Crumpton v. Sunset Club Properties, L.L.C.
Filing
62
OPINION AND ORDER making findings and directing the Courtroom Deputy to enter judgment in favor of plaintiff and against defendants, jointly and severally, awarding plaintiff $1,178.10 in unpaid unliquidated overtime compensation, plus $1,178.10 for liquidated damages, for a total of $2,356.20. The Clerk shall terminate all pending deadlines and motions as moot, and close the file. Signed by Judge John E. Steele on 8/1/2011. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
MARGARET CRUMPTON, on her own behalf
and others similarly situated,
Plaintiff,
vs.
Case No.
2:09-cv-680-FtM-29DNF
SUNSET CLUB PROPERTIES, L.L.C., a
foreign limited liability company,
and GARRY OAKES, an individual,
Defendants.
___________________________________
OPINION AND ORDER
This matter is before the Court on a one count Amended
Complaint (Doc. #26) alleging a claim for overtime compensation
under the Fair Labor Standards Act (FLSA).
In an Opinion and Order
(Doc. #50) filed on February 28, 2011, the Court granted summary
judgment in favor of defendants as to years 2008 and 2009 because
defendant Sunset Club Properties, LLC did not have an annual gross
income of at least $500,000 for either year.
The matter came
before the Court for a non-jury trial on July 26, 2011, as to year
2007. The Court heard testimony from plaintiff Margaret Crumpton
and
defendant
plaintiff.
Garry
Oakes,
and
received
three
exhibits
from
The Court’s findings of fact and conclusion of law are
set forth below.
I.
Defendant Garry Oakes (Oakes) was and is a member of defendant
Sunset Club Properties, LLC, a Florida limited liability company
(Sunset Club) (collectively defendants). During the relevant years
of 2007 through 2009, Sunset Club was in the business of leasing
residential apartments in Lee County, Florida, and Oakes was the
member who oversaw the day-to-day operations of the company.
Sunset Club operated eight separate properties containing a total
of approximately 242 lower income apartment units.
In 2006, Oakes
came to Florida to salvage the apartment buildings from the impact
of the real estate slump which had resulted in up to $50,000 per
month of negative cash flow.
In November, 2006, plaintiff Margaret Crumpton (Crumpton or
plaintiff) and Oakes began communicating through Match.com, and met
in person on December 5, 2006.
Beginning December 6, 2006, Oakes
moved in with Crumpton and started a romantic relationship, which
lasted until December, 2007.
Crumpton worked for Sunset Club from
January 1, 2007 through August 20, 2009, although the parties
dispute
whether
this
was
as
an
employee
or
an
independent
contractor.
Crumpton testified that she worked as the marketing director
for Sunset Club.
and
Crumpton described her job functions as creating
implementing
marketing
strategies
to
find
tenants
for
apartments controlled by Sunset Club, training the leasing staff,
and identifying when tenants got paid and collecting rents in a
timely fashion.
Crumpton testified she also traveled to Ohio with
Oakes to train his staff there as to how to better show apartments,
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and while in Ohio answered the phone for the Florida office.
It
appears that plaintiff utilized defendants’ equipment and property,
or equipment and property paid for by defendants, in performing her
work function as a marketer of apartment units.
Crumpton testified that it was agreed she would be paid a
monthly salary plus commissions based on signed leases.
Plaintiff
testified that for 2007 she worked an average of 74 hours per week,
but was paid a base salary for 40 hours per week.
She arrived at
the 74 hour figure by reviewing signed leases with her prior
attorney during
the
pretrial
stages
of
this case.
Crumpton
testified that her base salary for 40 hours a week equaled $2,500
a month ($625.00 a week).
Crumpton also testified that she was
supposed to receive a commission of $100 for each signed lease she
secured, and $200 for each lease she secured for a furnished
apartment.
Crumpton would be responsible for furnishing the
apartment, but Oakes testified he would assist her in do so.
Plaintiff’s
answers
to
Court
interrogatories
stated
she
was
supposed to be paid $500 a week plus commissions, and was paid on
average $642.50 per week.
(Doc. #16-1.)
Oakes testified that Crumpton’s main function was to try to
rent apartments, which she did as an independent contractor. Oakes
testified that Crumpton would be paid $100 for each signed lease
she procured, and $200 if she furnished the apartment.
Oakes
testified that initially there was a $2,000 draw against lease
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commissions. If Crumpton did not rent enough apartments to satisfy
the draw amount, she was never required to return any money.
There
were times when Crumpton claimed credit for leases which were
disputed by Sunset Club office staff, and Oakes would intercede
just about every month to tell the office staff to give Crumption
credit for the leases.
If Sunset Club did not have an apartment
the person wanted, Crumpton could take the person to another
apartment complex, and be paid a referral fee from those complexes.
Crumpton would give the referral check to Sunset Club, and receive
half of the amount back from Sunset Club.
Oakes testified he took
Crumpton to his office in Ohio, and introduced her to his people in
the office.
Crumpton got together with his Ohio leasing person to
exchange tips on leasing and receive training from the Ohio person.
Both parties testified that Sunset Club’s property manager
Lori
fired
Crumpton
for
about
six
difficult personnel relationships.
weeks
in
late
2007
after
Despite the “firing,” Oakes
kept Crumption working under the same arrangements for the company
but had her avoid going to the office.
Defendant estimated that for part of 2007 plaintiff worked an
average of 40 to 50 hours per week, and less than that at other
times
in
2007.
Neither
party
kept
or
produced
any
records
concerning the nature of the employment relationship, the number of
hours plaintiff worked, or the amount of money she was paid. There
was no written employment agreement with Crumpton.
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Money paid to
Crumpton was reflected for tax purposes on 1099 forms, not W-2
forms.
II.
The FLSA requires covered “employers” to pay overtime wages
once “employees” exceed forty hours of work in a given week.
With
exceptions not at issue in this case,
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).
The statute defines an “employee” as “any
individual employed by an employer.” 29 U.S.C. § 203(e)(1). In
turn, the FLSA broadly defines “to employ” as “to suffer or permit
to work,” 29 U.S.C. § 203(g), and an “employer” as “any person
acting. . . in the interest of an employer in relation to an
employee,” 29 U.S.C. § 203(d).
An entity “suffers or permits” an
individual to work if, as a matter of economic reality, the
individual is dependent on the entity. Goldberg v. Whitaker House
Coop., Inc., 366 U.S. 28, 33 (1961); Aimable v. Long & Scott Farms,
Inc., 20 F.3d 434, 439 (11th Cir. 1994).
A.
Employee or Independent Contractor
Defendants
assert
that
plaintiff
was
an
independent
contractor, and as such was not covered by the overtime provisions
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of the FLSA.
A determination of employment status under the FLSA
is a question of law.
Antenor v. D & S Farms, 88 F.3d 925, 929
(11th Cir. 1996).
If plaintiff is an independent contractor, she does not fall
within the scope of the FLSA.
Weisel v. Singapore Joint Venture,
Inc., 602 F.2d 1185, 1188 (5th Cir. 1979).
To determine whether
Crumpton was an employee or an independent contractor, the Court
must look to the economic realities of the situation.
Food Corp. v. McComb, 331 U.S. 722, 728 (1947).
Rutherford
The Eleventh
Circuit has identified several factors to guide this inquiry in an
FLSA case:
(1) the nature and degree of the alleged employer’s
control as to the manner in which the work is to be performed; (2)
the alleged employee’s opportunity for profit or loss depending
upon his managerial skill; (3) the alleged employee’s investment in
equipment or materials required for his task, or her employment of
workers; (4) whether the service rendered requires a special skill;
(5)
the
degree
of
permanency
and
duration
of
the
working
relationship; and (6) the extent to which the service rendered is
an integral part of the alleged employer’s business. Freund v. HiTech Satellite, Inc., 185 F. App’x 782, 783 (11th Cir. 2006).
“No
one of these considerations can become the final determinant, nor
can the collective answers to all of the inquiries produce a
resolution which submerges consideration of the dominant factor -economic dependence.”
Id. at 783 (citation omitted).
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While the factors in this case do no all point in the same
direction, the Court concludes that the evidence presented to it at
trial is sufficient to establish that plaintiff was an employee and
not an independent contractor.
were
an
integral
part
of
The services rendered by Crumpton
Sunset
Club’s
business,
and
were
particularly important given Oakes’ efforts to salvage the company
from the real estate downturn.
The business relationship had a
reasonable degree of permanency and lasted for two and one-half
years.
Plaintiff brought a skill set to the job which appears to
have been as successful as the economic climate allowed, and
certainly
brought
an
intensity
which
benefitted
Sunset
Club.
Although the testimony was not entirely clear, it appeared that
Crumpton mainly used equipment and items owned or provided by
Sunset Club to perform her job.
Crumpton had the opportunity for
extra income based upon her success in the form of commissions.
Sunset Club had very little control over Crumpton’s day to day work
performance.
The Court finds that the economic realities of the
situation favors the view that plaintiff was an employee of Sunset
Club.
B.
As such, the FLSA applied to the relationship.
Statute of Limitations
If an infraction of the FLSA is not willful, a two-year
statute
of
limitations
applies.
See
29
U.S.C.
§
255(a).
In
McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988), the Supreme
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Court defined willful violations as those where “the employer
either knew or showed reckless disregard for the matter of whether
its conduct was prohibited by the statute.” Id. at 133.
It is
clear to the Court that the business relationship between Sunset
Club and
Crumpton
was
complicated
from
the beginning
romantic relationship between Oakes and Crumpton.
by
the
Sunset Club
reported money paid to Crumpton on a 1099 form from the beginning,
and the mixed factors discussed above convince the Court that the
infraction was neither willful or done with reckless disregard.
For this reason the two year statute of limitations applies.
Plaintiff filed her Complaint on October 15, 2009, and therefore
plaintiff may seek damages from October 15, 2007 through December
31, 2007.
C.
Unliquidated Damages
Where the employer fails to submit accurate records, the
employee need only show she has in fact performed work for which
she was improperly compensated and produce sufficient evidence to
show the amount and extent of that work as a matter of just and
reasonable inference.
Brock v. Norman’s Country Market, Inc., 835
F.2d 823, 828 (11th Cir. 1988) (citations omitted).
Upon such
showing, the burden “shifts to the employer to prove its claim or
disprove the employee’s, and upon failing to do so, the court can
award
damages
approximate.”
to
the
employee
even
if
the
result
is
only
Etienne v. Inter-County Sec. Corp., 173 F.3d 1372,
-8-
1375 (11th Cir. Apr. 30, 1999), modified, 1999 U.S. App. LEXIS
12080 (June 11, 1999)(citing Anderson v. Mt. Clemens Pottery Co.,
328 U.S. 680, 687-88 (1946)).
Where an employer has not kept
adequate records of its employees’ wages and hours, “[t]he employer
cannot be heard to complain that the damages lack the exactness and
precision of measurement that would be possible had he kept records
in accordance with the requirements of [the FLSA].”
Anderson v.
Mt. Clemens Pottery Co., 328 U.S. 680, 688 (1946), superseded by
statute on other grounds, Bonilla v. Baker Concrete Constr., Inc.,
487 F.3d 1340, 1344 n.6 (11th Cir. 2007).
Neither side produced any records documenting the number of
hours plaintiff worked between October 16, 2007 and December 31,
2007.
Both witnesses had ample reason to shade their testimony
concerning
the
number
of
hours
Crumpton
worked.
Reasonable
inferences from the credible evidence convince the Court that a
reasonable estimate of the hours plaintiff worked during this time
period was somewhere between the 50 hours Oakes estimated as a high
end and the 74 hours plaintiff estimated as the consistent average.
The Court finds that Crumpton has established by a preponderance of
the evidence that she worked on average 60 hours per work week
between October 16 and December 31, 2007.
The
FLSA
normally
requires
eligible
employees
to
be
compensated at one and one-half their hourly wages for overtime
hours worked. 29 U.S.C. § 207(a)(1). Where certain conditions are
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met, however, the rate is reduced to “half time” pursuant to what
is referred to as the “fluctuating workweek” method.
Garcia v.
Port Royale Trading Co. Inc., 198 F. App’x 845, 845-46 (11th Cir.
2006); 29 C.F.R. § 778.114.
The fluctuating workweek method is to
be used when “there is a clear mutual understanding of the parties
that
the
fixed
salary
is
compensation
(apart
from
overtime
premiums) for the hours worked each workweek, whatever their
number, rather than for working 40 hours or some other fixed weekly
work period.” Id. § 778.114(a). Under this kind of compensation
structure, the salary “is intended to compensate the employee at
straight time rates for whatever hours are worked in the workweek.”
Id.
Thus, regardless of the fluctuating nature of the hours an
employee may work, the salary is intended to pay for all hours
worked.
E.g., Clements v. Serco, Inc., 530 F.3d 1224, 1230-31
(10th Cir. 2008).
The Court finds that it was the clear mutual understanding of
the
parties
that
the
fixed
monthly
salary
of
$2,000
plus
commissions was compensation for whatever number of hours were
worked each workweek.
Therefore, plaintiff is entitled to an
additional half-time amount for the hours she worked over forty
hours per work week.
There are eleven work weeks between October 15, 2007 and
December 31, 2007.
Assuming the average weekly rate of pay of
$642.50, divided by a 60 hour workweek, Crumpton received $10.71 an
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hour. The half-time rate ($5.36) multiplied by the 20 hours worked
over the 40 hour workweek comes to an additional $107.10 per week.
Therefore, the eleven weeks at issue, Crumpton is entitled to
$1,178.10, plus an equal amount in liquidated damages.
D.
Liquidated Damages
An employer who violates the overtime provisions of the Fair
Labor Standards Act “shall be liable to the employee or employees
affected in the amount of their unpaid minimum wages, or their
unpaid overtime compensation, as the case may be, and in an
additional equal amount as liquidated damages.”
216(b).
29 U.S.C. §
If the employer shows that the “act or omission . . . was
in good faith and that [defendant] had reasonable grounds for
believing that his act or omission was not a violation of the
[FLSA]”, the Court may award no liquidated damages.
260.
29 U.S.C. §
“An employer who seeks to avoid liquidated damages bears the
burden of proving that its violation was ‘both in good faith and
predicated upon such reasonable grounds that it would be unfair to
impose upon him more than a compensatory verdict.’” Joiner v. City
of Macon, 814 F.2d 1537, 1539 (11th Cir. 1987)(citations omitted).
“Thus, the district court’s decision whether to award liquidated
damages does not become discretionary until the employer carries
its burden of proving good faith.
In other words, liquidated
damages are mandatory absent a showing of good faith.”
(citation omitted).
-11-
Id.
Although defendants pled in their First Affirmative Defense
(Doc. #29) that they acted in good faith and within reasonable
grounds, the Court finds that defendants did not meet the burden at
trial.
Therefore, plaintiff will be awarded liquidated damages.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
1. The Court finds plaintiff was an employee; that defendants
did not act with willful or reckless disregard; plaintiff is
limited to damages sustained between October 15, 2007 through
December 31, 2007; and plaintiff is entitled to half-time pay for
the hours worked in addition to the regular 40 hours in the
workweek.
2.
The Clerk shall enter judgment in favor of plaintiff and
against defendants,
$1,178.10
in
unpaid
jointly
and
severally,
unliquidated
overtime
awarding plaintiff
compensation,
plus
$1,178.10 for liquidated damages, for a total of $2,356.20.
3.
The Clerk is further directed to terminate all deadlines
and motions, and to close the file.
DONE AND ORDERED at Fort Myers, Florida, this
August, 2011.
Copies:
Parties of record
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1st
day of
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