ACOSTA v. MOSLUOGLU, INC. et al

Filing 47

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 4/27/21. 4/28/21 ENTERED AND COPIES E-MAILED.(jaa, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
PATRICK PIZZELLA,
Plaintiff,
v.
EMPIRE DINER, et al.,
Defendants.

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CIVIL ACTION
NO. 18-4663

M E M O R A N D U M
EDUARDO C. ROBRENO, J.

April 27, 2021

I. INTRODUCTION
Patrick Pizzella, a former acting Secretary of Labor
(“Plaintiff”), brought this Fair Labor Standards Act (“FLSA”)
action against Empire Diner and certain individuals who own
and/or manage it (“Defendants”), alleging violations of the
FLSA’s minimum wage, overtime, and recordkeeping requirements.
Plaintiff and Defendants filed cross motions for summary
judgment.
For the reasons enumerated below, Defendants’ motion for
summary judgment will be denied in full. Plaintiff’s motion for
summary judgment will be denied in part and granted in part. The
motion will be granted in relation to establishing minimum wage,
overtime, and recordkeeping violations. The motion will be

denied as to the issues of back wages, liquidated damages,
injunctive relief, whether Defendant Engin Gunaydin is an
employer under the FLSA, and whether Defendants’ violations were
willful.
II.

BACKGROUND 1
Defendants own, operate, and/or manage Empire Diner

(“Empire”), a 24-hour restaurant in Lansdowne, Pennsylvania. The
diner employs a variety of employees, such as servers, kitchen
workers, bussers, and cashiers. Defendants’ employees handle,
sell, and work on goods and materials moved in or produced for
interstate commerce, such as meats and produce sourced outside
of Pennsylvania. The annual gross revenue for Empire between
2015 and 2018 ranged from $1,827,407-$2,014,837.
A Wage and Hour (“WH”) investigation began at Empire on
August 10, 2017. On May 3, 2018, WH investigator Gyasi Martin
held a final meeting with Defendants Ihsan Gunaydin (“Ihsan”),
Engin Gunaydin (“Engin”), and Certified Public Accountant Ali
Gunaydin (“Ali”). During the relevant time period (defined as
January 12, 2015, to March 10, 2019), Ihsan was the owner of
Empire, and was responsible for assigning work, scheduling work,

1

As required at the summary judgment stage, the Court views the facts
“in the light most favorable” to the nonmoving party and draws “all
reasonable inferences” in that party’s favor. Young v. Martin, 801 F.3d 172,
174 (3d Cir. 2015).

2

and supervising employees. Ihsan and Engin possess knowledge of
and were involved with decisions related to Empire’s
compensation policies, but Ihsan is the one that made the
ultimate decisions relating to the compensation policies.
The undisputed facts show that during the relevant time
period, bussers made at least $7.75 per hour. Servers were paid
$2.83 per hour. Defendants attempted to claim those servers’
tips as a credit toward the $7.25 minimum wage obligations under
section 203(m) of the FLSA, 29 U.S.C. § 203(m), which Plaintiff
argues they were not entitled to do.
Plaintiff argues that Defendants prohibited Empire servers
from keeping all of their tips and required them to provide
anywhere from 10-15% of their tips to Defendants and/or the
person working at the cash register. Defendants argue that the
tip pool was voluntary and that there was no suggested amount
for the tip pool. They allege that servers were encouraged, but
not required, to contribute a small amount of their tips to the
tip pool, and would indicate on a piece of paper how much they
put into the tip pool. Defendants admit that the tip pool was
used to contribute to the bussers’ wages whenever possible.
Plaintiff argues that Defendants intentionally created a
scheme wherein the payroll records always showed $7.63 per hour
for each server, regardless of the amount of tips received or
hours worked. Defendants argue that it was not intentional.
3

Rather, Empire sought to have servers record their tips, but
they allegedly either would not report the tips, or the reports
were inaccurate. Consequently, Empire paid each server $2.83,
plus all reported credit card tips. If that number did not reach
minimum wage, Empire estimated the amount of cash tips received
by the server because the servers were allegedly uncooperative
and would not tell Defendants how much they were making in tips.
In relation to the $7.63 number, Ihsan testified that he used a
roundabout number to record because he believed that the servers
made more than the $4 per hour that was being reported.
Defendants also admit that they failed to inform employees
that Defendants were claiming their tips as a basis for paying
them less than the minimum wage. After the WH investigation, and
on or about May 2018, Empire created a new Employee Handbook.
The Handbook included a “Notice to Tipped Employees” which
outlined the requirements found in section 203(m) of the FLSA.
Plaintiff argues that Defendants paid certain employees less
than $7.25 per hour even after the WH investigation, which
Defendants dispute.
In relation to overtime, Defendants failed to pay some of
their employees the proper section 207 overtime premium of at
least time-and-one-half their regular rates for hours worked in
excess of forty per workweek. See 29 U.S.C. § 207(a)(1).

4

Defendants also failed to keep records of their employees’
wages, hours, and other conditions of employment. Defendants
admit that they kept neither the records showing the amounts
servers provided nor the records concerning the payments they
made to bussers from the servers’ tips. Defendants also did not
keep the records of the amount of tips that servers retained.
III. LEGAL STANDARD
Summary judgment is appropriate if no genuine dispute as to
any material fact exists and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). “A motion
for summary judgment will not be defeated by ‘the mere
existence’ of some disputed facts, but will be denied when there
is a genuine issue of material fact.” Am. Eagle Outfitters v.
Lyle & Scott Ltd., 584 F.3d 575, 581 (3d Cir. 2009) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986)). A
fact is “material” if proof of its existence or nonexistence
might affect the outcome of the litigation, and a dispute is
“genuine” if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson, 477 U.S. at
248.
The Court views the facts in the light most favorable to
the nonmoving party. “After making all reasonable inferences in
the nonmoving party’s favor, there is a genuine issue of
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material fact if a reasonable jury could find for the nonmoving
party.” Pignataro v. Port Auth., 593 F.3d 265, 268 (3d Cir.
2010) (citing Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900
(3d Cir. 1997)). While the moving party bears the initial burden
of showing the absence of a genuine issue of material fact,
meeting this obligation shifts the burden to the nonmoving party
who must “set forth specific facts showing that there is a
genuine issue for trial.” Anderson, 477 U.S. at 250 (quoting
Fed. R. Civ. P. 56).
IV.

DISCUSSION
Both parties have filed motions for summary judgment. When

confronted with cross-motions for summary judgment,
“[t]he court must rule on each party’s motion on an individual
and separate basis, determining, for each side, whether a
judgment may be entered in accordance with the Rule 56
standard.” 10A Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 2720 (4th ed. 2021). This includes
placing the burden on the movant to demonstrate the absence of a
genuine dispute of material fact and on the non-movant to show
the existence of one. However, given that the arguments made in
Defendants’ motion for summary judgment are nearly identical to
the arguments made in response to Plaintiff’s motion for summary
judgment, much of the analysis discussed in relation to
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Plaintiff’s motion will be incorporated by reference into the
analysis of Defendants’ motion, except that the burdens will be
appropriately placed.
The parties agree that Empire is a covered enterprise under
the FLSA and that Ihsan is a covered “employer” under the FLSA,
but dispute the remaining issues discussed below.
A.

Whether Engin Is an “Employer” Under the FLSA
1. Plaintiff’s Motion

First, Plaintiff argues that Engin is an “employer” within
the meaning of the term under the FLSA, which Defendants
dispute. The term is defined in the FLSA as “any person acting
directly or indirectly in the interest of an employer in
relation to an employee.” Falk v. Brennan, 414 U.S. 190, 195
(1973) (quoting 29 U.S.C. § 203(d)).
The Third Circuit has recognized that the FLSA’s definition
of “employer” is “the broadest definition that has ever been
included in any one act.” In re Enter. Rent-A-Car Wage & Hour
Emp. Pracs. Litig., 683 F.3d 462, 467-68 (3d Cir. 2012) (quoting
United States v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945)).
Courts utilize the “economic reality” test for determining
whether individuals are employers under the FLSA. See id. at
467. “Economic reality” depends on the “totality of the
circumstances” rather than on rigid “technical concepts of the
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employment relationship.” Haybarger v. Lawrence Cty. Adult Prob.
& Parole, 667 F.3d 408, 418 (3d Cir. 2012) (quoting Hodgson v.
Arnheim & Neely, Inc., 444 F.2d 609, 612 (3d Cir. 1971), rev’d
on other grounds, 410 U.S. 512 (1973)). “Significant control” is
sufficient to establish employer status, but ultimate control is
not required. Enterprise Rent-A-Car, 683 F.3d at 468.
The Third Circuit acknowledged the flexibility of the
FLSA’s “employer” definition by adopting four non-exhaustive
factors: “(1) authority to hire and fire employees; (2)
authority to promulgate work rules and assignments, and set
conditions of employment, including compensation, benefits, and
hours; (3) day-to-day supervision, including employee
discipline; and (4) control of employee records, including
payroll, insurance, taxes, and the like.” Id. at 469. The Third
Circuit stressed that the analysis should not be confined to
these four criteria, and that the court “must instead consider
all the relevant evidence, including evidence that does not fall
neatly within one of the above factors.” Id. Other indicia of
“significant control” suggesting that a person was an employer
“may be persuasive” when incorporated with these four factors.
Id. at 470.
The parties agree that Engin is a manager and not an owner
of the diner. However, Plaintiff argues that Engin was an
employer because he was responsible for hiring employees,
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recommending that employees be hired, and had the authority to
schedule, fire, and set the conditions of employment for
employees. Plaintiff further alleges that Engin (1) provided
training to new employees; (2) assigned servers to sections in
the restaurant, directed the work of employees, and enforced
workplace rules; (3) helped Ihsan to distribute the weekly pay
to employees; (4) was highly involved in collecting servers’
tips and in the tip-sheet recordkeeping system; and (5) informed
tipped employees of their rate of pay and followed up with
payroll when an employee was not making minimum wage.
On the contrary, Defendants argue that although Engin was
able to make recommendations regarding hiring, he did not have
authority to hire or fire employees. Defendants also argue that
Ihsan, not Engin, was the one who scheduled the employees.
Defendants further allege that Engin did not have the authority
to set conditions of employment. Construing the record in the
light most favorable to Defendants, the scope of Engin’s
authority in relation to the employees at Empire is a genuine
dispute of material fact that does not warrant granting summary
judgment to Plaintiff on the issue of whether Engin is an
“employer” under the FLSA.
2. Defendants’ Motion
Defendants argue that Engin is clearly not an “employer”
under the FLSA based on the same arguments outlined above.
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Plaintiff disputes Defendants’ claims and argues that the scope
of Engin’s authority is broader and that he had the authority to
hire and fire employees, set conditions of employment, etc.
Construing the record in the light most favorable to Plaintiff,
the scope of Engin’s authority in relation to the employees at
Empire is still a genuine dispute of material fact that does not
warrant granting summary judgment to Defendants on the issue of
whether Engin is an “employer” under the FLSA.
B.

Minimum Wage Requirements Under the FLSA

Section 206 of the FLSA requires employers to pay covered
employees minimum wage of at least $7.25 per hour for each hour
worked. 29 U.S.C. § 206(a). However, under some circumstances
and by complying with the provisions of the tip credit under
section 203(m), an employer can pay $2.13 per hour ($2.83 per
hour under Pennsylvania law, see 34 Pa. Cons. Stat. § 231.101(b)
(2021)) to tipped employees and supplement that payment with
tips in order to reach minimum wage. In order to avail
themselves of the tip credit, Defendants’ compliance with the
FLSA must be strict. See Reich v. Chez Robert, Inc., 28 F.3d
401, 403-04 (3d Cir. 1994); 29 C.F.R. 531.59(b) (2020).
Additionally, the requirements of section 203(m) must be
satisfied even if the employees received wages and tips that
together satisfy the minimum wage requirement. See Reich, 28

10

F.3d at 404 (quoting Martin v. Tango’s Rest., Inc., 969 F.2d
1319, 1323 (1st Cir. 1992)).
1. Plaintiff’s Motion
Plaintiff argues that Defendants failed to comply with the
requirements of section 203(m) in multiple ways. Because the
Court finds that Defendants failed to comply with the notice
requirements under section 203(m), the Court need not consider
Plaintiff’s other arguments with respect to this section.
The FLSA requires employers to “inform” their tipped
employees of the provisions of the section 203(m) tip credit
prior to claiming the tip credit. See 29 U.S.C. § 203(m). The
2011 tip credit regulation specifies the information that
employers must provide to their tipped employees:
[1] The amount of the cash wage that is to be paid to
the tipped employee by the employer; [2] the
additional amount by which the wages of the tipped
employee are increased on account of the tip credit
claimed by the employer, [3] which amount may not
exceed the value of the tips actually received by the
employee; [4] that all tips received by the tipped
employee must be retained by the employee except for a
valid tip pooling arrangement limited to employees who
customarily and regularly receive tips; and [5] that
the tip credit shall not apply to any employee who has
not been informed of these requirements in this
section.
29 C.F.R. § 531.59(b) (2020).
The failure to provide notice is not merely a technical
violation, but a basis for denying employers the tip credit.
Courts, including the Third Circuit, have made it clear that
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notice is vital, and the remedy for inadequate notice is denial
of the section 203(m) tip credit, liability for the full minimum
wage of $7.25 per hour, and allowing affected tipped employees
to keep all tips received. See, e.g., Reich, 28 F.3d at 403
(citing Martin, 969 F.2d at 1322-23). Employers are also not
entitled to credit their employees’ tips received toward their
liability for back wages due. Id. at 404. “If the penalty for
omitting notice appears harsh, it is also true that notice is
not difficult for the employer to provide.” Id. (quoting Martin,
969 F.2d at 1323).
Here, Defendants admit they only told the servers that they
would be paid $2.83, plus tips and overtime. Engin Dep. 31:2-12,
ECF No. 40-9. Defendants assumed that servers “most likely know
about tip credit.” Ihsan Dep. 55:8-13, ECF No. 40-8. 2 These
depositions demonstrate that Defendants did not specifically
inform servers that tips would be credited toward the minimum
wage obligation, and that Defendants did not provide servers
with notice of all the elements contained in section 203(m) or
29 C.F.R. § 531.59(b). 3

Even if this was true, Defendants cite no legal authority for the claim
that general awareness is sufficient to show compliance with the section
203(m) notice requirement.
3
Subsequent to the investigation, Defendants amended their employee
handbook to include the required notice under section 203(m), but the same
was not provided to employees prior to the investigation.
2

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Construing the record in the light most favorable to
Defendants, summary judgment is warranted for Plaintiff and the
Court finds that there is no genuine dispute of material fact
that Defendants violated the minimum wage requirements under the
FLSA.
2. Defendants’ Motion
Defendants argue that sufficient notice was given to
employees concerning the tip credit as a result of a poster in
the kitchen “explaining the wage information.” Defs.’ Mot. Summ.
J. 25, ECF No. 44-2. However, they do not attach a copy of the
poster as an exhibit to their motion, and it was not produced in
discovery. Even if a poster could be held to constitute
sufficient notice (which the Court need not address), there is
no evidence in the record as to the actual content of the
poster, so Defendants have failed to meet their burden under
Federal Rule of Civil Procedure 56(c)(1) of supporting their
factual position. On the other hand, and for the reasons
explained above, Plaintiff has met this burden by pointing to
relevant parts of the record demonstrating that Defendants did
not provide the proper notice under section 203(m).
Construing the record in the light most favorable to
Plaintiff, summary judgment is not warranted for Defendants and
the Court finds that there is no genuine dispute of material

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fact that Defendants violated the minimum wage requirements
under the FLSA.
C.

Overtime Requirements Under the FLSA

Section 207 of the FLSA forbids an employer from employing
any worker “for a workweek longer than forty hours unless such
employee receives compensation . . . at a rate not less than one
and one-half times the [employee’s] regular rate” for the excess
hours. 29 U.S.C. § 207(a)(1). Where an employer takes a tip
credit, overtime is calculated based on the full minimum wage
(i.e., $7.25 per hour), not on the lower direct (or cash) wage
payment. See 29 C.F.R. §§ 531.60, 778.5 (2020).
1. Plaintiff’s Motion
Here, Plaintiff argues that Defendants violated section 207
by paying their servers an overtime premium of one and one-half
times their cash wage of $2.83 per hour, rather than one and
one-half times the full minimum wage of $7.25 per hour.
Defendants first argue that “[t]o the extent Defendants paid
wrongful amounts for overtime, they have rectified that and now
use the correct formula,” and that “to the extent there were any
miscalculations, it was a very small number. Even Mr. Martin
stated . . . that the total due for overtime wages was . . .
($17[,]291.61 in total).” Defs.’ Resp. Opp’n Pl.’s Mot. Summ. J.
38-39, ECF No. 43-2. But Plaintiff does not dispute this number,
and no authority supports the proposition that rectifying the
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overtime issue somehow forgives the overtime violations that
occurred.
Defendants also argue that to the extent there were
overtime mistakes, they were the fault of their accountant, and
Defendants should not be held liable. But no authority supports
the proposition that a mistake by the employer’s accountant is a
defense to a charge of failing to pay overtime wages. In any
case, Defendants’ accountant, Ali Gunaydin (one of Defendants’
family members), testified that Empire is a family business and
that the business “[d]oesn’t operate without family,” so it is
apparent that Ali, as Empire’s accountant, was part of the
family business and acting on Defendants’ behalf. Ali Dep.
17:14-15, ECF No. 40-19. He also supported Plaintiff’s assertion
that an improper overtime calculation was being used. Ali Dep.
72:18-73:12.
Construing this record in the light most favorable to
Defendants, summary judgment is warranted for Plaintiff and the
Court finds that there is no genuine dispute of material fact
that Defendants violated the overtime requirements under the
FLSA.
2. Defendants’ Motion
In its motion for summary judgment on the overtime
requirements claim, Defendants again attempt to place blame on
their accountant for any overtime violations that occurred. This
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argument was unpersuasive even when the record was construed in
Defendants’ favor. See supra Section IV.C.1. Here, with the
record construed in Plaintiff’s favor, it fails again.
D.

Recordkeeping Requirements Under the FLSA

Section 211(c) of the FLSA requires employers to “maintain
accurate records to ensure that all workers are paid . . . for
every hour worked.” Williams v. Tri-County Growers, Inc., 747
F.2d 121, 128 (3d Cir. 1984) (citing Wirtz v. Williams, 369 F.2d
783, 785 (5th Cir. 1966)). More specifically, 29 C.F.R. §
516.28(a) (2020) requires employers to maintain and preserve
records containing, inter alia, the “[w]eekly or monthly amount
reported by the employee, to the employer, of tips received,”
and the “[a]mount by which the wages of each tipped employee
have been deemed to be increased by tips as determined by the
employer.”
1. Plaintiff’s Motion
Plaintiff alleges that Defendants failed to keep accurate
records of, inter alia, the amount of cash tips received by
servers and the amount by which servers’ wages were increased by
tips. Thus, Plaintiff argues that it is impossible to determine
whether all workers were paid for every hour worked, i.e.,
whether or not the servers actually received sufficient tips to
bring their hourly rate up to $7.25. Defendants admit to making

16

an estimate of such tips. See Defs.’ Mot. Summ. J. 34, ECF No.
44-2.
Construing this record in the light most favorable to
Defendants, summary judgment is warranted for Plaintiff and the
Court finds that there is no genuine dispute of material fact
that Defendants violated the recordkeeping requirements under
the FLSA.
2. Defendants’ Motion
Defendants argue that they should not be liable for any
recordkeeping violations because the only reason they estimated
the servers’ cash tips was because (1) Defendants knew that the
servers were making at least minimum wage, and (2) the servers
refused to cooperate and tell Defendants how much they were
making in cash tips due to the potential tax consequences. See
Defs.’ Mot. Summ. J. 34. However, no authority supports either
of these propositions as appropriate excuses for failing to
comply with the recordkeeping requirements.
Construing the record in the light most favorable to
Plaintiff, and incorporating the analysis above, see supra
Section IV.D.1, summary judgment is not warranted for Defendants
and the Court finds that there is no genuine dispute of material
fact that Defendants violated the recordkeeping requirements
under the FLSA.
E.

Whether Defendants’ Violations Were Willful
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While the general statute of limitations for minimum wage
and overtime violations under the FLSA is two years, an
employer’s willful conduct extends the back wage period by an
additional year. 29 U.S.C. § 255(a). Whether a given set of
facts constitutes willfulness is a question of fact. Souryavong
v. Lackawanna Cnty., 872 F.3d 122, 126 (3d Cir. 2017)
(explaining that willfulness is a question of fact, but it can
be decided as a matter of law if there is no legally sufficient
evidentiary basis for a reasonable jury to find for the nonmoving party). A violation of the FLSA is considered willful if
the employer knew that its conduct was prohibited by the Act or
showed reckless disregard for the legality of the conduct.
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 135 (1988).
1. Plaintiff’s Motion
Plaintiff argues that Defendants willfully violated the Act
in a variety of ways. First, they argue that Defendants knew
enough about what the FLSA required to create false payroll
records and false tip records to give the appearance of
compliance. Defendants argue that these violations were not
willful because they attempted to accurately record the tips and
simply could not because of the servers’ refusal to accurately
report their tips. Defendants allege that they then acted in
good faith by making an estimate as to the amount of tips
because they already knew that servers made well in excess of
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minimum wage. Even though Defendants knew what the relevant
minimum wage was and therefore how much in tips they needed to
“estimate,” it is not clear that they knew they could not make
estimates as to the servers’ tips in a situation in which they
allegedly knew that servers made minimum wage and were
inaccurately reporting their tips to Defendants.
Relatedly, Plaintiff argues that Defendants’ failure to
keep records of the tips they collected from servers and the
amount they used to pay bussers’ wages suggests willfulness. But
Defendants have continuously asserted that they were unaware of
this requirement and would have kept the records if they had
been aware.
Plaintiff next argues that Defendants’ actions were willful
because they knew that the minimum wage was $7.25 per hour, and
despite having an obligation to ensure that employees were being
paid that much, passed this obligation through to employees and
simply assumed that employees were making that much because none
of them complained to Defendants about it. However, although
Defendants may have known what the minimum wage is and that they
were required to pay employees as such, it is not clear whether
they knew that they were not entitled to rely on employees to
inform them when their pay dropped below the minimum wage.
Plaintiff also argues that Defendants’ violations were
willful because of their persistent interference with the WH
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investigation. For example, Defendant Engin allegedly told
server Frances Tepper that the investigation was underway and
told her to lie about having to pay for breakage fees and about
the number of bussers who worked at Empire. Additionally, Engin
allegedly told overnight manager Marie Sheeran that if she was
contacted by the Department of Labor (“DOL”) she should tell
them that she only worked forty hours per workweek, when in fact
she worked approximately fifty-four to fifty-eight hours per
workweek. Defendant Ihsan then allegedly told her to use two
separate time cards, one which would show she worked only eight
hours per day and the other for the rest of her daily hours.
Lastly, Defendant Ihsan allegedly told Tarique Williams not to
clock in any hours over forty hours per workweek (despite the
fact that he worked approximately sixty hours per workweek) and
that he should be loyal to Empire. All of this interference is
denied by Defendants, who point to the over seventy affidavits
of other employees who did not corroborate any interference.
Lastly, Plaintiff argues that Defendants’ willfulness can
be established as a result of their prior investigation. After a
DOL investigation in 1999, Defendants agreed to pay $64.46 in
back wages to two employees. However, it is not clear whether
the violations in that case were related to the same violations
alleged in this case, so the Court cannot say one way or the
other whether this investigation was sufficient to put
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Defendants on notice of any wrongdoing as it relates to this
case. Relatedly, on or about May 3, 2018, the WH investigator in
this case explained the overtime requirements to Defendants.
However, even with this information, Plaintiff alleges that
Defendants continued their violations. Defendants argue that any
overtime violations were not willful because they relied upon
their accounting firm for their overtime payments and were not
aware that the payments were being handled incorrectly.
Construing the record in the light most favorable to
Defendants, the foregoing arguments raise a genuine dispute of
material fact as to whether Defendants’ violations were willful.
Thus, the Court will not grant summary judgment to Plaintiff on
this issue.
2. Defendants’ Motion
Defendants make the same arguments as to why the Court
should find that their violations were not willful as they made
in response to Plaintiff’s motion. Construing the record in the
light most favorable to Plaintiff, and incorporating the
analysis above, see supra Section IV.E.1, there is still a
genuine dispute of material fact as to whether Defendants’
violations were willful. Thus, the Court will not grant summary
judgment to Defendants on this issue.
F.

Back Wages
1. Plaintiff’s Motion
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Plaintiff argues that based on eight employee declarations,
Defendants’ payroll, and Defendants’ admissions, Defendants owe
back wages in the amount of $664,971.25. However, this figure is
premised on Plaintiff’s allegation that Defendants’ violations
were willful. Given that the willfulness issue raises a genuine
dispute of material fact, as explained previously, see supra
Section IV.E, Plaintiff’s motion for summary judgment as to the
issue of the appropriate amount of back wages is denied.
2. Defendants’ Motion
Defendants argue, inter alia, that compensation is
“entirely unnecessary” because “all Empire Diner employees made
at least minimum wage, if not more.” Defs.’ Mot. Summ. J. 44,
ECF No. 44-2. Regardless, the requirements of section 203(m) are
mandatory and must be satisfied strictly. Therefore, back wages
may be owed even if the employees received wages and tips that
together satisfy the minimum wage requirement. See Reich v. Chez
Robert, Inc., 28 F.3d 401, 404 (3d Cir. 1994) (citing Martin v.
Tango’s Rest., Inc., 969 F.2d 1319, 1323 (1st Cir. 1992)). Thus,
Defendants’ motion for summary judgment as to the issue of the
appropriate amount of back wages is also denied.
G.

Liquidated Damages

Under section 216(c) of the FLSA, the DOL may recover both
unpaid wages and an additional equal amount in liquidated
damages for violations of the minimum wage and overtime
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requirements. See 29 U.S.C. § 216(c). These liquidated damages
are not punitive, but compensatory, i.e., they “compensate
employees for losses they might suffer by reason of not
receiving their lawful wage at the time it was due.” Martin v.
Cooper Elec. Supply Co., 940 F.2d 896, 907 (3d Cir. 1991)
(quoting Marshall v. Brunner, 668 F.2d 748, 753 (3d Cir. 1982)).
In challenging the appropriateness of liquidated damages,
the employer bears the “plain and substantial” burden of
establishing both good faith and reasonable grounds for the
violation. Id. at 907-08 (quoting Williams v. Tri-County
Growers, Inc., 747 F.2d 121, 128-29 (3d Cir. 1984)). “If the
employer fails to come forward with plain and substantial
evidence to satisfy the good faith and reasonableness
requirements, the district court is without discretion to deny
liquidated damages.” Williams, 747 F.2d at 129 (first citing
Marshall, 668 F.2d at 753; then citing Laffey v. Nw. Airlines,
Inc., 567 F.2d 429, 465 (D.C. Cir. 1976), abrogated on other
grounds sub nom. McLaughlin v. Richland Shoe Co., 486 U.S. 128
(1988); then citing Richard v. Marriott Corp., 549 F.2d 303,
305-06 (4th Cir. 1977); then citing McClanahan v. Mathews, 440
F.2d 320, 322 (6th Cir. 1971); and then citing Rothman v.
Publicker Indus., 201 F.2d 618, 620 (3d Cir. 1953)).
To carry its burden of establishing good faith, an employer
must first show that it “took affirmative steps to ascertain the
23

Act’s requirements, but nonetheless, violated its provisions.”
Martin, 940 F.2d at 908. The employer has a duty to ascertain
the FLSA’s requirements and may not wait for complaints from
others, such as employees, before complying. See Keeley v.
Loomis Fargo & Co., 183 F.3d 257, 270 (3d Cir. 1999) (quoting
Williams, 747 F.2d at 129). The employer must prove “an honest
intention to ascertain and follow the dictates of the Act.”
Marshall, 668 F.2d at 753 (citing Laffey, 567 F.2d at 464).
Next, the “reasonableness” requirement requires that the
employer had reasonable grounds for believing it was in
compliance. Id. Reasonableness is an objective standard, and to
satisfy the standard the employer must act “as a reasonably
prudent man” under the same circumstances. Brooks v. Vill. of
Ridgefield Park, 185 F.3d 130, 137 (3d Cir. 1999) (quoting
Addison v. Huron Stevedoring Corp., 204 F.2d 88, 92 (2d Cir.
1953)). “[I]gnorance alone is not sufficient in meeting the
objective test.” Id. (citing Marshall, 668 F.2d at 753). Merely
reviewing case law and looking at the DOL website is not
sufficient to establish reasonableness either. See Sec’y United
States Dep’t of Labor v. Am. Future Sys., Inc., 873 F.3d 420,
434 (3d Cir. 2017).
1. Plaintiff’s Motion
Plaintiff argues that Defendants should be required to pay
liquidated damages in an amount equal to the amount of back
24

wages owed (i.e., $664,971.25) because they took no affirmative
steps to comply with the FLSA and have no objectively reasonable
grounds for their violations. However, given that the Court
already denied Plaintiff’s motion for summary judgment as to the
appropriate amount of back wages, the Court must also deny
Plaintiff’s motion as to liquidated damages, which is based on
the same amount. The proper amount of liquidated damages cannot
be determined until the appropriate amount of back wages is
determined.
2. Defendants’ Motion
Defendants argue that they should not be liable for
liquidated damages because they did not commit any violations
knowingly and none of the people that they hired (e.g., their
CPA) informed them of any issues. They also try to place blame
on the Government for not informing them of their violations in
1999 and for waiting ten months during the 2017 investigation
before informing them of the violations. However, as already
explained, ignorance of the mandates of the FLSA and its
implementing regulations is not an excuse. See Brooks, 185 F.3d
at 137 (citing Marshall, 668 F.2d at 753). Additionally, the
duty falls on the employer to ascertain the FLSA’s requirements,
i.e., the employer may not simply stand idly by and wait for
others to inform them that violations are occurring. See Keeley,
183 F.3d at 270 (quoting Williams, 747 F.2d at 129).
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Defendants also argue that the fact that they immediately
took steps to rectify any issues after being told about them
demonstrates that they were acting reasonably and in good faith.
However, the Third Circuit has foreclosed employers from relying
on actions taken after the DOL initiated an investigation. See
Martin, 940 F.2d at 909. Consequently, and as a result of the
foregoing, Defendants’ motion for summary judgment will also be
denied as to the issue of liquidated damages.
H.

Injunctive Relief
1. Plaintiff’s Motion

Plaintiff argues that even if Defendants are currently in
compliance with the FLSA, injunctive relief is still warranted
because Defendants’ violations were willful, and their “pattern
of misconduct” and “pervasive interference with the WH
investigation” suggests a reasonable probability of recurrence
of the violations. See Pl.’s Mot. Summ J. 44-45, ECF No. 40
The FLSA authorizes district courts to issue injunctive
relief “restrain[ing] violations” of sections 206 and 207 upon a
showing of cause. 29 U.S.C. § 217. In deciding whether to grant
an injunction, courts consider “(1) ‘the employer’s past
conduct’; (2) the employer’s ‘current conduct’; and (3) ‘most
importantly, whether the employer can be counted on to comply
with the FLSA in the future.’” Acosta v. Osaka Japan Rest.,
Inc., No. CV 17-1018, 2018 WL 3397337, at *17 (E.D. Pa. July 12,
26

2018) (quoting Acosta v. Cent. Laundry Inc., No. CV 15-1502,
2018 WL 1726613, at *10 (E.D. Pa. Apr. 10, 2018), aff’d in part,
rev’d in part on other grounds, 790 F. App’x 368 (3d Cir.
2019)).
In Osaka, the defendants argued that “[w]hether issued
under 29 U.S.C. § 217 or some other basis, an injunction is
still equitable relief which can only be entered in accordance
with Fed. R. Civ. P. 65.” Id. (quoting Defs.’ Br. 15). The court
noted that the defendants “obliquely point out a central failing
of Plaintiff’s request for injunctive relief: Plaintiff seeks
prospective injunctive relief on the basis of the summary
judgment record alone, without a hearing of any sort.” Id. The
court thus denied the request for an injunction. Id.; see also
Hugler v. Cent. Laundry Inc., No. CV 15-1502, 2017 WL 11461954,
at *2 n.2 (E.D. Pa. Mar. 24, 2017) (denying request for
injunctive relief and noting that the court would only consider
such request upon motion, Fed. R. Civ. P. 7(b), and after a
hearing). Given that the same issue arises here, i.e., Plaintiff
seeks prospective injunctive relief on the basis of the summary
judgment record alone, without a hearing, Plaintiff’s motion for
summary judgment as to the issue of injunctive relief will be
denied.
2. Defendants’ Motion

27

Defendants argue that no injunctive relief is necessary
because Defendants have rectified all alleged issues and there
is no reason to assume that Defendants will fail to adhere to
the FLSA’s requirements in the future. However, as explained
above, Plaintiff argues that even if Defendants are currently in
compliance, injunctive relief is still warranted because
Defendants’ violations were willful, and their “pattern of
misconduct” and “pervasive interference with the WH
investigation” suggests a reasonable probability of recurrence
of the violations. See Pl.’s Mot. Summ J. 44-45. As discussed
previously, there are genuine disputes of material fact
concerning whether Defendants’ violations were willful and
whether they interfered with the WH investigation. Under these
circumstances, summary judgment is also not warranted for the
Defendants in relation to injunctive relief.
V. CONCLUSION
As a result of the foregoing, Defendants’ motion for
summary judgment will be denied in full. Plaintiff’s motion for
summary judgment will be denied in part and granted in part. The
motion will be granted in relation to establishing minimum wage,
overtime, and recordkeeping violations. The motion will be
denied as to the issues of back wages, liquidated damages,
injunctive relief, whether Engin is an employer under the FLSA,
28

and whether Defendants’ violations were willful. An appropriate
order follows.

29