Clancy v. Skyline Grill, LLC et al

Filing 26

REPORT AND RECOMMENDATIONS re 23 MOTION for Default Judgment as to Individual Defendants filed by Thomas A. Clancy Signed by: Judge Magistrate Judge Stephanie A Gallagher Objections to R&R due by 2/11/2013 Responses due by 2/11/2013. Signed by Magistrate Judge Stephanie A Gallagher on 1/23/2013. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
THOMAS CLANCY
v.
SKYLINE GRILL, LLC, et al.

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Case No. ELH-12-1598

REPORT AND RECOMMENDATION
This Report and Recommendation addresses the Motion for Default Judgment (ECF No.
23) filed by Plaintiff Thomas Clancy against the individual Defendants, Marcus Donovan and
William Mulholland (collectively, “the individual Defendants”). The individual Defendants
have not filed an opposition, and their deadline has now passed. On January 11, 2013, Judge
Hollander referred this case to me to review Plaintiff’s motion and to make recommendations
concerning damages, pursuant to 28 U.S.C. § 301 and Local Rule 301.6. ECF No. 25. No
hearing is deemed necessary. Local Rule 105.6 (D. Md. 2011). For the reasons discussed below,
I respectfully recommend that Plaintiff’s motion (ECF No. 23) be GRANTED and that damages
be awarded as set forth herein.
I.

BACKGROUND
On May 30, 2012, Plaintiff filed a Complaint in this Court alleging that Defendant

Skyline Grill, LLC (“Skyline”) and the individual Defendants failed to pay him wages owed for
his work as a line cook at Skyline. ECF No. 1. According to the Complaint, Plaintiff worked at
Skyline at least 45 hours per week from October 20, 2011 through April 10, 2012. Id. ¶¶ 12, 26
& 30. On April 10, 2012, he left Skyline due to ongoing non-payment of wages. Id.
Plaintiff alleged that he received very few payments for his work. Id. ¶¶ 17-20, 22-28.
At one point, Defendant Donovan gave Plaintiff a personal check for $600 to cover some of the

unpaid wages, but the check failed to clear. Id. ¶ 19. Subsequently, Defendant Donovan paid
Plaintiff $1,300 in cash and $100 by personal check. Id. ¶¶ 22-23, 25.
Plaintiff filed his Complaint on May 30, 2012, alleging violations of the Fair Labor
Standards Act, 29 USC 201-219 (1998 & Supp. 2007) (“FLSA”); the Maryland Wage Payment
Collection Law, Lab. & Empl. 3-501-3-509 (“MWPCL”); and the Maryland Wage and Hour
Law , Md. Code Ann., Lab. & Empl. 3-401-3-431 (2008) (“MWHL”), and claims of breach of
contract and quantum meruit. Id. ¶¶ 38-39, 44, 48, 50 & 55. Defendant Skyline was served with
the summons and Complaint on June 14, 2012. ECF No. 6. Defendant Donovan was served on
July 3, 2012, ECF No. 7, and Defendant Mulholland was served on August 12, 2012. ECF No.
13. Each of the Defendants failed to file an answer or to otherwise respond within the time
frames allowed in the Federal Rules of Civil Procedure. At Plaintiff’s request, the Clerk entered
an Order of Default against Skyline on July 16, 2012. ECF No. 9. Plaintiff then filed a Motion
for Default Judgment against Skyline. ECF No. 10. On November 5, 2012, United States
Magistrate Judge Paul W. Grimm filed a Report and Recommendation recommending entry of
default judgment against Skyline on Counts One through Four of the Complaint, and further
recommending an award of damages to Plaintiff in the amount of $18,641.52 for unpaid wages
and overtime compensation, $400.00 in costs, attorney’s fees, and post-judgment interest as
calculated under 28 U.S.C. 1961. ECF No. 17 at 21. On November 30, 2012, the Clerk entered
Orders of Default against the individual Defendants. ECF Nos. 21, 22. On December 5, 2012,
Plaintiff filed the instant Motion for Default Judgment against the individual Defendants. ECF
No. 23.

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II.

STANDARD FOR DEFAULT JUDGMENT

In reviewing Plaintiffs’ Motion for Default Judgment, the court accepts as true the wellpleaded factual allegations in the complaint as to liability. Ryan v. Homecomings Fin. Network,
253 F.3d 778, 780-81 (4th Cir. 2001). It, however, remains for the court to determine whether
these unchallenged factual allegations constitute a legitimate cause of action. Id.; see also 10A
Wright, Miller & Kane, Federal Practice and Procedure § 2688 (3d ed. Supp. 2010)
(“[L]iability is not deemed established simply because of the default . . . and the court, in its
discretion, may require some proof of the facts that must be established in order to determine
liability.”).
If the court determines that liability is established, the court must then determine the
appropriate amount of damages. Ryan, 253 F.3d at 780-81. The court does not accept factual
allegations regarding damages as true, but rather must make an independent determination
regarding such allegations. See, e.g., Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d
151, 154 (2d Cir. 1999). In so doing, the court may conduct an evidentiary hearing. Fed. R. Civ.
P. 55(b)(2). The court can also make a determination of damages without a hearing so long as
there is an adequate evidentiary basis in the record for an award. See, e.g., Adkins v. Teseo, 180
F.Supp.2d 15, 17 (D.D.C. 2001) (court need not make determination of damages following entry
of default through hearing, but rather may rely on detailed affidavits or documentary evidence to
determine the appropriate sum); see also Trustees of the Nat’l Asbestos Workers Pension Fund v.
Ideal Insulation Inc., 2011 WL 5151067 at *4 (D. Md. Oct. 27, 2011) (determining, in a similar
case of default judgment against an employer, “the Court may award damages without a hearing
if the record supports the damages requested.”); Pentech Fin. Servs. Inc. v. Old Dominion Saw
Works, Inc., 2009 WL 1872535 at *2 (W.D. Va. June 30, 2009) (concluding that there was “no

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need to convene a formal evidentiary hearing on the issue of damages” after default judgment
where plaintiff submitted affidavits and electronic records establishing the amount of damages
sought).
In sum, (1) the court must determine whether the unchallenged facts in Plaintiff’s
Complaint constitute a legitimate cause of action, and, if they do, (2) the court must make an
independent determination regarding the appropriate amount of damages and the appropriate
injunctive relief.
II.

DISCUSSION
a. Adoption of Rationale in Judge Grimm’s November 5, 2012 Report and
Recommendation
In Judge Grimm’s Report and Recommendation, he reviewed the elements of each cause

of action and applied those elements to the facts alleged by Plaintiff. ECF No. 17. He concluded
that Plaintiff’s allegations established that Skyline had violated the FLSA, the MWHL, and the
MWPCL, and that Skyline had breached its contract with Plaintiff. Id. Judge Grimm also found
that Plaintiff had not established a viable quantum meruit claim against Skyline. Id. I agree with
Judge Grimm’s rationale, and I incorporate his findings herein by reference.
b. Individual Liability Against Defendants Donovan and Mulholland
Plaintiff alleges that, like Skyline, Defendants Donovan and Mulholland are responsible
for the violations of federal and state wage laws as his employer. The FLSA allows a broad
definition of “employer,” to include “any person acting directly or indirectly in the interest of an
employer in relation to an employee.” 29 U.S.C. § 203(d). In Jones v. Williams, Civil No. CCB11-793, 2011 WL 5110380 at *3 (D. Md. Oct. 24, 2011), the Court noted:

In Falk v. Brennan, the Supreme Court described the FLSA's definition of
employer as “expansive [ ],” and found that a defendant qualified as an
“employer” under the statute because the defendant had extensive managerial
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responsibilities and “substantial control of the terms and conditions of the work
of [plaintiff] employees.” Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 38
L.Ed.2d 406 (1973) (cited in Benshoff v. City of Virginia Beach, 180 F.3d 136,
141 (4th Cir.1999)). More recently, in Brock v. Hamad, the Fourth Circuit found
that a defendant manager was liable for FLSA violations as an “employer”
because “he hired and directed the employees who worked for the enterprise.”
867 F.2d 804, 808 n. 6 (4th Cir.1989).
Courts examine a variety of factors to assess the “economic reality” of an individual’s status as
employer, including but not limited to the individual’s level of control over the employment
relationship. See Gionfriddo v. Jason Zink, LLC, 769 F.Supp.2d 880, 890 (D. Md. 2011).
Maryland courts apply the same “economic reality” test to define an employer for the
purposes of the Maryland wage laws. Newell v. Runnels, 407 Md. 578, 649-51 (2009). Under
the MWPCL, an “employer” is “any person who employs an individual in the State or a
successor of the person.” Md. Code, Lab. & Empl. 3-501(b). “Employ” is defined to include
“allowing an individual to work” and “instructing an individual to be present at a work site.” Id
at 3-101(c).
Under the tests set forth above, both Defendants Donovan and Mulholland are liable as
employers under the federal and state wage laws. Both individual Defendants are co-owners of
Skyline. Compl. ¶ 9. Both participated in hiring Plaintiff as line cook. Id. ¶ 11. Both made
repeated promises to pay Plaintiff the wages he was owed. Id. ¶¶ 17, 24. Although those
allegations alone suffice to establish each individual defendant as an “employer,” Plaintiff makes
additional allegations with respect to Defendant Donovan, including “wages” that Defendant
Donovan paid to Plaintiff from his personal funds. Id. ¶¶ 22-23, 25. Because the economic
reality of the relationship establishes that Defendants Donovan and Mulholland exercised
sufficient control over the employment relationship to meet the definition of “employer” for

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purposes of the wage laws, I recommend that Plaintiff’s Motion for Default Judgment be
granted.
c. Damages
I agree with the calculation of wages and overtime damages set forth by Judge Grimm in
his November 5, 2012 Report and Recommendation. I therefore incorporate his rationale by
reference into this opinion, and recommend that the award proposed in his Report and
Recommendation be imposed on the basis of joint and several liability against Skyline and the
individual Defendants.
With respect to attorney’s fees and costs, Judge Grimm issued a second Report and
Recommendation on December 5, 2012, ECF No. 24, addressing Plaintiff’s motion for attorney’s
fees. ECF No. 18. In that Report and Recommendation, Judge Grimm recommended an award
of attorney’s fees in the amount of $25,389.50. ECF No. 24. In making that recommendation,
Judge Grimm specifically excluded 2.7 attorney hours and 0.1 paralegal hours spent drafting and
filing the instant Motion for Default Judgment, because he found that those fees would be proper
only in the context of a subsequent motion for fees pertaining to this motion. ECF No. 24 at 5.
In the interest of reducing litigation costs, I recommend that, without requiring a separate motion
for fees, additional fees be awarded to compensate Plaintiff’s counsel for those reasonable hours.
Specifically, I recommend an award of additional fees in the amount of $821.50, for a total of
$26,211.00 in attorney’s fees.1 Plaintiff also seeks increased costs in the amount of $205.00, to
compensate for the costs of service on the individual Defendants. That amount is a reasonable
charge for the out-of-pocket expenses incurred in this litigation, and I recommend that it be
awarded in addition to the $400.00 in costs recommended by Judge Grimm.

I further

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  $821.50 represents 2.7 hours at the attorney rate of $300 per hour plus 0.1 hours at the paralegal rate of
$115 per hour.
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recommend that the attorney’s fees and costs be subject to joint and several liability among
Skyline and the individual Defendants.
Conclusion
For the reasons set forth above, I recommend that:
1.

The Court GRANT Plaintiff’s Motion for Default Judgment (ECF No. 23); and

2.

The Court award Plaintiff $18,641.52 as damages for unpaid regular wages and

overtime compensation, plus $26,211.00 in legal fees and $605.00 in costs for a total of
$45,457.52, to be paid jointly and severally by all Defendants, plus post-judgment interest as
calculated under 28 U.S.C. § 1961.
I also direct the Clerk to mail a copy of this Report and Recommendation to the
individual Defendants at the addresses listed on Plaintiff’s Complaint (ECF No. 1).
Any objections to this Report and Recommendation must be served and filed within
fourteen (14) days, pursuant to Fed. R. Civ. P. 72(b) and Local Rule 301.5.b.

Dated: January 23, 2013

/s/
Stephanie A. Gallagher
United States Magistrate Judge

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