Hugler v. Dominion Granite and Marble, LLC et al

Filing 12

MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 6/21/2017. (dest, )

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
EDWARD C. HUGLER, Acting
Secretary of Labor, United
States Department of Labor,
Plaintiff,
v.
DOMINION GRANITE & MARBLE,
LLC, et al.,
Defendants.

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M E M O R A N D U M

1:17cv229 (JCC/IDD)

O P I N I O N

Plaintiff Edward C. Hugler, Acting Secretary of Labor,
brings this action against Defendants Dominion Granite and
Marble, LLC, Raul Chao, and Christian Southwell Berard under the
Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (FLSA).

The

case is before the Court now on Defendants’ Motion to Dismiss
for Failure to State a Claim [Dkt. 5].

Defendants argue that

Plaintiff’s Complaint does not sufficiently demonstrate that
injunctive relief is warranted or that Defendants Chao and
Berard are “employers” within the meaning of the FLSA.

For the

reasons that follow, the Court will deny Defendants’ Motion.
I. Background
The following allegations of fact drawn from
Plaintiff’s Complaint are taken as true for purposes of the

present Motion.

See E.I. du Pont de Nemours & Co. v. Kolon

Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011).
Defendant Dominion Granite and Marble, LLC is a
Virginia corporation that, as its name suggests, is in the
business of installing granite and marble.
¶¶ 2, 5.
FLSA.

Compl. [Dkt. 1]

It employs individuals in positions covered by the

See id. ¶ 6.

Defendant Chao owns 92% of the company,

while Defendant Berard – the company’s Operations Manager – owns
5%.

Id. ¶ 2.

Both Chao and Berard have supervisory authority

over the company’s employees and are “directly involved” in
setting the “terms” and “conditions” of employment at the
company, including the “manner of payment and compensation.”
Id. ¶¶ 3-4.
In 2016, the Department of Labor launched an
investigation into Defendants’ labor practices.

Id.

The agency

found that, between April 2013 and April 2016, Defendants failed
to pay employees overtime wages at rates prescribed by sections
7 and 15(a)(2) of the FLSA.

Id.

Some employees were improperly

paid a salary, while others “were paid only ‘straight time’ for
the hours worked in excess of 40 in a week and did not receive
additional half-time pay for overtime hours.”

Id.

During the

period in question, Defendants also failed to maintain adequate
timekeeping records for hourly employees as required by sections
11(c) and 15(a)(5) of the FLSA.

Id. ¶ 8.
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The agency confirmed

during its investigation that Defendants were aware of their
legal obligations under the FLSA, but willfully failed to meet
them.

Id.

As a result of the agency’s investigation,

Defendants ultimately paid their employees the amounts
unlawfully withheld.

Id. ¶ 9.

On February 28, 2017, the Department of Labor filed
this action against Defendants seeking injunctive and
declaratory relief.

Defendants filed their Motion to Dismiss

[Dkt. 5] on May 8, 2017.

The matter is now fully briefed and

ripe for disposition.
II. Legal Standard
In order to survive a motion to dismiss brought under
Federal Rule of Civil Procedure 12(b)(6), a complaint must set
forth “a claim to relief that is plausible on its face.”
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Bell

A claim is

facially plausible “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”

Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
556).

When reviewing a motion brought under Rule 12(b)(6), the

Court “must accept as true all of the factual allegations
contained in the complaint,” drawing “all reasonable inferences”
in the plaintiff’s favor.

E.I. du Pont de Nemours & Co., 637

F.3d at 440 (citations omitted).

“[T]he court ‘need not accept
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the [plaintiff’s] legal conclusions drawn from the facts,’ nor
need it ‘accept as true unwarranted inferences, unreasonable
conclusions, or arguments.’”

Wahi v. Charleston Area Med. Ctr.,

Inc., 562 F.3d 599, 616 n.26 (4th Cir. 2009) (quoting Kloth v.
Microsoft Corp., 444 F.3d 312, 319 (4th Cir.2006)) (alterations
in original).
III. Analysis
Defendants first contend that Plaintiff has not set
forth sufficient factual matter in his Complaint to demonstrate
that he is entitled to injunctive relief at this initial stage
of the proceedings.

This argument is misguided, as a motion to

dismiss brought under Federal Rule of Civil Procedure 12(b)(6)
tests whether relief can be granted, not whether it should be
granted.

See United States v. Maricopa Cnty., Ariz., 915 F.

Supp. 2d 1073, 1082 (D. Ariz. 2012) (“A 12(b)(6) motion to
dismiss challenges the legal sufficiency of the pleadings, not
the appropriateness of the relief sought.”); City of New York v.
A-1 Jewelry & Pawn, Inc., 247 F.R.D. 296, 353 (E.D.N.Y.
2007)(“[A] motion for failure to state a claim properly
addresses the cause of action alleged, not the remedy sought.”);
Owens v. Hous. Auth. of City of Stamford, 394 F. Supp. 1267,
1274 (D. Conn. 1975) (“The propriety of the redress requested
must, of course, await more advanced steps in this
litigation.”).
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“[A] request for injunctive relief does not constitute
an independent cause of action; rather, the injunction is merely
the remedy sought for the legal wrongs alleged in the . . .
substantive counts.”

Fare Deals Ltd. v. World Choice

Travel.Com, Inc., 180 F. Supp. 2d 678, 682 n.1 (D. Md. 2001).
Defendants appear to concede that Plaintiff’s Complaint includes
sufficient factual material to state a claim under the FLSA.
Indeed, the Complaint plainly alleges cognizable claims for
failure to pay overtime wages and to keep proper time records.
Moreover, nothing in the Complaint forecloses the possibility
that injunctive relief may be warranted should Plaintiff prevail
on his FLSA claims.
otherwise.

Defendants do not appear to contend

Defendants instead argue that Plaintiff has failed

to put forth enough factual material to justify awarding relief
that Plaintiff has not yet formally requested through, for
example, a motion for summary judgment.
It would be inappropriate, at this early stage of the
proceedings, for the Court to rule on whether an injunction
should issue in this case.

See Chao v. Virginia Dep’t of

Transp., 157 F. Supp. 2d 681, 691 (E.D. Va. 2001), aff’d in
part, rev’d in part, 291 F.3d 276 (4th Cir. 2002) (finding that
“the issuance of a prospective injunction [under the FLSA]
depends on findings of fact which cannot be made in deciding” a
motion to dismiss); see also Dwoskin v. Bank of Am., N.A., 850
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F. Supp. 2d 557, 573 (D. Md. 2012) (refusing to dismiss a
request for injunctive relief on a Rule 12(b)(6) motion because
the court could not “say with legal certainty” that an
injunction should not issue).

Whether Plaintiff is entitled to

an injunction is a matter for the Court to address at a later
date, when the record is better developed.

To hold otherwise

would put the cart before the horse and require the Court to
make a fact-bound decision without the benefit of evidence or
substantive briefing.

See Chao, 157 F. Supp. 2d at 690.

Regardless, drawing all reasonable inferences in
Plaintiff’s favor, see E.I. du Pont de Nemours & Co., 637 F.3d
at 440, Plaintiff has plausibly pled that injunctive relief will
eventually be warranted in this case.

Although Defendants have

apparently now made an effort to comply with the FLSA, see
Compl. [Dkt. 1] ¶ 9, “[c]urrent compliance with the FLSA alone,
especially when it results from scrutiny by the federal
government, is not sufficient grounds for denying a prospective
injunction.” Chao, 157 F. Supp. 2d at 690.

“Where the Secretary

has established violations of the Act, the district court should
ordinarily grant injunctive relief, even if the employer is in
present compliance, unless the district court is soundly
convinced that there is no reasonable probability of a
recurrence of the violations.”
1115, 1118 (8th Cir. 1980).

Marshall v. Van Matre, 634 F.2d

Here, Plaintiff’s Complaint alleges
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that Defendants willfully violated the FLSA over a period of
three years by failing both to pay employees overtime wages and
to keep adequate time records.

See Compl. [Dkt. 1] ¶¶ 6-8.

Defendants’ efforts at compliance came only after Defendants
were caught violating the FLSA. See id. ¶ 9.

There is no

indication that Defendants have provided any reliable assurances
of future compliance.

The foregoing is more than sufficient for

the Court to draw the reasonable inference that “there exists
some cognizable danger of recurrent violation, something more
than the mere possibility[.]”

Mitchell v. Hertzke, 234 F.2d

183, 187 (10th Cir. 1956).1
Defendants next argue that Plaintiff’s Complaint fails
to plead sufficient factual material to establish that the
individual defendants, Mr. Chao and Mr. Berard, are “employers”
subject to the FLSA.

The Court disagrees.

Plaintiff has

manifestly pled sufficient facts to support such a claim.
The term “employer” in the FLSA is defined broadly to
“include[ ] any person acting directly or indirectly in the
interest of an employer in relation to an employee," 29 U.S.C.

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In Defendants’ Reply Brief [Dkt. 11], Defendants
attempt to draw a distinction between the individual defendants
and the company itself with respect to the propriety of an
injunction. There is, however, no meaningful distinction. The
company itself is merely a legal fiction that acts through the
individual defendants. And as discussed below, both the company
and the individual defendants are “employers” within the meaning
of the FLSA.
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§ 203(d), and is construed liberally by courts.

See, e.g.,

Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir.
2006); see also McFeeley v. Jackson St. Entm’t, LLC, 825 F.3d
235, 240 (4th Cir. 2016) (“In keeping with th[e] [FLSA’s]
‘remedial and humanitarian’ goals, Congress applied the FLSA
broadly, as reflected in the Act’s definitions of ‘employee’
(‘any individual employed by an employer’), ‘employer’ (‘any
person acting directly or indirectly in the interest of an
employer in relation to an employee’), and ‘employ’ (‘to suffer
or permit to work’).”) (citations omitted).

“‘The remedial

purposes of the FLSA require the courts to define ‘employer’
more broadly than the term would be interpreted in traditional
common law applications.’”

Dole v. Elliott Travel & Tours,

Inc., 942 F.2d 962, 965 (6th Cir. 1991) (quoting McLaughlin v.
Seafood, Inc., 867 F.2d 875, 877 (5th Cir. 1989) (per curiam)).
Determining whether an individual is an “employer” under the
FLSA entails a flexible inquiry, accounting for “the
circumstances of the whole activity.”

Rutherford Food Corp. v.

McComb, 331 U.S. 722, 730 (1947).
Plaintiff alleges that Defendant Chao owns the vast
majority of Dominion Granite and Marble, LLC – 92%.
[Dkt. 1] ¶ 2.

Compl.

Defendant Chao allegedly “supervises and directs

the work of all of the employees of the company, and is involved
in the hiring, firing, and scheduling of employees.”
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Id.

Plaintiff further alleges that Defendant Chao is “directly
involved in the policies and decisions regarding the terms,
manner of payment, and compensation of the current and past
employees of the Company.”

Id.

Similarly, Defendant Berard

allegedly serves as the company’s “Operations Manager” and owns
5% of Dominion Marble and Granite, LLC.

Id. ¶ 2.

Defendant

Berard is likewise alleged to be “involved in the supervision of
employees as well as hiring and firing of employees of the
Company.”

Id. ¶ 4.

Finally, Plaintiff alleges that Defendant

Berard is, like Defendant Chao, responsible for “the policies
and decisions regarding the terms, conditions, and manner of
payment and compensation of the current and past employees of
the Company.”

Id.

In short, Plaintiff alleges that Defendants Chao and
Berard are co-owners of the company, supervise its employees,
and set pertinent policies regarding compensation.

This is more

than sufficient to permit a reasonable inference that Defendants
Chao and Berard are “employers” within the meaning of the FLSA.
Cf. Dole, 942 F.2d at 966 (finding that an individual was an
employer under the FLSA where that individual was “the chief
corporate officer, had a significant ownership interest in the
corporation, and had control over significant aspects of the
corporation’s day-to-day functions, including determining
employee salaries”); see also Baystate Alternative Staffing,
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Inc. v. Herman, 163 F.3d 668, 681 n.13 (1st Cir. 1998) (listing
cases under which various courts have deemed individuals to be
FLSA “employers” under similar circumstances).

That Plaintiff

has pled sufficient factual material in his Complaint does not,
of course, preclude Defendants from raising the issue of whether
Mr. Chao and Mr. Berard and properly considered “employers”
under the FLSA on a more developed record.
IV. Conclusion
For the foregoing reasons, the Court will deny
Defendants’ Motion to Dismiss for Failure to State a Claim [Dkt.
5].

An appropriate order will issue.

June 21, 2017
Alexandria, Virginia

/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE

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