions for federal income tax withholding and the employee’s
share of the social security (F.I.C.A.) tax to the employees, or their legal representatives, as their interests may appear. Defendants remain responsible for the employer’s
share of F.I.C.A. arising from or related to the back wages distributed by Plaintiff.
Any back wages which cannot be distributed to the employees, or to their
personal representatives because of the inability of Plaintiff to locate the proper persons
or because of any person’s refusal to accept payment, shall be deposited by the Plaintiff
in a special deposit account to be paid to the rightful employee. If such back wages are
not claimed by the employee (or a personal representative of the employee) within three
years, Plaintiff shall deposit them into the United States Treasury as miscellaneous
receipts.
It is FURTHER ORDERED that each party shall bear his, her, or its own
attorney’s fees, costs and other expenses incurred by such party to date in connection
with any stage of the proceeding including, but not limited to, attorney’s fees, costs and
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other expenses which may be available under the Equal Access to Justice Act, as
amended.
DATED: February
02
, 2012
BY THE COURT:
________________________________
CHRISTINE M. ARGUELLO
United States District Judge
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