Perez v. Stone Castle et al

Filing 30

MEMORANDUM DECISION and ORDER granting 29 Motion for Summary Judgment. Plaintiff is directed to provide a proposed judgment for the Court's signature, including a proposed permanent injunction, within fourteen (14) days of this Order. Signed by Judge Ted Stewart on 6/22/2015. (blh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
THOMAS E. PEREZ, SECRETARY OF
LABOR, UNITED STATES
DEPARTMENT OF LABOR,

MEMORANDUM DECISION AND
ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT

Plaintiff,
v.
STONE CASTLE LLC d/b/a STONE
CASTLE RECYCLING, ANTHONY
STODDARD, individually,

Case No. 1:14-CV-66 TS
District Judge Ted Stewart

Defendants.

This matter is before the Court on Plaintiff’s Motion for Summary Judgment. Defendants
have failed to respond to Plaintiff’s Motion and the time to do so has now passed. For the
reasons discussed below, the Court will grant the Motion.
I. BACKGROUND
Defendant Stone Castle LLC d/b/a Stone Castle Recycling (“Stone Castle”) is a Utahregistered limited liability company, with a principal office located in Clearfield, Utah. Stone
Castle is engaged in electronic recycling, including breaking down and recycling electronics,
computers, televisions, glass, and other materials, and selling or recycling these components.
Defendant Anthony Stoddard (“Stoddard”) is the President and sole owner of Stone Castle.
Stoddard exerts day-to-day operational control of Stone Castle; directs the work of employees;
and makes strategic and managerial decisions that affect the terms and working conditions of
employees, including hiring, firing, and compensation decisions.

1

Plaintiff, through the Wage Hour Division (“Wage Hour”), investigated possible Fair
Labor Standards Act (“FLSA”) violations by Defendants. This investigation revealed that
Defendants had failed to fully comply with an agreement concluding an earlier Wage Hour
investigation. In that earlier investigation, Wage Hour found that Stone Castle was not paying
employees overtime compensation for hours worked in excess of 40 in a workweek, and found a
total of $33,221.41 due to 34 employees. Stoddard signed a Wage Hour Form 56 on February
20, 2013, agreeing to pay the back wages by May 20, 2013. Defendants provided proof of
payment showing that half of the 34 employees due overtime back wages had been paid.
However, 17 employees are still due a total of $18,508.55.
During the earlier investigation, the Wage Hour Investigator discussed with Stoddard the
requirements of the FLSA, and documented his agreement to comply with the FLSA’s recordkeeping, minimum wage, and overtime provisions. However, Stoddard held a meeting with
employees in March 2014 and informed them that times were financially hard and that they were
not likely to be paid for a while.
During the time of the Wage Hour Division’s second investigation into Defendants,
Defendants were employing at least 24 employees. Defendants’ employees are engaged in the
taking apart of electronic equipment, including computers, cell phones, glass, and televisions,
down to their component parts and selling these component parts, including recyclable materials,
to customers who are located both in and outside the state of Utah. Defendant Stone Castle had
an annual volume of sales made of over $500,000 for 2012 and 2013.
During the period from February 1, 2014, through at least April 25, 2014, employees
worked for Defendants but were not paid for their work. Defendants admit that they did not pay

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some of their employees for hours worked starting with the pay period covering February 1,
2014, through February 14, 2014, and continuing through May 23, 2014. Defendants admit that
as of June 2014, Defendants still owed numerous employees wages for hours worked in February
2014 through April 2014.
There are six confirmed pay periods for which employees have not been paid at least
minimum wage: February 1–February 14, 2014; February 15–February 28, 2014; March 1–
March 14, 2014; March 15–March 28, 2014; March 29–April 11, 2014; and April 12–April 25,
2014. There are 16 hourly employees across these six pay periods who are due back wages for
being paid less than minimum wages in the total amount of $35,727.06.
There are eight employees who were categorized as salaried employees by Defendants
and are being treated as such for purposes of the Wage Hour investigation. These employees are
due back wages for not being paid at least the minimum required to qualify as a salaried exempt
employee in the total amount of $42,770.00.
During the period from February 1, 2014, through at least April 25, 2014, Defendants
permitted certain of their employees to work in excess of 40 hours per week without
compensating such employees for their employment in excess of 40 hours at a rate not less than
one and one-half times the regular rate at which they were employed. There are six confirmed
pay periods for which employees have not been paid required overtime wages: February 1–
February 14, 2014; February 15–February 28, 2014; March 1–March 14, 2014; March 15–March
28, 2014; March 29–April 11, 2014; and April 12–April 25, 2014. There are ten employees
across these six pay periods who are due overtime wages for work in excess of 40 hours per
week in the total amount of $1,111.64.

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II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” 1 In
considering whether a genuine dispute of material fact exists, the Court determines whether a
reasonable jury could return a verdict for the nonmoving party in the face of all the evidence
presented. 2 The Court is required to construe all facts and reasonable inferences in the light most
favorable to the nonmoving party. 3 Pursuant to Rule 56(e), since Defendants have failed to
properly address Plaintiff’s assertions of fact, the Court may consider the facts undisputed for the
purposes of this Motion and may grant summary judgment if the Motion and supporting
materials show that Plaintiff is entitled to judgment.
III. DISCUSSION
Plaintiff asserts various claims against Defendants under the FLSA. Plaintiff seeks an
order granting summary judgment on each of its claims against Defendants and issuing: (1) a
judgment, pursuant to Section 17 of the FLSA, 29 U.S.C. § 217, permanently restraining the
violations specified in Plaintiff’s Complaint; (2) a judgment ordering the payment of
uncompensated wages of $98,117.25 due to employees; and (3) an equal additional amount as
liquidated damages pursuant to Section 16(c) of the FLSA, 29 U.S.C. § 216(c).

1

Fed. R. Civ. P. 56(a).

2

See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Clifton v. Craig, 924
F.2d 182, 183 (10th Cir. 1991).
3

See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Wright v. Sw. Bell Tel. Co., 925 F.2d 1288, 1292 (10th Cir. 1991).

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A.

EMPLOYERS UNDER THE FLSA
Liability under the FLSA is imposed on employers. 29 U.S.C. § 203(d) provides that an

“employer” “includes any person acting directly or indirectly in the interest of an employer in
relation to an employee.” An individual supervisor may be liable under the Act. The FLSA
broadens the definitions of employer and employee beyond “strict application of traditional
agency principles.” 4 The FLSA focuses instead on “the economic realities of the relationship”
between the employee and the employer, and includes evaluating such factors as “whether the
alleged employer has the power to hire and fire employees, supervises and controls employee
work schedules or conditions of employment, determines the rate and method of payment, and
maintains employment records.” 5
As set forth above, Stone Castle is engaged in breaking down electronics, computers,
televisions, glass, and other materials, and selling or recycling these components. Stoddard is the
President and sole owner of Stone Castle. Stoddard exerts day-to-day operational control of
Stone Castle; directs the work of employees; and makes strategic and managerial decisions that
affect the terms and working conditions of employees, including hiring, firing, and compensation
decisions. Based upon these undisputed facts, the Court finds that Defendants are employers
under the Act.
B.

ENTERPRISE ENGAGED IN COMMERCE
Among other things, the FLSA regulates enterprises engaged in commerce. An

“enterprise” is “the related activities performed (either through unified operation or common

4

Baker v. Flint Eng’g & Const. Co., 137 F.3d 1436, 1440 (10th Cir.1998).

5

Id.

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control) by any person or persons for a common business purpose.” 6 An “enterprise engaged in
commerce” is an enterprise that “has employees engaged in commerce or in the production of
goods for commerce, or that has employees handling, selling, or otherwise working on goods or
materials that have been moved in or produced for commerce by any person” and has an “annual
gross volume of sales made or business done is not less than $500,000.” 7 As stated, Defendants’
employees are engaged in the taking apart of electronic equipment, including computers, cell
phones, glass, and televisions, down to their component parts and selling these component parts,
including recyclable materials, to customers who are located both in and outside the state of
Utah. Further, Plaintiff has presented evidence that Stone Castle had an annual volume of sales
of over $500,000 for 2012 and 2013. Thus, the Court finds that Defendants are an enterprise
engaged in commerce.
C.

MINIMUM WAGE PROVISIONS
Employers must pay employees employed in an enterprise engaged in commerce the

minimum wage set forth in 29 U.S.C. § 206. Plaintiff has presented evidence showing that
Defendants did not pay their employees the minimum wage. In particular, Plaintiff has shown
that there are six confirmed pay periods for which employees have not been paid the minimum
wage between February 1, 2014, and April 25, 2014, resulting in 24 employees who are due back
wages in the amount of $78,497.06.
Plaintiff argues that Defendants’ failure to pay the minimum wage was a willful
violation. To demonstrate a willful violation, Plaintiff must show that Defendants “either knew

6

29 U.S.C. § 203(r)(1).

7

Id. § 203(s)(1)A).

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or showed reckless disregard for the matter of whether its conduct was prohibited by the
statute.” 8
Plaintiff has demonstrated that Defendants’ conduct was willful. In an earlier
investigation, Wage Hour found that Stone Castle was not paying employees overtime
compensation for hours worked in excess of 40 in a workweek. Wage Hour discussed with
Stoddard the requirements of the FLSA and Stoddard agreed to comply with the FLSA’s recordkeeping, minimum wage, and overtime provisions. Thus, Defendants knew the conduct that was
prohibited by the statute, but despite this knowledge did not properly compensate their
employees.
D.

OVERTIME PROVISIONS
Employers must pay employees a rate not less than one and one-half times their regular

pay rate for hours worked beyond forty hours in a workweek. 9 The undisputed facts show that
Defendants failed to pay employees the required overtime wages for two periods. First, some
employees are still due overtime wages from the prior Wage Hour investigation, totaling
$18,508.55. Second, during the period from February 1, 2014, through at least April 25, 2014,
Defendants permitted certain of their employees to work in excess of 40 hours per week without
compensating such employees for their employment in excess of 40 hours at a rate not less than
one and one-half times the regular rate at which they were employed. Plaintiff has determined
that ten employees are due overtime wages in the total amount of $1,111.64. This constitutes a

8

McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988).

9

29 U.S.C. § 207.

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violation of 29 U.S.C. § 207. For substantially the same reasons set forth above, the Court finds
this violation to be willful because Defendants knew their conduct was prohibited by statute.
Based upon all of the above, the Court grants summary judgment in favor of Plaintiff and
against Defendants on each of Plaintiff’s claims against Defendants, and will enter judgment
ordering the payment of uncompensated wages of $98,117.25 due to employees.
E.

LIQUIDATED DAMAGES
In addition, Plaintiff seeks liquidated damages. 29 U.S.C. § 216(b) provides: “Any

employer who violates the provisions of section 206 or section 207 of this title shall be liable to
the employee or employees affected in the amount of their unpaid minimum wages, or their
unpaid overtime compensation, as the case may be, and in an additional equal amount as
liquidated damages.” 10 This provision essentially doubles the damage award. 11
However, if “an employer ‘shows to the satisfaction of the court that the act or omission
giving rise to such action was in good faith and that he had reasonable grounds for believing that
his act or omission was not a violation of the FLSA,’ the court may refuse to award liquidated
damages.” 12 A court may “eliminate or reduce the award of liquidated damages only if the
employer shows both that he acted in good faith and that he had reasonable grounds for believing
that his actions did not violate the [FLSA].” 13

10

Id. § 216(b).

11

Mumby v. Pure Energy Servs. (USA), Inc., 636 F.3d 1266, 1272 (10th Cir. 2011).

12

Renfro v. City of Emporia, Kan., 948 F.2d 1529, 1540 (10th Cir. 1991) (quoting 29
U.S.C. § 260).
13

Id.

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For substantially the same reasons that the Court finds Defendants’ violations were
willful, the Court finds that Defendants did not act in good faith. The same standard applies to
both determinations. 14 Therefore, the Court finds that Plaintiff is entitled to liquidated damages.
Thus, the total damage award is $196,234.50.
F.

PERMANENT INJUNCTION
Finally, Plaintiff seeks a permanent injunction barring Defendants from future violations

of the FLSA. The Court has jurisdiction to restrain violations of the FLSA. 15 “Permanent
prospective injunctions serve to effectuate congressional policy against substandard labor
conditions by preventing future violations. The purpose of an injunction against future violations
is remedial rather than punitive.” 16
Plaintiff, as the movant, “bears the burden of satisfying the court that an injunction is
necessary.” 17 “The necessary determination is that there exists some cognizable danger of
recurrent violation, something more than the mere possibility which serves to keep the case
alive.” 18
Courts properly look at many factors in determining whether to grant a
prospective injunction, including the employer’s previous conduct, its current
conduct, and the reliability of its promises of future compliance. When a past
violation is found, courts balance that finding against factors indicating a
reasonable likelihood that the violation will not recur, such as the employer’s

14

See Brinkman v. Dep’t of Corrs. of State of Kan., 21 F.3d 370, 373 (10th Cir. 1994).

15

29 U.S.C. § 217.

16

Metzler v. IBP, Inc., 127 F.3d 959, 963 (10th Cir. 1997).

17

Id.

18

Mitchell v. Hertzke, 234 F.2d 183, 187 (10th Cir. 1956).

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intent to comply, extraordinary efforts taken to prevent recurrence, the absence of
repetitive violations, and the absence of bad faith. 19
Considering these factors, the Court finds that a permanent injunction is necessary to
prevent future violations. Defendants previously violated the FLSA, as was discovered during
the initial investigation. Defendants agreed to pay back wages and were counseled on the
requirements of the FLSA. Defendants, however, have continued to violate both the minimum
wage and overtime provisions, sometimes not paying their employees at all. In addition,
Defendants failed to comply with their agreement to pay back wages. Further, Defendants were
not forthcoming during Wage Hour’s investigation and have stopped participating in this
litigation. There is no evidence in the record from which the Court could find these violations
will not recur. Defendants have shown no intent to comply and have shown no extraordinary
efforts to prevent recurrence. Instead, the evidence shows repeat violations and the presence of
bad faith. Therefore, the Court finds that an injunction is appropriate here.
IV. CONCLUSION
It is therefore
ORDERED that Plaintiff’s Motion for Summary Judgment (Docket No. 29) is
GRANTED. Plaintiff is directed to provide a proposed judgment for the Court’s signature,
including a proposed permanent injunction, within fourteen (14) days of this Order.

19

Metzler, 127 F.3d 963–64.

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DATED this 22nd day of June, 2015.
BY THE COURT:

Ted Stewart
United States District Judge

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