Portillo v Intipuqueno Restaurant et al
Filing
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MEMORANDUM OPINION AND ORDER granting in part and denying in part 26 Motion to Set Aside Default. Defendants Answer IS DUE November 22, 2017. Signed by Judge Paul W. Grimm on 11/8/2017 (cags, Deputy Clerk)
Case 8:15-cv-03909-PWG Document 31 Filed 11/08/17 Page 1 of 12
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MARINA PORTILLO,
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Plaintiff,
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v.
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Civil Case No. PWG-15-3909
INTIPUQUENO RESTAURANT, et al.,
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Defendants.
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MEMORANDUM OPINION AND ORDER
Plaintiff Marina Portillo claims that she worked for Intipuqueno Restaurant and its owner
Telbis Elizabeth Garcia (together, “Intipuqueno”) but was not paid for the overtime hours she
regularly worked, did not receive any compensation other than tips, and was not paid “in full at
least twice each month.” Compl., ECF No. 1. According to Portillo, her employment ended
when she was fired in retaliation for an epileptic seizure that she had while at work. Thereafter,
she filed suit against Intipuqueno on December 22, 2015, bringing claims of discrimination in
violation of federal, state, and local law, as well as claims of violations of federal and state wage
payment laws.1 Id. Intipuqueno did not answer or otherwise respond, and on December 28,
2016, I granted Portillo’s Motion for Default Judgment against Intipuqueno, awarded
1
Specifically, she alleges violations of the Americans with Disability Act (“ADA”), 42 U.S.C.
§ 12112(a); the Maryland Human Rights Act (“MHRA”), Md. Code Ann., State Gov’t § 20606(a)(1)(i); and the Montgomery County Code (“MCC”), Montgomery Cty. Code § 2719(a)(1)(A); as well as claims of violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C.
§§ 206, 207(a); the Maryland Wage & Hour Law (“MWHL”), Md. Code Ann., Lab & Empl.
§§ 3-413(b), 3-415(a); and the Maryland Wage Payment and Collection Law (“MWPCL”), Lab.
& Empl. §§ 3-413(b), 3-507.2(a), (b).
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$154,710.36 in damages, and allowed Portillo to file a motion for attorney’s fees and costs. J. &
Order 2–3, ECF No. 9.
Portillo moved for attorney’s fees. ECF No. 11. On February 2, 2017, Intipuqueno
responded for the first time in the case, opposing the motion, ECF No. 12, and seeking leave to
file a motion to set aside default judgment that had been entered just over one month earlier, ECF
No. 13. I granted leave for Intipuqueno to file the motion, and I dismissed the motion for
attorney’s fees without prejudice to renewal following the resolution of this matter. ECF No. 23.
Intipuqueno filed the pending Motion to Set Aside Default Judgment on March 16, 2017,
asserting that “Garcia speaks little English and believed that her attorney was responding to the
pleadings in this matter,” and “[s]he moved as quickly as possible to obtain [counsel] once she
learned of the default judgment.” Defs.’ Mot. 4–5, ECF No. 26. Portillo filed an opposition.
ECF No. 30. Defendants did not file a reply, and the time for doing so has passed. See Loc. R.
105.2(a). A hearing is not necessary. See Loc. R. 105.6. Because Intipuqueno has presented a
meritorious defense and shown excusable neglect in its efforts to respond to Portillo’s complaint,
I will grant Intipuqueno’s Motion and set aside the default judgment.
Discussion
There is a “strong policy that cases be decided on their merits.” United States v. Shaffer
Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993); see also Offer v. Golden Sands Club Condo., Inc.,
No. ELH-16-3695, 2017 WL 2335596, at *3 (D. Md. May 26, 2017) (“[T]he Fourth Circuit has
repeatedly expressed a strong preference that, as a matter of general policy, ‘default should be
avoided and that claims and defenses be disposed of on their merits.’”). Yet, when a party fails
to respond to a pleading or otherwise defend, entry of judgment by default may be appropriate.
See Fed. R. Civ. P. 55; S.E.C. v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005). After the
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Court enters a default judgment, the party against whom the judgment was entered may seek
relief from the judgment pursuant to Rule 60(b). See Fed. R. Civ. P. 55(c).
Rule 60(b) provides:
Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and
just terms, the court may relieve a party or its legal representative from a final
judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have
been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or
misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an
earlier judgment that has been reversed or vacated; or applying it prospectively is
no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b). The Court must “balance[] against the manifest preference for trials on the
merits” its “interests in finality and repose” and its “concern lest an already-burdened judicial
system by compromised by frivolous and unnecessary proceedings.” United States v. Moradi,
673 F.2d 725, 727–28 (4th Cir. 1982).
Therefore, in addition to establishing one of these
reasons, the movant must “act in a timely fashion, to avoid prejudice to the non-movant, and . . .
proffer a meritorious defense in order to obtain relief.” Augusta Fiberglass Coatings, Inc. v.
Fodor Contracting Corp., 843 F.2d 808, 811 (4th Cir. 1988) (per curiam). Defendants identify
mistake and fraud as bases for relief. See Defs.’ Mot. 6, 7. “When a Rule 60(b)(1) motion is
made, the District Court denies or grants relief based on its discretionary appraisal of the
particular facts of the case.” Universal Film Exchanges, Inc. v. Lust, 479 F.2d 573, 576 (4th Cir.
1973).
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Mistake2
In considering the reason offered for a defendant’s failure to defend, the Court considers
whether it was the party or its counsel that was responsible for the default. Augusta Fiberglass,
843 F.2d at 811.
This focus on the source of the default represents an equitable balance between
our preference for trials on the merits and the judicial system’s need for finality
and efficiency in litigation. When the party is blameless and the attorney is at
fault, the former interests control and a default judgment should ordinarily be set
aside.
Id. This is because “justice also demands that a blameless party not be disadvantaged by the
errors or neglect of his attorney which cause a final, involuntary termination of proceedings.”
Moradi, 673 F.2d at 728. Thus, “when the party is blameless, his attorney’s negligence qualifies
as a ‘mistake’ or as ‘excusable neglect’ under Rule 60(b)(1).” Augusta Fiberglass, 843 F.2d at
811 (citing Moradi, 673 F.2d at 727–28). Notably, in Moradi, the Fourth Circuit held that the
2
Intipuqueno also argues that it is entitled to relief from judgment because Portillo’s pleadings
are false, such that she “obtained [the judgment] by fraud and she has committed perjury.”
Defs.’ Mot. 1, 7. But, the fraud contemplated by Rule 60(b)(3) is fraud that prevents an
opposing party from fully or fairly presenting its case to the Court. Cohen v. Rosenstein, No.
WMN-14-3996, 2016 WL 8222018, at *1 (D. Md. Sept. 16, 2016) (“When the motion is based
on assertions of fraud, misrepresentation, or misconduct, the movant ‘must also prove the
misconduct complained of by clear and convincing evidence and demonstrate that such
misconduct prevented him from fully and fairly presenting his claim or defense.’” (quoting
Square Constr. Co. v. Wash. Metro. Area Transit Auth., 657 F.2d 68, 71 (4th Cir. 1981))). It
does not refer to the perjury that Intipuqueno insists Portillo is committing. See id. Intipuqueno
does not contend that Portillo prevented it from presenting its case to the Court. Therefore, Rule
60(b)(3) does not provide a basis for relief. See Square Constr. Co., 657 F.2d at 71; Cohen, 2016
WL 8222018, at *1.
Likewise, Rule 60(d)(3), which permits a court to “set aside a judgment for fraud on the
court,” and which Intipuqueno cites, see Defs.’ Mot. 7, is also an inappropriate ground for relief
under these circumstances. Perjury is “not adequate to permit relief as fraud on the court
because the legal system encourages and expects litigants to root [it] out as early as possible,”
and “fraud on the court ‘is limited to situations such as bribery of a judge or juror, or improper
influence exerted on the court by an attorney, in which the integrity of the court and its ability to
function impartially is directly impinged.” United States v. Conrad, 675 Fed. App’x 263, 264–65
(4th Cir. 2017) (quoting Fox v. Elk Run Coal Co., 739 F.3d 131, 135 (4th Cir. 2014)).
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Moradi should not be punished for his counsel’s failure to respond or defend the lawsuit when
Moradi himself bore “no personal responsibility for the failure to answer punctually or to appear
at [a court-ordered] pre-trial conference.” Moradi, 673 F.2d at 728.
In an affidavit translated to English from Spanish, Garcia asserts that she “retained the
attorney Mark Chalpin and believed that he would defend [her] and Intipuqueno in this action,
including filing responsive pleadings.” Garcia Aff. ¶ 4, Defs.’ Ex. 2, ECF No. 26-2. According
to Garcia, she “speak[s] very little English, and need[s] a translator to understand what is
happening in this matter.” Id. ¶ 6. She would take documents she received in this case “to Mr.
Chalpin and [she] believed he was taking the appropriate actions to represent [her] interests in
this action.” Id. ¶ 5. She received the Order and Judgment in this case in December, “was
frightened as to what [she] thought it might mean,” and “realized that [her] attorney Mr. Chalpin
had not been doing his job and [she] immediately proceeded to try to find new counsel.” Id. ¶ 7.
Portillo contends that Chalpin only represented Defendants for the limited purpose of
settlement, noting that they have not “provide[d] any documentation establishing that Defendant
Garcia retained Mr. Chalpin and the scope of representation they agreed upon, such as a retainer
agreement or any other correspondence,” and therefore Garcia cannot show that she, as a selfrepresented litigant, exercised due diligence in defending herself in this case. Defs.’ Opp’n 10–
11. Certainly, in a February 18, 2016 email to Portillo’s counsel, Chalpin stated: “I have been
retained by Telvis Elizabeth Garcia and the Intipuqueno Restaurant to try to settle this lawsuit.”
Emails 9, Pl.’s Ex. D, ECF No. 30-4. But, he did not state that he only represented Defendants
for settlement purposes. Having reviewed this evidence, I find that Garcia, having retained
counsel in this case, has shown that she reasonably believed that her attorney would take the
actions necessary to resolve the matter, including responding to pleadings.
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Therefore,
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Defendants are not responsible for the failure to defend, and their attorney’s failure to act
qualifies as mistake or excusable neglect under Rule 60(b)(1). See Augusta Fiberglass, 843 F.2d
at 811; Moradi, 673 F.2d at 727–28.
Timeliness
As for the timeliness of Intipuqueno’s action, although Portillo filed suit more than a year
earlier, Defendants retained counsel and sought to set aside the default judgment on February 2,
2017, just over a month after its entry on December 28, 2016. “Whether a party has taken
‘reasonably prompt’ action, of course, must be gauged in light of the facts and circumstances of
each occasion and the exercise of discretion by the trial judge will not be disturbed lightly.”
Moradi, 673 F.2d at 727. Given that Garcia believed that counsel was acting on her behalf until
she received the Order and Judgment, I find that she acted promptly. And, a delay of just over a
month in seeking to set aside the judgment certainly did not prejudice Portillo.
Meritorious Defense
“[A]ll that is necessary to establish the existence of a ‘meritorious defense’ is a
presentation or proffer of evidence, which, if believed, would permit either the Court or the jury
to find for the defaulting party.” Moradi, 673 F.2d at 727. To determine whether Intipuqueno
has established a meritorious defense to any of Portillo’s claims, I must consider the elements of
each claim.
To prevail on her claim of wrongful discharge in violation of federal, state and local laws
(Counts I–III), Portillo must show, inter alia, that “she was discharged” and that “the
circumstances of her discharge raise a reasonable inference of unlawful discrimination.” Rohan
v. Networks Presentations LLC, 375 F.3d 266, 273 n.9 (4th Cir. 2004) (discussing ADA); see
Sillah v. Burwell, 244 F. Supp. 3d 499, 507 (D. Md. 2017) (“For Plaintiff's claims of disability
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discrimination, because Maryland has applied the Montgomery County Human Rights Act and
Maryland Human Relations Act by looking to ADA case law, it is appropriate to consider those
claims of disability discrimination together.” (citing Anderson v. Discovery Commc’ns, LLC, 517
Fed. App’x 190, 193 n.3 (4th Cir. 2013), as amended (May 3, 2013) (citing Ridgely v.
Montgomery Cty., 883 A.2d 182, 193 (Md. Ct. Spec. App. 2005)))). Intipuqueno offers evidence
in the form of affidavits that Portillo was not discharged for having a seizure, and no one knew at
the restaurant that Portillo had a seizure on the day in question. Garcia Aff. ¶ 13; Canales Aff. ¶
14, Defs.’ Ex 7, ECF No. 26-7; Lizama Aff. ¶ 12, Defs.’ Ex. 8, ECF No. 26-8; Paredes Alvarado
Aff. ¶¶ 8, 34, Defs.’ Ex. 9, ECF No. 26-9; Ganuza Aff. ¶¶ 11–13. Moreover, Intipuqueno offers
evidence that she was not discharged; she quit. Garcia Aff. ¶ 15; Ganuza Aff. ¶ 14, Defs.’ Ex. 10,
ECF No. 26-10. If the trier of fact believed Intipuqueno’s evidence that Portillo was not
discharged and that her employer was unaware of her disability, it would prevent Portillo from
proving these elements. Thus, Intipuqueno has established a meritorious defense to these claims.
Moradi, 673 F.2d at 727. Because Defendants also have shown excusable neglect and that they
acted promptly to obtain relief, I will set aside the judgment as to these claims. See Augusta
Fiberglass, 843 F.2d at 811; Fed. R. Civ. P. 55(c), 60(b)(1).
As for Portillo’s claims for overtime wages under the FLSA, the MWHL, and the
MWPCL in Counts IV, V, and VI,3 she must prove that she worked in excess of forty hours per
week. See 29 U.S.C. § 207 (“[An employer cannot] employ any of his employees . . . 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
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“The MWHL ‘mirror[s]...the federal [FLSA] law,’ and the Plaintiff[’s] MWHL claim ‘stands or
falls on the success of their claim under the FLSA.’” Jennings v. Rapid Response Delivery, Inc.,
No. WDQ-11-92, 2011 WL 2470483, at *5 (D. Md. June 16, 2011) (quoting Turner v. Human
Genome Sci., Inc., 292 F. Supp. 2d 738, 744 (D. Md. 2003)).
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the regular rate at which he is employed.”); Peters v. Early Healthcare Giver, Inc., 97 A.3d 621,
625–26 (Md. 2014) (“[B]oth the [M]WHL and the [M]WPCL are vehicles for recovering
overtime wages.”). Intipuqueno offers evidence that, despite being scheduled for more than forty
hours per week, Portillo often did not show up for work, left early, was absent for extended
periods, and never worked more than forty hours per week. Garcia Aff. ¶¶ 17–21; Canales Aff.
¶¶ 10–11; Lizama Aff. ¶¶ 8–9; Paredes Alvarado Aff. ¶¶ 10, 15–18, 20; Ganuza Aff. ¶¶ 5–8. If
the trier of fact believed this evidence, Defendants could prevail on the overtime claims under
the FLSA, MWHL, and MWPCL.
Therefore, they sufficiently have shown a meritorious
defense to these claims.
Counts IV, V, and VI also include claims for minimum wages under the FLSA, MWHL,
and MWPCL.
Section 206 of FLSA requires covered employers to pay all employees a
minimum wage for hours worked, unless the employee qualifies for a statutory
exemption. See 29 U.S.C. § 206(a). Employers may, however, pay employees less
than the federal minimum wage if the employee is engaged in an occupation
which regularly receives tips. See 29 U.S.C. § 203(m). Section 203(t) defines a
“tipped employee” as “any employee engaged in an occupation in which he
customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. §
203(t). As this court has explained, “[t]ipped employees ... are required to receive
at least the minimum wage, but their employers are permitted to pay a direct wage
of $2.13 per hour and then take a ‘tip credit’ to meet the $7.25 per hour minimum
wage requirement.” Gionfriddo v. Jason Zink, LLC, 769 F.Supp.2d 880, 893 (D.
Md. 2011). In essence, FLSA’s requirements are satisfied when the difference
between the $2.13 paid to the employee and the $7.25 minimum wage is made up
for by the tips received by the employee. See id.; see also Dorsey v. TGT
Consulting, LLC, 888 F. Supp. 2d 670, 680 (D. Md. 2012). In order to utilize the
tip credit loophole under the statute, “during the relevant time frame the employer
[is] required to (1) inform the employee that the tip credit was being claimed; and
(2) allow the employee to retain all tips he or she received....” Dorsey, 888 F.
Supp. 2d at 681 (quoting Arencibia v. 2401 Rest. Corp., 831 F. Supp. 2d 164, 175
(D.D.C. 2011). The requirements for claiming the tip credit under the statute are
“strictly construed.” Id. (citing Copantitla v. Fiskardo Estiatorio, Inc., 788
F.Supp.2d 253, 287 (S.D.N.Y. 2011).
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Barnhart v. Chesapeake Bay Seafood House Assocs., L.L.C., No. JFM-16-01277, 2017 WL
1196580, at *3 (D. Md. Mar. 31, 2017). The MWHL “requirements directly track the FLSA
requirements with respect to the minimum wage and tipped employee provisions.” Id. at *6
(citing McFeeley v. Jackson St. Entm’t, LLC, 825 F.3d 235, 245–46 (4th Cir. 2016)). Under the
MWHL, however, the direct wage that must be paid is $3.63 instead of $2.13. See Md. Code
Ann., Lab. & Empl. § 3-419(c). The MWPCL, like the MWHL, “allow[s] employees to recover
unlawfully withheld wages from their employer.” Peters, 97 A.3d 621, 625.
Certainly, Garcia stated in her affidavit that Portillo “regularly earned approximately
$450 per week in tips.”
Garcia Aff. ¶ 24.4
Thus, Portillo easily qualified as a “tipped
employee.” Barnhart, 2017 WL 1196580, at *3. If Portillo worked no more than forty hours per
week, as Intipuqueno asserts, she would have earned at least $11.25 per hour, well over the
minimum wage. And, Intipuqueno offered a photograph as evidence that the laws were posted in
the workplace; this postings may have included information about the “tip credit.” See Garcia
Aff. Ex. 6. But, there is no evidence that Intipuqueno paid Portillo the direct wage required
under federal ($2.13/hour) or Maryland ($3.63/hour) law. Barnhart, 2017 WL 1196580, at *3.
Consequently, this evidence does not provide a meritorious defense to Portillo’s claim for
minimum wages. It does, however, provide a defense to a claim for $7.25 per hour in minimum
wages, as Portillo may have been entitled to only the direct wage due to tipped employees. See
id.
And, it provides a defense to the number of hours Portillo claims to have worked.
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Garcia made this statement “[u]pon information and belief,” which would not be sufficient for
entry of judgment. See Balt. Line Handling Co. v. Brophy, 771 F. Supp. 2d 531, 543 (D. Md.
2011) (“An allegation made ‘on information and belief’ does ‘not serve as a reliable foundation
upon which to predicate a final judgment.’” (quoting Oceanic Trading Corp. v. Vessel Diana,
423 F.2d 1, 4–5 (2d Cir. 1970))). But, as noted, when moving to set aside a default judgment,
“all that is necessary to establish the existence of a ‘meritorious defense’ is a presentation or
proffer of evidence, which, if believed, would permit either the Court or the jury to find for the
defaulting party.” Moradi, 673 F.2d at 727.
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Accordingly, I will grant the motion to set aside the judgment as to damages on the FLSA,
MWHL, and MWPCL minimum wage claims, but deny it as to liability on these claims. See
Augusta Fiberglass, 843 F.2d at 811; Fed. R. Civ. P. 55(c), 60(b)(1).
Portillo also includes a claim in Count VI for failure to pay wages at least twice a month,
in violation of the MWPCL. See Alvarez-Soto v. B. Frank Joy, LLC, No. TDC-15-1120, 2017
WL 2731300, at *6 (D. Md. June 23, 2017) (“The MWPCL requires an employer to set regular
pay periods and pay each employee at least every two weeks or twice a month . . . .” (citing Md.
Code Ann., Lab. & Empl. § 3–502(a)(1))). As noted, Intipuqueno does not offer any evidence
that it paid any direct wages to Portillo, let alone wages in regular, statutorily-required intervals.
But, as also noted, the amount of damages is in question, as Portillo may have been entitled to
only the direct wage due to tipped employees and she may have worked fewer hours than she
alleges. Therefore, I will grant the motion to set aside the judgment as to damages on this
MWPCL wage payment claim, but deny it as to liability on this claim. See Augusta Fiberglass,
843 F.2d at 811; Fed. R. Civ. P. 55(c), 60(b)(1).
Conclusion
In sum, because Intipuqueno has shown excusable neglect, moved promptly to set aside
the default judgment, such that Portillo was not prejudiced, and has shown meritorious defenses
with regard to Portillo’s discrimination and overtime claims, I will set aside the judgment as to
liability and damages on the discrimination and overtime claims. Because Intipuqueno has
shown meritorious defenses with regard to the damages due on her minimum wage and
bimonthly wage payment claims but not as to liability on those claims, I will set aside the
judgment as to damages, but not liability, on those claims. The following chart summarizes the
status of Portillo’s claims.
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Count
Claim
Liability
Damages
I – ADA
discrimination
Judgment set aside
Judgment set aside
II – MHRA
discrimination
Judgment set aside
Judgment set aside
III – MCC
discrimination
Judgment set aside
Judgment set aside
IV – FLSA
failure to pay
minimum wage
Judgment in
Plaintiff’s favor
Judgment set aside
IV – FLSA
failure to pay
overtime
Judgment set aside
Judgment set aside
V – MWHL
failure to pay
minimum wage
Judgment in
Plaintiff’s favor
Judgment set aside
V – MWHL
failure to pay
overtime
Judgment set aside
Judgment set aside
VI – MWPCL
failure to pay
minimum wage
Judgment in
Plaintiff’s favor
Judgment set aside
VI – MWPCL
failure to pay
overtime
Judgment set aside
Judgment set aside
VI – MWPCL
failure to pay
bimonthly
Judgment in
Plaintiff’s favor
Judgment set aside
ORDER
Accordingly, it is, this 8th day of November, 2017, hereby ORDERED that
1. Defendants’ Motion to Set Aside Default Judgment, ECF No. 26, IS GRANTED IN
PART AND DENIED IN PART as follows:
a. The judgment as to liability is set aside for Counts I (ADA), II (MHRA), and III
(MCC) in their entirety, and the overtime claims in Counts IV (FLSA), V
(MWHL), and VI (MWPCL);
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b. The judgment as to liability is not aside for the minimum wage claims in Counts
IV (FLSA), V (MWHL), and VI (MWPCL), or for the failure to pay bimonthly
claim in Count VI (MWPCL); and
c. The judgment as to damages is set aside for all claims;
2. Defendants’ Answer IS DUE November 22, 2017. Thereafter, a Scheduling Order
will be issued and a telephonic scheduling conference will be set.
/S/
Paul W. Grimm
United States District Judge
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