Acosta v. Lewaro Interiors, Inc.
Filing
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ORDER granting 6 Motion for Civil Contempt. The Court finds Phillip Moore, CEO and registered agent of Lewaro Interiors, Inc. in civil contempt for failure and refusal to comply with the Secretary's lawful Subpoena and this Court's lawful Orders. The parties shall comply with the Court's directions as outlined in this Order. Signed by District Judge Max O. Cogburn, Jr on 10/25/2018. (chh)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:18-mc-00087-MOC-DCK
R. ALEXANDER ACOSTA,
Secretary of Labor,
United States Department of Labor
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Petitioner,
Vs.
LEWARO INTERIORS, INC.,
Respondent.
ORDER
THIS MATTER is before the Court on the Secretary of Labor’s Petition for Civil
Contempt (#6) filed against Respondent Lewaro Interiors, Inc. d/b/a Lewaro Interiors (“Lewaro
Interiors”) and its owner and registered agent, Phillip Moore (“Mr. Moore”) (collectively,
“Respondents”), for refusing to obey a court order to enforce an administrative subpoena duces
tecum.
The Court ordered a Show Cause hearing, which was held on October 15, 2018.
Respondents were not present at the hearing. Having considered the Secretary’s Petition and
evidence presented during the hearing, the Court makes the following findings of fact and
conclusions of law.
I.
FINDINGS OF FACT
On February 23, 2018, an administrative subpoena duces tecum (the “Subpoena”) was
lawfully issued against Lewaro Interiors and its related business, Lewaro Construction, by the
Regional Administrator of the Wage and Hour Division (“WHD”) of the United States Department
of Labor in an investigation conducted pursuant to the Fair Labor Standards Act of 1938. See Ex.
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6, Motion to Compel (#1). The Subpoena was personally served on Mr. Moore’s wife, Nicole
Moore, at their residence on February 27, 2018. Id. Respondents failed to produce the requested
documents or cooperate with the WHD’s investigation.
On May 31, 2018, United States Magistrate Judge David C. Keesler issued an Order
Granting Secretary’s Petition to Enforce Subpoena (#3) requiring respondent to contact
petitioner’s counsel by no later than June 8, 2018 in order to produce the required documents. A
copy of Judge Keesler’s May 31, 2018 Order and an additional copy of the Secretary’s Petition to
Enforce (#3) were personally served on Mr. Moore at his residence on June 8, 2018. See Ex. 4,
Motion for Civil Contempt (#6). Respondents failed to produce the requested documents or
contact petitioner’s counsel by the June 2018 deadline.
On August 10, 2018, this Court issued an Order (#8) directing Respondents to fully respond
or to appear before the Court on September 12, 2018 to show cause why they should not be
required to produce the documents identified in the Subpoena. On August 23, 2018, the Court
granted the Secretary’s Motion to Continue due to a scheduling conflict. On September 14, 2018,
the Court granted the Secretary’s second Motion to Continue due to the severe weather threat
caused by Hurricane Florence, which presented a significant risk for the Secretary’s counsel
traveling from Atlanta to Charlotte and ultimately prompted the Court to be closed on Monday,
September 17, 2018. The hearing was reset for October 15, 2018. The Secretary was directed to
make best efforts to provide Respondents with notice of this Order by either overnight mail, text,
or phone message.
On October 15, 2018 at 3:00 p.m., the Court held a Show Cause hearing. No one appeared
on behalf of Respondents. In open violation of the May 31 and September 14 Orders, Respondents
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have not provided any of the documents identified in the Subpoena. Respondents did not appear
before the Court on October 15, 2018 to show cause why the Court should not find Respondents
in contempt for those violations.
A.
Civil Contempt
Under 18 U.S.C. §401(3), “[a] court of the United States shall have power to punish by
fine or imprisonment, or both, at its discretion, such contempt of its authority, and none other, as .
. . (3) Disobedience or resistance to its lawful writ, process, order, rule, decree, or command.” To
establish civil contempt, the Secretary must show by clear and convincing evidence: (1) the
existence of a valid decree of which Respondents had actual or constructive knowledge; (2) that
the decree was in the Secretary’s “favor”; (3) that Respondents, by their conduct, violated the terms
of the decree and had at least constructive knowledge of such violations; and (4) that the Secretary
suffered harm as a result of Respondents’ violations. See Ashcraft v. Conoco, Inc., 218 F.3d 288,
301 (4th Cir. 2000) (articulating elements of civil contempt). The Secretary has met its burden of
proof for each element.
The Secretary has presented evidence that Mr. Moore was served a copy of the Subpoena,
the Secretary’s Petition to Enforce the Subpoena, and the Order to Enforce the Subpoena issued
May 31, 2018. Respondents' willful and deliberate refusal to comply with the Subpoena issued by
the Secretary, to comply with Judge Kessler's Order issued on May 31, 2018, and to appear before
the Court as required by the Order to Show Cause issued on August 24, 2018 violated the terms of
these valid decrees. Further, Respondents have obstructed the Secretary's proper exercise of his
lawful authority and responsibility to enforce and administer the protections afforded to employees
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under the FLSA. Respondents’ violations, therefore, constitute contempt pursuant to 18 U.S.C. §
401(3).
B.
Daily Fine
The Secretary has asked the Court to impose a coercive daily fine against Respondents
until contempt is purged. When a defendant is adjudicated in contempt, the contempt continues
until purged and the court has ample power to frame contempt and purge orders to accomplish
compliance with the judgment. This power includes the power to fine or imprison if necessary.
Specifically, the Supreme Court has explained:
One who is fined, unless by a day certain he produces the books, has it in his power
to avoid any penalty. And those who are imprisoned until they obey the order,
'carry the keys of their prison in their own pockets.' Fine and imprisonment are
then employed not to vindicate the public interest but as coercive sanctions to
compel the contemnor to do what the law made it his duty to do.
Penfield Co. of Calif. v. S.E.C., 330 U.S. 585, 590 (1947) (citations omitted).
This Court has authority to order fines and/or confinement until its decree is obeyed, and
district courts commonly resort to such measures in response to non-compliance by a party.
Section 401(3) specifically provides that “[a] court of the United States shall have power to punish
by fine or imprisonment, or both, at its discretion, such contempt of its authority.” 18 U.S.C.
§401(3) (emphasis added). And this Court has issued a similar coercive fine per day in other FLSA
subpoena enforcement matters. See, e.g., Ex. 1, Secretary’s Supp. Memo. (#16) (“Order for Civil
Contempt and Coercive Daily Fine” issued December 8, 2015).
Here, Respondents' willful and deliberate refusal to comply with the Subpoena and
disregard of two court orders gives the Court authority to impose a daily fine as a means of coercing
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compliance with its prior decrees.
Consequently, as the Court held on October 15, 2018,
Respondents are ordered to pay a total fine of $50.00 per day until the contempt is purged.
C.
Equitable Tolling
The Secretary has also asked the Court to equitably toll the statute of limitations for
bringing action against Respondents. Courts may equitably “toll” a statute of limitations “when a
litigant has pursued his rights diligently but some extraordinary circumstance prevents him from
bringing a timely action.” Lozano v. Montoya Alvarez, 134 S. Ct. 1224, 1231-1232 (2014). Here,
the Secretary has pursued his rights diligently, but Respondents' blatant refusal to comply with a
lawful subpoena and two subsequent lawful court orders is preventing the Secretary from being
able to complete his FLSA investigation and bring a timely action. Additionally, “Congress is
presumed to incorporate equitable tolling into federal statutes of limitations because equitable
tolling is part of the established backdrop of American law.” Id. at 1232. “[I]t is hornbook law
that limitations periods are customarily subject to equitable tolling, unless tolling would be
inconsistent with the text of the relevant statute.” Young v. United States, 535 U.S. 43, 49 (2002).
Therefore, it is within this Court's authority to toll the statute of limitations in this matter beginning
January 26, 2018 until Respondents comply with this Court's order by producing the required
documents.
Based on the foregoing findings of fact and conclusions of law, the Court orders the
following:
ORDER
IT IS, THEREFORE, ORDERED that Secretary's Petition for Civil Contempt (#6) is
GRANTED. The Court finds Phillip Moore, CEO and registered agent of Lewaro Interiors, Inc.,
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in civil contempt for failure and refusal to comply with the Secretary's lawful Subpoena and this
Court's lawful Orders. The Court further ORDERS:
i.
Respondents to purge themselves of contempt by fully complying with the Order to
Enforce the Subpoena entered May 31, 2018 and producing all required documents
pursuant to the February 27, 2018 Subpoena immediately;
ii.
The statute of limitations tolled beginning January 26, 2018, the date Respondents was
required to respond WHD’s 72-hour letter;
iii.
Respondents to pay a coercive fine of $50.00 per day until contempt is purged.
iv.
Respondents to pay the Secretary's costs and attorney's fees associated with the filing of
the Secretary's Petition to Enforce the Subpoena (#1) and the Petition for Civil Contempt
(#6); and
v.
Upon receipt of the requested documents, the Secretary to assess the total fine from
Respondents, including attorney’s fees and the daily coercive fine, and certify receipt of
the documents to this Court.
Respondents are hereby noticed that if they do not purge themselves of contempt within
thirty (30) days of this Order, the Court will take further coercive action upon a motion by the
Secretary.
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Signed: October 25, 2018
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