United States Department of Labor v. Los Cocos Mexican Restaurant, Inc. et al

Filing 156

MEMORANDUM DECISION: This matter is before the court on Plaintiff's motion for partial summary. (Doc. 143.) On August 26, 2024 prior to the start of trial, the court granted Plaintiff's motion in part and denied it in part on the record. This order details the court's reasoning for that decision. The court also made rulings on evidentiary issues. (See order for details.) Signed by District Judge John W. Broomes on August 28, 2024. (mls)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
JULIE SU, ACTING SECRETARY OF
LABOR, U.S. DEPARTMENT OF LABOR,
Plaintiff,
v.

Case No. 22-1004-JWB

LOS COCOS MEXICAN RESTAURANT,
INC., et al.,
Defendant.
MEMORANDUM DECISION
This matter is before the court on Plaintiff’s motion for partial summary. (Doc. 143.) On
August 26, 2024 prior to the start of trial, the court granted Plaintiff’s motion in part and denied it
in part on the record. This order details the court’s reasoning for that decision. The court also
made rulings on evidentiary issues as reflected herein.
Plaintiff’s Motion for Partial Summary Judgment. Plaintiff filed a motion for partial
summary judgment asserting that Defendants have waived their statute of limitations defense
based on their execution of six separate tolling agreements. Defendant Alvaro de Leon did not
sign any of the tolling agreements. All agreements, with the exception of the fourth agreement,
were signed by Plaintiff’s representative and Defendants Delgado (both individually and on behalf
of Los Cocos) and Alfaro. The fourth agreement was not executed by Plaintiff. Defendants
Delgado and Alfaro have put forth evidence that they did not receive a signed copy of the first five
tolling agreements from Plaintiff. (Docs. 147-2, 147-3.) Although Defendants object to the
authenticity of the agreements in Plaintiff’s filing, it is clear from the response which attached the
same agreements (although some were unsigned) that they do not dispute that these were the tolling
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agreements exchanged by the parties during the investigation. (Id.) Further, Plaintiff authenticated
the tolling agreements by submitting a declaration by the investigator with her reply brief. (Doc.
148-1.)
The first tolling agreement tolled the limitations period from May 16, 2019 through
October 23, 2020 and was signed on May 15, 2020 by Defendants and on September 17, 2020 by
Director Reed Trone. (Doc. 143-1.) All subsequent tolling agreements tolled the period from May
16, 2019 to a later date in the future depending on when the agreement was executed. (Docs. 1432–143-5.) The last tolling agreement (the sixth agreement) tolled the limitations period from June
15, 2017 until the time that the Secretary filed a lawsuit, which is referred to as the “tolling period.”
(Doc. 143-6.) The agreement further states that the “tolling period” “will not be included in
computing the time limited by any statute of limitations, nor will the Tolling Period be raised in
any other defense raised by Employers (including laches) that otherwise would be available to
Employers concerning the timeliness of any legal proceedings that may be brought against
Employers as a result of the Secretary’s findings from this investigation. The Secretary and
Employers specifically agree that any applicable statute of limitations shall be tolled for the entire
Tolling Period set forth herein.” (See e.g., Doc. 143-6 at ¶ 4.) Defendants were represented by
counsel when the sixth agreement was executed. The sixth agreement was signed by Defendants
Delgado (both individually and on behalf of Los Cocos) and Alfaro on June 10 and 17, 2021. It
was signed by Elaine Smith for DOL on June 21, 2021. Ms. Smith then sent the fully executed
agreement to Defendants’ counsel on June 21, 2021. (Doc. 143-7.)
Plaintiff moves for partial summary judgment on the basis that the statute of limitations
was tolled under the agreements or, alternatively, that Defendants waived their statute of
limitations defense. In response, Defendants assert that the first five tolling agreements are not

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enforceable because Plaintiff either did not sign them or did not return the executed agreements to
them. In essence, they are arguing that the contracts were never accepted by Plaintiff and therefore
not enforceable. Federal statutes of limitations can often be tolled by agreement. Nat'l Credit
Union Admin. Bd. v. Barclays Cap. Inc., 785 F.3d 387, 392 (10th Cir. 2015). Courts look to state
law to determine if the tolling agreement is enforceable. See Brough v. O.C. Tanner Co., 2019
WL 181355, at *3 (D. Utah Jan. 11, 2019) (citing Madsen v. Prudential Fed. Sav. & Loan Ass'n,
635 F.2d 797, 802–03 (10th Cir. 1980)). Under Kansas law, a written contract signed by one party
but acted upon by both parties as a binding agreement is enforceable against the party who signed
it. See Scottsdale Ins. Co. v. James L. Gardner Tr., No. 98-1343-MLB, 2001 WL 1325954, at *2
(D. Kan. May 16, 2001) (citing Sentney v. Hutchinson Interurban Ry. Co., 90 Kan. 610 (1913) (a
written contract, signed by one party only, but fully recognized and acted upon by both is binding).
See also Hartford Fire Ins. Co. v. P & H Cattle Co., 451 F. Supp. 2d 1262, 1273 (D. Kan. 2006),
aff'd, 248 F. App'x 942 (10th Cir. 2007). Defendants accepted the benefit of not being sued during
the time period at issue and Defendants cannot now assert that the agreements are not enforceable
because of the lack of Plaintiff’s signature. See id.; see also Hallard v. Kinney, 135 Kan. 323
(1932). See also J.P.C. Petroleum Corp. v. Vulcan Steel Tank Corp., 118 F.2d 713, 716 (10th Cir.
1941) (“a contract becomes binding where it is executed by one party, is forwarded to the other
for execution or approval, is received and retained by the latter but never formally signed or
approved by him, and both parties act in reliance upon it as a valid contract.”) Therefore, the court
finds that all of the tolling agreements are enforceable against Defendants Delgado (both
individually and on behalf of Los Cocos) and Alfaro.
Even when a tolling agreement is not enforceable, the Tenth Circuit has held that a party’s
waiver with respect to a statute of limitations defense is enforceable. See Nat'l Credit Union

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Admin. Bd. v. Barclays Cap. Inc., 785 F.3d 387, 393 (10th Cir. 2015). Here, the agreements
include both an agreement to toll the statute of limitations and Defendants’ waiver of any defense
with respect to the tolling period in the agreements.
The court finds that Defendants Los Cocos, Delgado, and Alfaro have waived their statute
of limitations defense with respect to the time period May 16, 2019 to the date that this action is
filed. Those Defendants executed all of the tolling agreements as evidenced in their declarations
and they were represented by counsel when at least two of the agreements were executed. The
fact that one or more agreements were not signed by Plaintiff does not effect the waiver. See Perez
v. Arizona Logistics Inc., 2022 WL 973585, at *4 (D. Ariz. Mar. 31, 2022). Defendants expressly
promised not to raise a defense regarding the tolling period on six different occasions. Plaintiff
relied on those promises by not bringing an action during the time period that they were
investigating and engaged in negotiations. Defendants must be held to that promise even though
the statute of limitations has passed. See Nat'l Credit Union Admin., 785 F.3d at 393. Plaintiff’s
motion is granted as to Los Cocos, Delgado, and Alfaro. Plaintiff’s motion is denied as to Alvaro
de Leon.
Therefore, Plaintiff’s claims regarding FLSA violations from May 16, 2017 are not barred
by the statute of limitations as to these Defendants. Defendant Alvaro de Leon did not execute the
agreements and Plaintiff makes no argument as to how these agreements waived his ability to
assert a statute of limitation defense. As to Alvaro de Leon, because he did not individually waive
his right to assert the defense, he can only be liable for violations occurring from January 6, 2020.
If Plaintiff proves that he acted willfully, Plaintiff could recover against Alvaro de Leon for
violations occurring from January 6, 2019.

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In their response brief, Defendants have asked for sanctions due to alleged misconduct by
Plaintiff. Defendants’ request is denied as it fails to comply with Federal Rule of Civil Procedure
11(c) which requires that a separate motion be filed and served.
Defendants’ exhibits 10-13 (Tax Returns and Profit and Loss statement) and
Evidence regarding financial condition. At the in limine hearing, Plaintiff renewed her motion
to exclude evidence of Defendants’ financial condition and the exhibits relating to the same on the
basis that the evidence was not relevant to the issues since the parties dismissed the count seeking
civil penalties. Defendants assert that this evidence is relevant to the issue of liquidated damages.
However, liquidated damages are a form of compensatory damages. See Brooklyn Sav. Bank v.
O'Neill, 324 U.S. 697, 707 (1945). As such, Defendants’ financial condition is not relevant to this
issue. See Walsh v. Fusion Japanese Steakhouse, Inc., 585 F. Supp. 3d 766, 791 (W.D. Pa. 2022)
(citing cases). After review, the court finds that Defendants’ financial condition is not relevant to
the issues remaining and the motion to exclude these exhibits is granted.
Employee Statements. Several employees provided statements to Plaintiff during her
investigation. These statements were provided to Defendants without the name of the employee
making the statement because Plaintiff invoked the government’s informer privilege. This
privilege is to protect the informer's identity, who has provided confidential information in a
statement which tends to indicate that the person giving it has cooperated with the government
against the employer. See Keenan v. Dep’t of Labor, 851 F. App’x 865 (10th Cir. 2021). The
identity of the informer is protected due to concern that an employer would pressure the employees
to change their testimony or discourage them from testifying. Id. Defendant asks the court to
require Defendant to reveal the identity of the informers. In response, Plaintiff asks the court to
withhold the identity of the informer until the morning of the testimony and asserts that the

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employees are concerned that they may be fired, although that would be a violation of the law in
and of itself. In Keenan, the Tenth Circuit approved disclosure of the statement’s after the witness
testified, which is similar to the standard under the Jencks Act. After review and in accordance
with Keenan, the court finds that disclosure of the unredacted statements on the morning prior to
the employee’s testimony is appropriate to protect the informant and provide a sufficient amount
of time for Defendants to prepare for cross examination.
IT IS SO ORDERED. Dated this 28th day of August 2024.
__s/ John W. Broomes__________
JOHN W. BROOMES
UNITED STATES DISTRICT JUDGE

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