Lee v. Center for Psychological Health Care, Inc. et al

Filing 46

ORDER & REASONS that Plaintiff Nicole Lee's 35 Motion for Summary Judgment is GRANTED IN PART AND TAKEN UNDER ADVISEMENT IN PART as set forth in order. Signed by Honorable Eldon E. Fallon on 7/24/13. (DNO)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

NICOLE LEE

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VERSUS
CENTER FOR PSYCHOLOGICAL
HEALTH CARE, INC., ET AL.

CIVIL ACTION
NO. 12-27
JUDGE FALLON

ORDER & REASONS
Before the Court is a Motion for Summary Judgment filed on behalf of Plaintiff,
Nicole Lee. (R. Doc. 35). The Court has reviewed the submitted memoranda and the applicable
law and now issues this Order and Reasons.
I. BACKGROUND
Plaintiff Nicole Lee brings this overtime wage lawsuit pursuant to the Fair Labor
Standards Act, Title 29, United States Code, Sections 201, et seq. (“FLSA”), both in her
individual capacity and also as a FLSA Collective Action on behalf of others similarly situated.
Made Defendants herein are Center for Psychological Healthcare, Inc. (“CPHC”), CPHC
Manhood Training, Inc., and their owners and officers, Frances M. Toldson and her nowdeceased husband, Dr. Ivory L. Toldson (collectively, “Defendants”). This case arises out of
Defendants’ employment of Lee from approximately October 2005 to October 2010. In her
Complaint, Lee alleges that, during that time, Defendants failed to pay her due overtime wages.
(R. Doc. 1). As a result, she sought assistance from the United States Department of Labor.
Although the Department of Labor conducted an audit of Defendant Center for Psychological
Health Care, Inc. (“CPHC”), Lee alleges that scope of the investigation was inadequate and

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would not allow her to recover adequate compensation or liquidated damages. As a result, on
January 18, 2012, Lee filed the instant suit in this Court on behalf of herself and all others
similarly situated, seeking recovery of unpaid overtime wages, liquidated damages, and legal
fees for the time periods between December 1, 2008 to April 17, 2009, and from March 28,
2010, to October 2010, under the provisions of the FLSA. Lee also seeks the balance of unpaid
back wages, liquidated damages, and legal fees for the time period relevant to the Department of
Labor investigation: April 18, 2009 to March 27, 2010.
Lee obtained a preliminary default on May 15, 2012. One week later, the
Defendants filed a Motion to set the default aside and an Answer denying liability. (R. Docs. 17,
18). On July 17, 2012, the Court granted the Defendants’ Motion to Set Aside the Preliminary
Default and ordered the case scheduled for trial.
II.

PENDING MOTION
On June 1, 2013, the Plaintiff Nicole Lee filed the instant Motion seeking summary

judgment (R. Doc. 35). Lee seeks a judgment: (1) declaring that CPHC is an enterprise under
the FLSA; (2) finding that Defendants CPHC, Ivory Toldson, and Frances Toldson are jointly
and severally liable to Lee; (3) awarding Lee $9,213.99 in back overtime wages and $13,301.66
in liquidated damages. In support of her Motion, Lee argues that CPHC meets the FLSA’s
definition of an “enterprise” because it employed several individuals, including Lee, and because
its sales volume exceeded $500,000. Lee further points out that Defendants do not dispute this
point.
As to joint and several liability, Lee argues that binding precedents define the term
“employer” as used in the FLSA to include corporate officers along with the corporation. Lee

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further argues that individuals are joint employees when they exercise control over employee
responsibilities, hiring, firing, pay rates, and employment records. Lee alleges that Ivory
Toldson, as CEO, and Frances Toldson, as COO, exercised such control and are therefore joint
employers under the FLSA. Lee further notes that Defendants do not dispute that Lee was their
employee.
The parties dispute several points with regard to the appropriate calculation of
damages. The first issue is the appropriate overtime calculation for a salaried employee; Lee
was paid a $700 per week salary from March 28, 2010 until October 5, 2010. Lee argues that
Defendants intended for her salary to compensate her at a rate of $10.94 per hour, meaning that
her $700 per week salary was intended to compensate her for 64 hours per week. Lee therefore
requests $5.47 per hour (half-time) for hours between 40 and 64, and $16.47 (time-and-a-half)
for any hours in excess of 64 in a given week.
The second issue is the applicable limitations period. Lee argues that the FLSA
provides for a three-year period if a defendant’s conduct represents a willful violation of the law.
Lee further argues that Frances Toldson, who completed a degree in business education, and who
claims to have been ignorant of the FLSA and its requirements, actually complied with the
FLSA’s requirements prior to December 1, 2008 in that Defendants paid hours in excess of 40 in
a given week at a rate of time-and-a-half, as per the FLSA requirements. Lee alleges that, when
Lee asked why Defendants stopped paying her overtime, Frances Toldson explained that CPHC
did not have to pay overtime because it was a “small company.” Lee argues that Defendants’
compliance with the FLSA’s overtime requirements demonstrates their knowledge of same, and
that their decision to stop complying without seeking legal advice can only be understood as a

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willful violation.
The third issue is the appropriateness of liquidated damages. Lee argues that the
FLSA requires liquidated damages in an amount equal to back wages unless a defendant can
prove an affirmative defense of good faith. Lee argues that Defendants have not pled such a
defense, and in any case have not met and cannot meet their substantial burden based on the
undisputed facts. Lee therefore seeks $13,301.66 in liquidated damages.
Defendants oppose Lee’s Motion. (R. Doc. 38). Defendants argue that they are
liable to Lee under the FLSA, but for a smaller amount than Lee claims. As a result, Defendants
ask the Court to grant Lee’s Motion only in part, and to award Lee $5,295.11 in unpaid overtime,
and no liquidated damages.
In support of their position as to the salary issue, Defendants argue that the salary
was intended to compensate Lee for all hours worked, and thus calculate her overtime for the
salaried period based on a reduced hourly rate. Defendants do not provide any citation to
evidence in the record to support their position as to this intention.
As to the applicable limitations period and the appropriateness of liquidated
damages, Defendants make essentially one argument: that they acted in good faith at all times
and complied with the Department of Labor’s investigation. Defendants argue that their good
faith precludes this Court’s finding that their violation of the FLSA was willful, and that
therefore a two-year limitations period applies. Defendants further argue that liquidated
damages are not appropriate because of their good faith.
Defendants also argue that Lee cannot establish personal liability against Ivory
Toldson or Frances Toldson for their violations of the FLSA. Defendants argue that the LLC

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structure shields them from personal liability.
Defendants also argue that they did not give authority to Mr. Simmons, their former
counsel, to toll the statute of limitations during attempts to settle this matter before Lee filed suit.
Defendants argue that this Court should apply the applicable limitations period from the date that
Lee filed suit rather than from December 1, 2011 pursuant to their agreement.
Lee filed a reply memorandum in support of her Motion. (R. Doc. 42). In it, she
argues that the tolling agreement is valid and enforceable against Defendants because Mr.
Simmons agreed both orally and via email to toll the statute as of December 1, 2013. As to
Simmons’ authority, Lee notes that Frances Toldson’s deposition testimony makes clear that
Simmons was her lawyer and Defendants were Simmons’ clients at the relevant times. Lee
further argues that she is entitled to all unpaid overtime, including overtime that remains unpaid
from the period covered by the Department of Labor’s investigation. Lee repeats her argument
that the Defendants’ earning statement indicates the hourly pay rate upon which Lee’s salary was
based and thus the number of hours per week that her salary was intended to compensate. Lee
also renews her arguments as to the applicable limitations period and the appropriateness of
liquidated damages. Finally, Lee argues that Defendants cite the incorrect standard for the
determination of individual liability under the FLSA.
III.

LAW & ANALYSIS

A. Summary Judgment Standard
A district court can grant a motion for summary judgment only when the
“‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving

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party is entitled to a judgment as a matter of law.’” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (quoting Fed. R. Civ. P. 56(c)). When considering a motion for summary judgment, the
district court “will review the facts drawing all inferences most favorable to the party opposing
the motion.” Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The
court must find “[a] factual dispute [to be] ‘genuine’ if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party [and a] fact [to be] ‘material’ if it might
affect the outcome of the suit under the governing substantive law.” Beck v. Somerset Techs.,
Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986)).
“If the moving party meets the initial burden of showing that there is no genuine
issue of material fact, the burden shifts to the non-moving party to produce evidence or designate
specific facts showing the existence of a genuine issue for trial.” Engstrom v. First Nat’l Bank of
Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24; Fed. R. Civ.
P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly
supported motion. See Anderson, 477 U.S. at 248. “If the evidence is merely colorable, or is not
significantly probative,” summary judgment is appropriate. Id. at 249-50 (citations omitted).
Partial summary judgment dismissing only certain claims is appropriate under the same
standards. See Fed. R. Civ. P. 56(d).
B. Analysis
The parties do not dispute several initial points, and the Court finds that there is no
genuine issue of material fact, and that Plaintiff Nicole Lee is entitle to judgment as a matter of
law, on these initial points. Specifically, there is no disputing the fact that CPHC was Lee’s

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“employer” and “an enterprise engaged in commerce” as defined by the FLSA. The Court will
grant Plaintiff’s Motion as to this threshold issue.
As to the individual liability of Ivory and Frances Toldson, there is a dispute among
the parties. The Court finds that Frances Toldson and, until his death, Ivory Toldson, jointly
owned CPHC and served as its corporate officers. The Court finds that both individuals had and
exercised the power to hire and fire employees and to determine their rate and method of
employment. Accordingly, under the economic reality test defined by the United States Court of
Appeals for the Fifth Circuit, the Court finds that Ivory and Frances Toldson were both joint
employers of Plaintiff Nicole Lee. See Martin v. Spring Break ‘83 Prod., 688 F.3d 247, 251-53
(5th Cir. 2012). CPHC, Ivory Toldson, and Frances Toldson were Lee’s employers as defined
by the FLSA and relevant precedents, and are therefore jointly and severally liable to Plaintiff
Nicole Lee for their violations of the FLSA. The Court will grant Plaintiff’s Motion as to this
issue.
As to the parties’ tolling agreement, the Court finds that Mr. Simmons was acting as
Defendants’ lawyer at the time that he consented to the tolling agreement. If some Defendants
wish to dispute the scope of his authority, they may do so in a proceeding against Mr. Simmons.
This Court finds that Mr. Simmons’s oral and written agreement binds the parties, and that the
applicable limitations period must be calculated from December 1, 2011, as agreed. The Court
will grant Plaintiff’s Motion as to this issue.
As to the recoverability of back overtime earned during the period covered by the
Department of Labor’s investigation, the Defendant cites no authority, and the Court can locate
no authority, indicating that a Plaintiff is precluded from claiming overtime wages earned during

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the period of a wage hour audit. The Court finds that the Plaintiff’s claims for unpaid overtime
during the relevant period are not precluded. The Court will grant Plaintiff’s Motion as to this
issue.
As to the proper calculation of Plaintiff’s wages during the period in which
Defendants paid her a salary, the Court notes that Defendants cite no evidence in support of their
position that the salary was intended to compensate Lee for all hours worked. After considering
all the facts and circumstances, including the notation on Defendants’ earning statement
indicating a rate of pay of $10.94 per hour, the Court finds that the evidence establishes the fact
that the parties intended the salary to compensate Lee for 64 hours of work per week. The Court
will grant Plaintiff’s Motion as to this issue.
The Court will reserve ruling on the remaining issues raised in Plaintiff’s Motion.
IV. CONCLUSION
For the foregoing reasons, IT IS ORDERED that the Motion for Summary
Judgment filed on behalf of Plaintiff Nicole Lee (R. Doc. 35) is hereby GRANTED IN PART
AND TAKEN UNDER ADVISEMENT IN PART as follows: Plaintiff’s Motion is granted
insofar as the Court finds that Defendants CPHC, Frances Toldson, and Ivory Toldson employed
Plaintiff and are jointly and severally liable to Plaintiff for their relevant violations of the FLSA;
Plaintiff’s Motion is also granted insofar as the Court finds that the parties have agreed to toll the
applicable limitations period effective December 1, 2011; Plaintiff’s Motion is also granted
insofar as the Court finds that Plaintiff is entitled to recover all unpaid back overtime, including
overtime wages that became due during the time period covered by the Department of Labor’s
investigation; and Plaintiff’s Motion is also granted insofar as the Court finds that the parties

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intended that Plaintiff’s salary would compensate her for 64 hours of work per week. The
remaining issues in Plaintiff’s Motion are taken under advisement.

New Orleans, Louisiana, this 24th day of July, 2013.

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UNITED STATES DISTRICT JUDGE

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