Rutledge et al v. Action Products International, Inc. et al
Filing
157
ORDER granting 154 Motion for Default Judgment. Clerk is directed to enter Judgment in favor of the Plaintiffs against the corporate defendants jointly and severally as follows: Debra Rutledge liquidated damages $4,143.36 on Count II and 36;19,800.00 as a civil penalty on Count IV; Eric Rutledge liquidated damages of $1968.00 on Count II; Jeanne Moore liquidated damages of $1256.59 on Count II. Plaintiff's request for deferred determination of reasonable attorney's fees is granted. The clerk is directed to term any pending motions and close the case signed by Judge Mary S. Scriven on 8/17/2011. (AKJ)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
DEBRA RUTLEDGE, ERIC
RUTLEDGE and JEANNE MOORE,
Plaintiffs,
v.
Case No. 6:09-cv-1245-Orl-35GJK
ACTION PRODUCTS INTERNATIONAL,
INC., ACTION TOYS, INC, ACTION
HEALTHCARE PRODUCTS, INC.,
CURIOSITY KITS, INC., WARREN
KAPLAN and JUDITH KAPLAN,
Defendants.
________________________________/
ORDER
THIS CAUSE comes before the Court for consideration of Plaintiffs’ Renewed
and Revised Motion for Entry of Final Default Judgment against Corporate Defendants.
(Dkt. 154) Upon consideration of all relevant filings, case law, and being otherwise fully
advised, the Court hereby GRANTS Plaintiffs’ motion (Dkt. 154), as described herein.
I.
BACKGROUND
On July 17, 2009, Plaintiffs filed their Verified Complaint in this case, alleging
violations of the Fair Labor Standards Act (“FLSA”) (Count I), breach of contract (Count
II), retaliation under the FLSA and the Florida Whistleblower Act (“FWA”) (Count III),
and damages for violations of COBRA and the American Recovery and Reinvestment
Act (“ARRA”) (Count IV). (Dkt. 1 at 12-17) Defendants filed their Answer, Affirmative
Defenses, and Counterclaim on August 7, 2009, which included a counterclaim by
Defendants/Counter-Plaintiffs Action Products International, Inc. (“APII”), Judith Kaplan,
and
Warren
Kaplan
against
indemnification. (Dkt. 4 at 7-9)
Plaintiff/Counter-Defendant
Debra
Rutledge
for
On October 7, 2010, the Clerk entered Default
Judgment against Defendants Action Products International, Inc., Action Toys, Inc.,
Action Healthcare Products, Inc., and Curiosity Kits, Inc., after these corporate
Defendants failed to retain counsel. (See Dkt. 52; Dkt. 57)
Plaintiffs and individual Defendants Warren and Judith Kaplan proceeded to a
jury trial and settled their claims after the first day. (See Dkt. 128; Dkt. 128; Dkt. 129)
On March 10, 2011, the Court held a hearing and granted the parties’ Oral Stipulated
Motion to Approve Settlement Agreement and Dismiss Action with Prejudice as to the
individual Defendants.
(Dkt. 128) At the hearing, Plaintiffs counsel advised that she
was “undergoing some settlement negotiations with the corporate defendant, who has
finally engaged counsel in Florida[.]” (Tr. Day 2 at 32) Accordingly, the Court issued an
Order directing the Plaintiffs to file a status report regarding negotiations within twentyone days.
(Dkt. 133)
In a March 31, 2011 status report, Plaintiffs requested an
additional two weeks to continue settlement negotiations with corporate Defendant APII,
advising that “[t]he other corporate Defendants refuse to discuss settlement.” (Dkt. 134
at 1) No other status report has been filed and it appears that Plaintiffs have been
unable to resolve their claims against corporate Defendants APII, Action Toys, Inc.,
Action Healthcare Products, Inc., and Curiosity Kits, Inc.
At Plaintiffs’ request, the Court dismissed Plaintiff Eric Rutledge and Plaintiff
Jeanne Moore’s retaliation claims and Plaintiff Debra Rutledge’s FLSA minimum wage
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claim against the corporate Defendants on July 6, 2011. (Dkt. 147) On August 4, 2011,
the Court dismissed Plaintiff Debra Rutledge’s retaliation claims against the corporate
Defendants. (Dkt. 155) Plaintiffs filed the instant motion on August 2, 2011, requesting
final default judgment be entered against (1) Plaintiff Eric Rutledge and Plaintiff Jeanne
Moore’s unpaid wages/breach of contract claims (Count II); (2) Plaintiff Debra
Rutledge’s unpaid wages/breach of contract claim (Count II); and (3) Plaintiff Debra
Rutledge’s COBRA violation claim (Count IV). (Dkt. 154 at 3)
II.
FACTS
Based on the Verified Complaint (Dkt. 1) and Plaintiff’s Motion (Dkt. 154), the
Court finds as follows:
1.
This Court has jurisdiction over Plaintiffs, Debra Rutledge, Eric Rutledge,
and Jeanne Moore, and Defendants, Action Products International, Inc., Action Toys,
Inc., Action Healthcare Products, Inc., and Curiosity Kits, Inc., and has subject matter
jurisdiction over this action.
2.
At all times material hereto, the principal executive office and
headquarters of each corporate Defendant was located at 1101 N. Keller Road, Suite E,
Orlando, Florida 32810.
3.
Defendant APII was the holding company for the other three corporate
Defendants—Action Toys, Inc., Action Healthcare Products, Inc., and Curiosity Kits,
Inc.—and owned, operated, and controlled these entities at all times material hereto.
4.
Defendant APII was incorporated in Florida in 1980 and became a publicly
traded company on the NASDAQ stock market in 1984.
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5.
Defendant APII is engaged in the business of
toy marketing,
manufacturing, and sales.
6.
Plaintiff Debra Rutledge was employed by Defendant APII from
September 2000 until March 2009. During her tenure, Plaintiff Debra Rutledge served
as the corporation’s controller and manager of credit, collections and office operations.
7.
Plaintiff Eric Rutledge, Debra Rutledge’s son, was employed by Defendant
APII for approximately three years, from March 2006 until March 2009.
8.
Plaintiff Jeanne Moore was employed by Defendant APII for approximately
five years, from March 2005 until March 2009.
9.
Plaintiffs’ wages were deferred for the payroll periods ending: (1)
02/22/09; (2) 03/08/09; (3) 03/22/09; and (4) 03/24/09.
During the pay periods ending
02/22/09 and 03/08/09, Plaintiffs were paid two-thirds of their normal earning, i.e., onethird of their wages were deferred.
During the pay periods ending 03/22/09 and
03/24/09, Plaintiffs were paid $10.00 per hour, with the remainder of their wages
deferred.
10.
Plaintiffs never consented or agreed to a reduction and/or deferral of their
wages.
11.
Plaintiff Debra Rutledge terminated the employment of Plaintiffs Eric
Rutledge and Jeanne Moore on March 20, 2009.
Plaintiff Debra Rutledge ceased
working for Defendant APII a few days later.
12.
Plaintiffs were not paid any deferred wages after their termination from
employment.
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13.
Plaintiff Debra Rutledge was a participant in the corporate Defendants’
medical benefit plan on the date of her resignation.
14.
The corporate Defendants failed to provide Plaintiff Debra Rutledge with
any information or notice regarding health insurance continuation or any other rights she
had under COBRA and the ARRA.
15.
After her termination, Plaintiff Debra Rutledge incurred $8,507.57 in
medical expenses.
III.
LEGAL STANDARD AND ANALYSIS
“When a party against whom a judgment for affirmative relief is sought has failed
to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the
clerk shall enter the party’s default.” FED. R. CIV. P. 55(a). However, a defendant’s
default alone does not require the court to enter a default judgment. DIRECTV, Inc. v.
Trawick, 359 F. Supp. 2d 1204, 1206 (M.D. Ala. 2005). To enter a judgment, there
must be sufficient basis in the pleadings to support the relief sought.
Id.
“The
defendant is not held to admit facts that are not well-pleaded or to admit conclusions of
law. In short . . . a default is not treated as an absolute confession of the defendant of
his liability and of the plaintiff's right to recover.”
Nishimatsu Constr. Co., Ltd. v.
Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). If the facts in the complaint
are sufficient to establish liability, then the court must conduct an inquiry to ascertain the
amount of damages. See Adolph Coors Co. v. Movement Against Racism & the Klan,
777 F.2d 1538, 1543-44 (11th Cir. 1985).
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Damages may be awarded only if the record adequately reflects the basis for the
award via a hearing or a demonstration of detailed affidavits establishing the necessary
facts. See id. at 1544. While a defaulted defendant admits well-pleaded allegations of
liability, allegations regarding the amount of damages are not admitted by virtue of
default. Miller v. Paradise of Port Richey, Inc., 75 F. Supp. 2d 1342, 1346 (M.D. Fla.
1999). The Court determines the amount and character of damages and may hold a
hearing to determine the same. Id. “Default judgments entered under Florida law only
admit to a plaintiff's entitlement to liquidated damages, those damages that can be
determined with exactness from the cause of action as pleaded, such as a pleaded
agreement between the parties, pleadings susceptible to an arithmetical calculation, or
by application of definite rules of law.” Loos v. Club Paris, LLC, 684 F.Supp.2d 1328,
1336 (M.D .Fla. 2010).
A. Count II- Breach of Express Employment Contract
For a breach of contract claim, Florida law requires a plaintiff to plead and
establish: “(1) the existence of a contract; (2) a material breach of that contract; and (3)
damages resulting from the breach.” Vega v. T-Mobile, USA, Inc., 564 F. 3d 1256,
1272 (11th Cir. 2009). All three Plaintiffs contend that the corporate Defendants
breached an “express oral contract that they would perform their job each day in
exchange for payment of the agreed upon salary rate of pay for their labor.” (Dkt. 74 at
7-8; see also Dkt. 1 at 13-14) In her sworn declaration, Plaintiff Debra Rutledge stated:
It was the practice, policy and custom of defendants to pay all amounts
due and owing to an employee in their last regular paycheck, including
unpaid accrued Paid Time Off (PTO), unless that employee was
terminated for cause.
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(Dkt. 154-1 at ¶ 4) Further, Plaintiffs allege that “Defendants breached that agreement
by failing to pay Plaintiffs the deferred amounts.” (Dkt. 1 at ¶ 78) As a result, Plaintiffs
claim they have suffered financial damages in the form of unpaid wages and unpaid
accrued time off. (Dkt. 1 at 13; Dkt. 154 at 6-8)
Plaintiffs’ allegations are sufficient to meet the elements of a claim for breach of
contract under Florida law. Accordingly, Plaintiffs’ motion for default judgment on Count
II is GRANTED.
Damages
The purpose of damages is to restore an injured party to the same position that
he would have been in had the other party not breached the contract. Capitol Envtl.
Servs., Inc. v. Earth Tech, Inc., 25 So.3d 593, 596 (Fla. 1st DCA 2009). Plaintiffs
submit that their economic, liquidated damages resulting from the corporate
Defendants’ breach of the employment agreements are as follows:
Plaintiff DEBRA RUTLEDGE is due a total of $4,143.36 in unpaid wages:
a. Deferred wages for Payroll period ending 02/22/09: $ 730.92
b. Deferred wages for Payroll period ending 03/08/09: $ 732.23
c. Deferred wages for Payroll period ending 03/22/09: $1,392.31
d. Unpaid wages for week of 03/24/09: $1,096.16
e. Unpaid accrued Paid Time Off: $ 630.20
less $438.461/ she was later paid ( 438.46)
Plaintiff ERIC RUTLEDGE is due $1,968.00 in unpaid wages:
a. Deferred wages for Payroll period ending 02/22/09: $400.00
b. Deferred wages for Payroll period ending 03/08/09: $400.00
c. Deferred wages for Payroll period ending 03/22/09: $400.00
d. Unpaid accrued Paid Time Off: $768.00
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Plaintiff JEANNE MOORE is due $1,256.59 in unpaid wages:
a. Deferred wages for Payroll period ending 02/22/09: $344.94
b. Deferred wages for Payroll period ending 03/08/09: $344.94
c. Deferred wages for Payroll period ending 03/22/09: $234.40
d. Unpaid accrued Paid Time Off: $332.31
(Dkt. 154 at 6-7; Dkt. 1 at ¶¶ 37, 59, 66) Because these amounts are liquidated and
ascertainable by simple mathematical calculations, Plaintiffs contend no trial for the
purpose of assessing damages is necessary. (Dkt. 154 at 8) The Court agrees. The
Verified Complaint and Plaintiff Debra Rutledge’s sworn declaration are sufficient for the
court to ascertain the appropriate measure of damages.
Accordingly, Plaintiffs are
entitled to recover the following amounts: (1) Plaintiff Debra Rutledge- $4,143.36; (2)
Plaintiff Eric Rutledge- $1,968.00; and (3) Plaintiff Jeanne Moore- $1,256.59.
B. Count IV- COBRA Violation
COBRA rights include the option to continue health insurance coverage
equivalent to other qualified beneficiaries for at least eighteen months if a qualifying
event occurs. 29 U.S.C. §§ 1162, 1165. Discharge from employment is a qualifying
event. 29 U.S.C. § 1163(2). After a qualifying event, the employer must notify the plan
administrator, who is required to provide notice to employees of their COBRA rights and
provide at least 60 days for the employee to elect COBRA continuation coverage. 29
U.S.C. §§ 1165, 1166(a)(2),(4). The statute does not prescribe the contents of required
notice. See 29 U.S.C. § 1166(a)(4). However, the notice given must be sufficient to
allow the qualified beneficiary to make an informed decision on whether to elect
coverage. Meadows v. Cagle's, Inc., 954 F.2d 686 (11th Cir. 1992).
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If a plan administrator arranges with another person to notify qualified
beneficiaries of their continuation coverage rights, the notification requirement
nonetheless remains with the administrator. Accordingly, the administrator must make
all agreements and arrangements with the other person that are necessary to ensure
qualified beneficiaries are properly notified. See Scott v. Suncoast Beverage Sales,
Ltd., 295 F.3d 1223, 1230-31 (11th Cir. 2002) (holding a company violated COBRA by
not notifying a former employee of his right to receive continuation coverage even
though the company had contracted with a third party to send out COBRA notices). The
duty of notification ultimately lies with the employer, even if a plan administrator or a
third party company is designated to disseminate COBRA notices. See id. Similarly,
the American Recovery and Reinvestment Act (“ARRA”), which provides a COBRA
premium reduction for eligible employees who are involuntarily terminated from
employment through the end of May 2010, requires that an employer notify eligible
employees of the availability of a COBRA premium reduction.
Pub. L. N. 111-5 §
3001(a).
In Count IV, Plaintiff Debra Rutledge claims that the corporate Defendants failed
to provide her with information regarding health insurance continuation after her
resignation/constructive discharge and have continued to deny her healthcare insurance
benefits under ERISA/COBRA. (Dkt. 1 at 16-17) Additionally, in her sworn declaration,
Plaintiff stated:
I made numerous attempts to obtain my COBRA notice so I could
continue my insurance coverage. I attempted to contact Warren Kaplan
and Judith Kaplan regarding my COBRA notice and was told to instead
contact M. Scott Beaton, an employee who was supposedly then handling
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such personnel issues. I emailed Mr. Beaton on several occasions; I
received only one response, a cryptic one that replied that ‘You will
receive your paperwork within the guidelines you mentioned.’ . . . However
I have never received any COBRA notice and was unable to continue my
health insurance. I also contacted the health insurance company which
informed me that they were not the COBRA administrator and did not
know who was supposed to provide me the COBRA notice except that
they knew it was not the insurer’s responsibility, nor could the insurer
allow me to COBRA my insurance without the insurer receiving the
appropriate forms as well.
...
Although I was responsible for some of the paperwork involved with the
COBRA process for employees as part of the personnel function of my
job, I was not the designated plan administrator and I did not send out
COBRA notices to employees. The company employed a third party
service, like COBRAServ, which handled the notices.
(Dkt. 154-1 at ¶¶ 6, 8) Plaintiff Debra Rutledge’s allegations regarding the corporate
Defendants’ failure to provide COBRA/ARRA notices set for in the Verified Complaint
and her sworn declaration are sufficient to establish non-compliance with the statutes.
Accordingly, Plaintiff Debra Rutledge’s motion for default judgment as to Count IV is
GRANTED.
Damages
ERISA's civil remedy enforcement scheme lies in 29 U.S.C. § 1132. That section
permits plan participants or beneficiaries to pursue various claims under the statute,
including actions to recover benefits due under a plan or for equitable relief following
ERISA violations. See 29 U.S.C. § 1132(a)(1)(B),(a)(3). Section 1132(a)(1)(A) allows a
participant or beneficiary to bring an action for the relief provided in § 1132(c). Section
1132(c), in pertinent part, empowers a court to impose a fixed penalty for ERISA
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procedural violations. 1 This penalty, up to $110 2 per day, can be imposed on a plan
administrator that fails to provide information, requested by a participant or beneficiary,
that ERISA requires be provided, such as through the procedural and notification
provisions here at issue. Though § 1132(c) concludes by ambiguously granting a court
the discretionary power to “order such other relief as it deems proper,” nothing in that
subsection, or § 1132 as a whole, suggests that ERISA would approve of an affirmative
damage recovery based merely on a plan administrator's failure to adhere to proper
notification and disclosure procedures. See, e.g., Hines v. Mass. Mut. Life. Ins. Co., 43
F.3d 207, 211 (5th Cir.1995) (recognizing violations of ERISA’s reporting and disclosure
requirements “does not give rise to a substantive damage remedy.”); Lewandowski v.
Occidental Chem. Corp., 986 F.2d 1006, 1008 (6th Cir. 1993) (noting that § 1132(c)
1
Specifically, § 1132(c) provides:
Any administrator (A) who fails to meet the requirements of paragraph (1) or (4) of
section 1166 of this title, section 1021(e)(1) of this title or section 1021(f), or section
1025(a) of this title with respect to a participant or beneficiary, or (B) who fails or refuses
to comply with a request for any information which such administrator is required by this
subchapter to furnish to a participant or beneficiary (unless such failure or refusal results
from matters reasonably beyond the control of the administrator) by mailing the material
requested to the last known address of the requesting participant or beneficiary within 30
days after such request may in the court's discretion be personally liable to such
participant or beneficiary in the amount of up to $100 a day from the date of such failure
or refusal, and the court may in its discretion order such other relief as it deems proper.
For purposes of this paragraph, each violation described in subparagraph (A) with
respect to any single participant, and each violation described in subparagraph (B) with
respect to any single participant or beneficiary, shall be treated as a separate violation.
...
Any employer maintaining a plan who fails to meet the notice requirement of section
1021(d) of this title with respect to any participant or beneficiary or who fails to meet the
requirements of section 1021(e)(2) of this title with respect to any person or who fails to
meet the requirements of section 1082(d)(12)(E) of this title with respect to any person
may in the court's discretion be liable to such participant or beneficiary or to such person
in the amount of up to $100 a day from the date of such failure, and the court may in its
discretion order such other relief as it deems proper.
29 U.S.C. § 1132(c)(1),(3).
2
For violations occurring after July 29, 2007, “the maximum amount of the civil monetary penalty” was
“increased from $100 a day to $110 a day.” 29 C.F.R. 2575.502c–1.
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empowers the court to impose a fixed $110 per day penalty for ERISA procedural
violations but does not empower the court to award a plaintiff additional damages).
Therefore, Plaintiff Debra Rutledge’s request for recovery of $8,507.57 in damages
related to medical costs is DENIED.
In this Circuit, in determining the appropriate penalty, trial courts may consider
whether a denial of information and proper notice prejudiced the plaintiff. Scott, 295
F.3d at 1231-32. Here, Plaintiff Debra Rutledge has shown that she was prejudiced
because she incurred medical costs in the amount of $8,507.57, which she would not
have incurred if proper notification had been given by the corporate Defendants. (See
Dkt. 1 at 17; Dkt. 154 at 9; Dkt. 154-1 at ¶ 2)
Therefore, the Court concludes that an
award of $110 per day for the full six-month coverage period (180 days) is appropriate.
Accordingly, Plaintiff Debra Rutledge is entitled to recover the sum of $19,800.00 as a
monetary civil penalty against the corporate Defendants.
C. Attorney’s Fees and Costs
Plaintiffs request “leave to submit their fees and costs after the judgment on the
damages has been entered[.]”
(Dkt. 154 at 11) Plaintiffs’ request for a deferred fee
award is GRANTED.
III.
CONCLUSION
Upon consideration of the foregoing, it is hereby ORDERED as follows:
(1)
Plaintiffs’ Renewed and Revised Motion for Entry of Final Default
Judgment against Corporate Defendants (Dkt. 154) is GRANTED and
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judgment is entered in favor of Plaintiffs upon Counts II and IV of the
Verified Complaint herein;
(2)
The CLERK is DIRECTED to ENTER Judgment in favor of Plaintiffs and
against the corporate Defendants consistent with the following:
a. Plaintiff Debra Rutledge is awarded liquidated damages in the
amount of $4,143.36 on Count II against corporate Defendants
Action Products International, Inc., Action Toys, Inc., Action
Healthcare Products, Inc., and Curiosity Kits, Inc. jointly and
severally;
b. Plaintiff Eric Rutledge is awarded liquidated damages in the
amount of $1,968.00 on Count II against corporate Defendants
Action Products International, Inc., Action Toys, Inc., Action
Healthcare Products, Inc., and Curiosity Kits, Inc. jointly and
severally;
c. Plaintiff Jeanne Moore is awarded liquidated damages in the
amount of $1,256.59 on Count II against corporate Defendants
Action Products International, Inc., Action Toys, Inc., Action
Healthcare Products, Inc., and Curiosity Kits, Inc. jointly and
severally;
d. Plaintiff Debra Rutledge is awarded $19,800.00 as a civil penalty
on Count IV against corporate Defendants Action Products
International, Inc., Action Toys, Inc., Action Healthcare Products,
Inc., and Curiosity Kits, Inc. jointly and severally;
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(3)
Plaintiff’s request for deferred determination as to a reasonable attorney’s
fee is GRANTED; and,
(4)
The CLERK is further DIRECTED to TERMINATE any pending motions
and CLOSE this case.
DONE and ORDERED in Orlando, Florida, this 17th day of August 2011.
Copies Furnished to:
Counsel of Record and
Any Unrepresented Parties.
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