Thompson v. Blessed Home Incorporated et al

Filing 51

ORDER GRANTING 38 Plaintiff's Motion for Summary Judgment. Summary judgment is awarded in favor of the plaintiff as to the defendants' abuse of process counterclaim and the defendants' FLSA exemption affirmative defenses. Partial s ummary judgment is awarded in favor of the plaintiff as to the issues that Blessed is subject to the FLSA and Felicia and Amobi Onuorah are "employers' and therefore proper defendants for the plaintiff's claims under the FLSA and NCWHA. Signed by US District Judge Terrence W. Boyle on 5/16/2014. (Fisher, M.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:13-CV-71-BO

EDWARD EARL THOMPSON,

)
)

Plaintiff,

)

v.

)
)
)

ORDER

BLESSSED HOME INC., FELICIA N.
)
ONUORAH, and AMOBI R. ONUORAH, )
)

Defendants.

)
___________________________ )
This matter is before the Court on the plaintiffs motion for partial summary judgment
[DE 38]. The motion is now ripe for adjudication. For the reasons stated herein, the plaintiffs
motion is GRANTED.

BACKGROUND
Plaintiff Edward Thompson initiated this action by filing a verified complaint on January
30, 2013 alleging violations of the Fair Labor Standards Act ("FLSA"), the North Carolina Wage
and Hour Act ("NCWHA"), and the North Carolina Retaliation Employment Discrimination Act
("REDA"), and alleging common law wrongful discharge against public policy. Plaintiff named
Blessed Home, Inc. ("Blessed"), his corporate employer, and Felicia N. Onuorah ("Felicia") and
Amobi R. Onuorah ("Amobi"), Blessed's sole owners and officers, as defendants. Plaintiff
alleges that he was not paid minimum wage, overtime, or for all hours worked, and that he was
terminated from his position as a habilitation technician at a group home in retaliation for
complaining about defendants' unlawful pay practices and for participating in a U.S. Department
of Labor ("DOL") investigation into those pay practices.

Defendants filed an answer claiming that Blessed is exempt from the FLSA pursuant to
29 U.S.C. §213(a)(15) and (b)(21). Plaintiff then filed an amended complaint and defendants
filed an amended counterclaim in response which included a counterclaim for abuse of process.
Plaintiff then filed a second verified amended complaint with leave of the Court.
Plaintiff now moves to dismiss, or in the alternative for summary judgment, on
defendants' abuse of process counterclaim, for summary judgment on defendants' claimed FLSA
exemption affirmative defense, and for partial summary judgment as to the issues that Blessed is
subject to the FLSA and that defendants Felicia and Amobi are employers and proper defendants
for plaintiffs claims under the FLSA and NCWHA.
DISCUSSION

A motion for summary judgment cannot be granted unless there are no genuine issues of
material fact for trial. FED. R. Crv. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317,322-23 (1986).
The moving party must demonstrate the lack of a genuine issue of fact for trial and if that burden
is met, the party opposing the motion must "go beyond the pleadings" and come forward with
evidence of a genuine factual dispute. Celotex, 477 U.S. at 324. The Court must view the facts
and the inferences drawn from the facts in the light most favorable to the non-moving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). Conclusory
allegations are insufficient to defeat a motion for summary judgment. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986) ("[T]he mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported motion for summary judgment.")
(emphasis in original). "[T]here must be evidence on which the jury could reasonably find for the
plaintiff." !d. at 252. Therefore the inquiry asks whether reasonable jurors could find for the
plaintiff by the preponderance of the evidence. !d. Plaintiff must produce "significant probative

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evidence tending to support the complaint" or provide "specific facts showing there is a genuine
issue for trial." /d. at 249-50. The Court will not consider "unsupported assertions," or "selfserving opinions without objective corroboration." Evans v. Techs. Apps. & Serv. Co., 80 F.3d
954, 962 (4th Cir. 1996).
I.

ABUSE OF PROCESS COUNTERCLAIM.

[A]buse of process is the misuse of legal process for an ulterior purpose. It
consists in the malicious misuse or misapplication of that process after issuance to
accomplish some purpose not warranted or commanded by the writ. It is the
malicious perversion of a legally issued process whereby a result not lawfully or
properly obtainable under it is attended (sic) to be secured.
Stanback v. Stanback, 254 S.E.2d 611, 624 (N.C. 1979) (quotation omitted) overruled on other
grounds by Dickens v. Puryear, 276 S.E.2d 325 (N.C. 1981). "Abuse of process requires both an

ulterior motive and an act in the use of the legal process not proper in the regular prosecution of
the proceeding." !d. (quotation omitted). "The ulterior motive requirement is satisfied when the
plaintiff alleges that the [] action was initiated by defendant or used by him to achieve a
collateral purpose not within the normal scope of the process used. The act requirement is
satisfied when the plaintiff alleges that once the [] proceeding was initiated, the defendant
committed some wilful act whereby he sought to use the existence of the proceeding to gain
advantage of the plaintiff in respect to some collateral matter." !d. (citation omitted). "[T]here is
no abuse of process where it is confined to its regular and legitimate function in relation to the
cause of action stated in the complaint." !d. (quotation omitted).
Defendants' counterclaim alleges that plaintiff's suit is meritless, he is seeking monies to
which he is not entitled, he is seeking to damage defendants' reputation and, on the day he was
terminated, plaintiff allegedly threatened to shut defendants' business down. Taking all of the
facts in the counterclaim as true, defendants have failed to properly allege a claim of abuse of

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process. The counterclaim fails to allege that plaintiff committed any wilful act not proper in the
regular course of this proceeding and is devoid of any factual allegations in support of any acts
made by plaintiffto damage defendants' reputation (other than this suit itself), any use of process
to gain advantage over defendants as to some matter that is separate from or collateral to this
proceeding, or any damage to defendants' reputation or business. There is no evidence
supporting such a claim. It is clear that plaintiff has pursued a legitimate lawsuit that is now at
the summary judgment stage of the proceedings against defendants and that he is entitled to seek
monies which he alleges were wrongfully withheld from him in violation of various state and
federal statutes. In short, defendants fail to properly allege an abuse of process claim, and even if
properly alleged, they have failed to come forward with any facts which support their claims.
Accordingly, summary judgment is granted for plaintiff on defendants' counterclaim.
II.

THE FLSA'S APPLICATION TO BLESSED.

Employees who work in an "enterprise engaged in commerce or in the production of
goods for commerce" are protected by the minimum wage and overtime provisions of the FLSA.
29 U.S.C. § 206(a); § 207(a). Defendants claim that Blessed is not an enterprise subject to the
FLSA and even if it is, it is exempted from the FLSA minimum wage and overtime provisions by
29 U.S.C. § 213(a)(15) and (b)(21). "[T]hese exemptions are to be narrowly construed against
the employers seeking to assert them and their application limited to those establishments plainly
and unmistakably within their terms and spirit." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388,
392 (1960). "[T]he application of an exemption under the [FLSA] is a matter of affirmative
defense on which the employer has the burden of proof." Corning Glass Works v. Brennan, 417

u.s. 188, 196-97 (1974).

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A.

The FLSA's General Application to Blessed.

The FLSA defines what constitutes an enterprise:
(1) "Enterprise" means the related activities performed (either through unified
operation or common control) by any person or persons for a common business
purpose, and includes all such activities whether performed in one or more
establishments ... but shall not include the related activities performed for such
enterprise by an independent contractor ...
(2) For purposes of paragraph (1 ), the activities performed by any person or
persons(A) in connection with the operation of a hospital, an institution primarily
engaged in the care of the sick, the aged, the mentally ill or defective who reside
on the premises of such institution ... (regardless of whether or not such hospital,
institution, or school is operated for profit or not for profit)

shall be deemed to be activities for a business purpose.
29 U.S.C. § 203(r). "The [FLSA] thus requires a three-part showing to bring an entity or entities
within the definition of enterprise: 1) the entity or entities must engage in "related activities," 2)
performed through "unified operation" or "common control," 3) for a common business purpose.

Dole v. Odd Fellows Home Endowment Bd., 912 F.2d 289, 692 (4th Cir. 1990) (citing Brock v.
Hamad, 867 F.2d 804, 806 (4th Cir. 1989).
An "enterprise engaged in commerce or in the production of goods for commerce" is
defined in relevant part as:
An enterprise that ... (B) is engaged in the operation of a hospital, an institution
primarily engaged in the care of the sick, the aged, or the mentally ill or defective
who reside on the premises of such institution ... (regardless of whether or not
such hospital, institution, or school is public or private or operated for profit or
not for profit) ; ...
29 U.S.C. § 203 (s)(l)(B). It is clear that 29 U.S.C. § 203(s) creates three separate categories of
enterprises that qualify as engaging in commerce which are sublisted as A through C. This
construction means that the requirements of subpart A do not extend to cover subparts B and C
and vice versa. Accordingly, although defendants go to great length to argue that plaintiff has not

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shown that he engaged in commerce or the production of goods for commerce and that Blessed's
gross volume of sales is not less than $500,000, it is to no avail. Plaintiff need not establish that
Blessed is an enterprise engaged in commerce under§ 203(s)(l)(A) if he can establish that it is
such an enterprise under § 203(l)(B) or (C). See Dole, 912 F.2d 693-95 (noting that commerce
requirement of § 203(1 )(A) no longer applied to an institution primarily engaged in the care of
the sick under the then newly enacted 29 U.S.C. § 203(s)(l)(B)).
Here, defendants admit that (1) Blessed is a for-profit corporation whose nature of
business is operating group homes for the care of developmentally disabled/mentally challenged
adults in Wake County, North Carolina, (2) Blessed is licensed by the North Carolina
Department of Health and Human Services Mental Health Licensure Branch to operate such
group homes, and (3) Blessed does and did operate three such group homes including the
location where plaintiff worked. Each of the three group homes and Blessed as a whole are
engaged in "related activities," thereby satisfying the first enterprise element. The Onuorahs
were and are the sole owners and sole officers for Blessed, they personally own the three group
home properties, and they had total control over plaintiffs work conditions including his
schedule, pay, direction, supervision, and control of his employment. These factors combined
with Blessed's overarching corporate control, satisfy the "unified operation," or "common
control" enterprise element. The third element to establish that Blessed is an enterprise, the
"common business purpose" is satisfied because Blessed is a for-profit corporation whose nature
of business is operating these group homes all located in Raleigh, North Carolina. See 29 U.S.C.
§ 203(r)(2) ("the activities performed by any person or persons . . . in connection with the
operation of . . . an institution primarily engaged in the care of the . . . the mentally ill or
defective who resides on the premises of such an institution ... shall be deemed to be activities

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performed for a business purpose."). Accordingly, Blessed is an enterprise and the Court now
turns to whether or not it is an "enterprise engaged in commerce or in the production of goods for
commerce."
Blessed operates group homes specifically for the care of developmentally disabled
adults. Blessed's admission criteria and evaluation/diagnosis policies require a doctor's order
stating the client's diagnosis and ambulatory status prior to admission, a primary diagnosis of
mental illness, and that a "comprehensive treatment and habilitation plan" be developed and
initiated at the time of admission. The mental and psychological needs of potential clients were
assessed by Blessed to determine whether they could be met prior to admission, as required by
governing regulations. Blessed was required by law and/or its governing regulations to have a
staff member at the group home. These facts establish that Blessed is an enterprise engaged in
commerce within the meaning of 29 U.S.C. § 203(s)(l)(B) and is thus subject to the FLSA
minimum wage and overtime provisions absent an applicable exception. See Dole, 912 F.2d at
693-95 (holding that defendant boards were liable under FLSA because their group home for the
destitute was an institution primarily engaged in the care of the sick and the aged who resided on
the premises of such institution because it required that its clients be unable to work due to age,
or infirmity); Mendez-Gonzalez v. Rodriguez Group Home, Inc., 2012 U.S. Dist. LEXIS 99519,
*2-6 (S.D. Fla. July 18, 2012) (unpublished) (holding that group homes for mentally disabled,
handicapped, and/or drug addicts owned and operated by defendant constituted a covered
enterprise under § 203(s)(l)(B)); Dep't of Labor, Wage and Hour Division, Field Operations
Handbook, Ch. 12, §§ 12g02, 12, and 14 (defining covered enterprises similar to defendants'
enterprise).

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Further, plaintiff is not an independent contractor which would render the FLSA
inapplicable to his case. See 29 U.S.C. § 203(r). The "economic reality" test applies to FLSA
claims. See Dubois v. Secretary of Defense, 1998 U.S. App. LEXIS 2167, *3 (4th Cir. Sept. 3,
1998) (unpublished) (citing Garrett v. Phillips Mills, Inc., 721 F.2d 979, 981-82 & n.5 (4th Cir.
1983) for the proposition). Under the FLSA, "employees are those who as a matter of economic
reality are dependent upon the business to which they render service." !d. (quoting Bartels v.
Birmingham, 332 U.S. 126, 130 (1947)).
In determining whether individuals are 'employees' under FLSA, we consider the
degree of control exercised by the employer over the workers; the workers'
opportunity for profit or loss and their investment in the business; the degree of
skill and independent initiative required to perform the work; the permanence or
duration of the working relationship; and the extent to which the work is an
integral part of the employer's business.

!d. (citing United States v. Silk, 331 U.S. 704, 716-17 (1947)). "The 'economic reality' test is
based upon the totality of the circumstances, and no single factor is dispositive. !d. at *4 (citing
Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (194 7)).
Here, defendants admit that plaintiff was employed by Blessed and worked as a
habilitation technician from on or about January 25, 2011 through September 15, 2011.
Defendants Mr. and Mrs. Onuorah were and are the sole owners and officers for Blessed; they
are the sole parties authorized to sign checks on behalf of Blessed; they personally and jointly
own the three group home properties; and they had total control over all aspects of plaintiffs
work conditions including his schedule, rate and method of pay, direction, supervision, and his
employment. Defendant provided all training, tools, and equipment for plaintiff. Plaintiffs
employment as a habilitation technician working for the defendants was his primary job and
occupation during his employment with defendants from on or around January 25, 2011 through
September 15, 2011, when defendants terminated his employment. Plaintiff was required by
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regulation to be at the home when clients were present and could not leave the premises at night.
Defendants testified that habilitation technicians, including plaintiff, require no particular skills
or training, that the position is not a "professional" job, and they equate the job to babysitting.
Defendants could terminate plaintiff at-will. Each factor of the economic reality test weighs
strongly in favor of finding that plaintiff was an employee of defendants and not an independent
contractor. See Chapman v. A.S.UI Healthcare & Dev. Ctr., 2014 U.S. App. LEXIS 2054, *3-6
(5th Cir. Feb. 3, 2014) (affirming summary judgment in favor of direct caregivers who worked in
group homes for developmentally disabled adults, holding under the economic reality test the
caregivers were employees in spite of signed contracts with employer stating that they were
independent contractors).
Accordingly, the Court finds that the FLSA applies to Blessed and now turns to
examining whether any of the explicit exemptions carved out in the FLSA apply.
B.

29 U.S.C. § 213(a)(15).

Defendants raise the affirmative defense that the exemption listed in 29 U.S.C. §
213(a)(15) applies and therefore the minimum wage and overtime requirements ofthe FLSA do
not apply to Blessed. Section 213( a)(15) provides that the provisions of§ 206 and § 207 shall not
apply with respect to:
any employee employed on a casual basis in domestic service employment to
provide babysitting services or any employee employed in domestic service
employment to provide companionship services for individuals who (because of
age or infirmity) are unable to care for themselves (as such terms are defined and
delimited by regulations of the Secretary)
29 U.S.C. § 213(a)(15). "As used in section 13(a)(15) of the Act, the term domestic service
employment refers to services of a household nature performed by an employee in or about a
private home (permanent or temporary) of the person by whom he or she is employed." 29

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C.F.R. § 552.3. Courts have generally held, and the Department of Labor has interpreted, that
such services are required to be performed in a "private home" for the exemption to apply. See
Welding v. Bios Corp., 353 F.3d 1214, 1216-19 (lOth Cir. 2004) (reversing denial of summary

judgment where companionship exemption was found not applicable because district court did
not analyze each residence of its developmentally disabled clients to determine whether the
services were provided in "private homes" and remanding for such determinations by living unit
where each plaintiff worked); U.S. Dep't of Labor Opinion Letter No. FLSA2001-14 (May 14,
2001) (advising that companionship services exemption did not apply because group home did
not satisfy "private home" requirement); see also Chapman, 2014 U.S. App. LEXIS 2054 at *78 (holding that "private home" requirement applied to companionship services exemption and
that group homes consisting of three clients per living unit were not private homes because
clients would not necessarily have resided in the living units but for the assistive living services).
Here, the defendants' group home does not constitute a "private home" as required by the
"companionship services" exemption. "[W]ho has the ultimate management control of the living
unit and whether the living unit is maintained primarily to facilitate the provision of assistive
services" are the key inquiries in determining if living units are private homes. Welding, 353
F.3d at 1219. The 1Oth Circuit outlined six, non-dispositive factors to assist in making this
determination. !d. The court considered (1) whether the client lived in the unit as his or her
private home before receiving services, (2) who owned the unit, (3) who managed and
maintained the residence, (4) if the client would be allowed to live in the unit without receiving
services, (5) the relative difference in the cost/value of the services provided and the total cost of
maintaining the unit, and (6) whether the service provider uses any part of the unit for its own
business purposes. !d. at 1219-20. Here, the clients (1) did not reside at Blessed's group home

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before receiving services, (2) the home was owned by Mr. and Mrs. Onuorah, (3) they managed,
furnished, and maintained the premises, the clients did not even have keys to the front door or
medicine cabinets, and did not have any say in who the other residents of the house would be,
and (4) the clients would not be allowed to live at the home without receiving treatment. These
four factors clearly support a finding that the group home was not a private home. Therefore the
§ 213(a)(15) exemption does not apply to Blessed in this case and summary judgment is granted
in favor of plaintiff on this issue.
C.

29 U.S.C. § 213(b)(21).

Defendants also argue that the "domestic services" exemption listed under 29 U.S.C. §
213(b)(21) applies. Section 213(b)(21) exempts from the FLSA overtime provisions "any
employee who is employed in domestic service in a household who resides in such household."
The related regulations incorporate "domestic service" as a requirement for the exemption. See
29 C.P.R.§ 552.102(a); § 552.100(a)(2); § 552.109(c). The "private home" requirement ofthe
"domestic service" definition of 29 C.P.R. 552.3 is incorporated into the domestic service
exemption. Upadhyay v. Sethi, 848 F. Supp. 2d 439, 441--42 (S.D.N.Y. 2012) (citing Long Island
Care at Home, Ltd. v. Coke, 551 U.S. 158, 170 (2007) to support its ruling that the§ 213(b)(21)

domestic services exemption incorporates the § 552.3 definitions of what work qualifies as
"domestic service"). Because the "private home" requirement also applies to § 213(b)(21 ), and,
as discussed supra Part II.B, plaintiff did not work in a private home, the exemption does not
apply to Blessed and summary judgment is granted in favor plaintiff on this issue.
III.

FELICIA AND AMOBI'S STATUS AS EMPLOYERS.

Plaintiff argues, and defendants do not contest, that Felicia and Amobi Onuorah face
personal liability and are proper defendants in this action because they are employers under the

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FLSA and NCWHA. Under the FLSA, the "employer" is liable for an employee's unpaid
minimum wage and overtime wages, liquidated damages, costs, and reasonable attorney's fees,
and in the case of retaliatory discharge, legal and equitable relief including back pay and
liquidated damages. 29 U.S.C. § 216(b). Under the NCWHA, the "employer" is liable for an
employee's unpaid wages, liquidated damages, costs, and reasonable attorney's fees. N.C. Gen.
Stat. § 95-25.22. "In interpreting the NCWHA, North Carolina courts look to the FLSA for
guidance." Garcia v. Frog Island Seafood, Inc., 644 F. Supp. 2d 696, 707 (E.D.N.C. 2009)
(citing Laborer's Int'l Union ofNA. v. Case Farms, Inc., 488 S.E.2d 632, 634 (N.C. 1997)). An
"employer" includes "any person acting directly or indirectly in the interest of an employer in
relation to an employee .... "N.C. Gen. Stat. § 95-25.2(5); 29 U.S.C. § 203(d). Under both the
FLSA and NCWHA an individual can be an "employer" and therefore be personally liable for
wages and damages. Garcia, 644 F. Supp. 2d at 720 (citing Brock v. Hamad, 867 F.2d 804, 808
n.6 (4th Cir. 1989).
To determine whether an individual is an "employer," courts apply an "economic reality"
test, which examines:
the totality of the circumstances to determine whether the individual has sufficient
operational control over the workers in question and the allegedly violative
actions to be held liable for unpaid wages or other damages. Factors commonly
relied on by courts in determining the extent of an individual's operational control
over employees include whether the individual: (1) had the power to hire and fire
the employees; (2) supervised and controlled employee work schedules or
conditions of employment; (3) determined the rate and method of payment; and
(4) maintained employment records. These factors are not exclusive nor is any
one factor dispositive.

Garcia, 644 F. Supp. 2d at 720-21 (citations and quotations omitted).
Here, defendants Felicia and Amobi Onuorah both admit that they: (1) had the power to
hire and fire plaintiff; (2) supervised and controlled plaintiffs work schedules and/or conditions

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of employment; (3) determined plaintiffs rate and method of payment; and (4) maintained
plaintiffs employment records. They also admit that they jointly made the decision to terminate
plaintiff. The Court finds that both Felicia and Amobi Onuorah are "employers" under the FLSA
and NCWHA. Accordingly, the Court grants plaintiffs motion for partial summary judgment as
to the issue that they can each be held individually liable and are proper defendants for plaintiffs
claims under the FLSA and NCWHA.
CONCLUSION

For the foregoing reasons, plaintiffs motion is GRANTED. Summary Judgment is
awarded in favor of plaintiff as to defendants' abuse of process counterclaim and defendants'
FLSA exemption affirmative defenses. Partial summary judgment is awarded in favor of plaintiff
as to the issues that Blessed is subject to the FLSA and Felicia and Amobi Onuorah are
"employers" and therefore proper defendants for plaintiffs claims under the FLSA and
NCWHA.

SO ORDERED.
This the~ day of May, 2014.

~W.¥

TERRENCE W. BOYLE
UNITED STATES DISTRICT JUDGE

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