Guzman v. D&S Capital, LLC

• Decision Date: 20 February 2015
• Docket Number: Civil No.: MAB 14-CV-01799
• Court: U.S. District Court — District of Maryland
• Parties: JOSE RICARDO GUZMAN, Plaintiff, v. D & S CAPITAL, LLC, d/b/a ROCKVILLE SUNOCO, HYAN CHAN DANNY SHIN, and IN SOOK SHIN, Defendants.

JOSE RICARDO GUZMAN, Plaintiff, v. D & S CAPITAL, LLC, d/b/a ROCKVILLE SUNOCO, HYAN CHAN DANNY SHIN,and IN SOOK SHIN, Defendants.

Civil No.: MAB 14-CV-01799

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

February 20, 2015

OPINION

Barnett, Judge:¹ Plaintiff, Jose Ricardo Guzman, brings suit against Defendants, D & S Capital, LLC ("D&S"), Hyun Chan Danny Shin ("Danny Shin"), and In Sook Shin (together, "Defendants"), pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., for unpaid overtime wages. Defendants now move, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss Plaintiff's complaint for failing to state a claim upon which relief can be granted.² For the reasons discussed below, the court grants, in part, and denies, in part, Defendants' motions to dismiss.

BACKGROUND

Plaintiff worked as a mechanic for Defendants from 2001 through March 20, 2014. (Compl. ¶¶ 2, 5, 14-15.)³ During this period, Danny and In Sook Shin owned, operated, and "controlled, and were in charge of, the day-to-day operations" of D&S. (Compl. ¶¶ 2, 4, 8, 13.) They "had the power to hire, fire, suspend, and otherwise discipline Plaintiff." (Compl. ¶ 9.) They "supervised [his] work duties . . . to ensure his work was of sufficient quality," "set and controlled [his] work schedule or had the power to set and control [his] work schedule," and "set and determined [his] rate and method of pay or had the power to set and determine [his] rate and method of pay." (Compl. ¶¶ 10-12.)

At D&S, and with Danny and In Sook's Shin's knowledge, Plaintiff averaged about fifty hours of work per week. (Compl. ¶¶ 18-19.) Defendants paid him, on a piece rate basis, approximately $700 per week. (Compl. ¶¶ 16-17.) Plaintiff alleges that Defendants paid him "a portion of his wages via cash, and a portion via check. . . . in an effort to hide the actual numbers of hours that Plaintiff worked and the actual pay Plaintiff received." (Compl. ¶ 22.) Plaintiff further alleges that "Defendants failed torecord the regular hours and overtime hours worked by Plaintiff on [his] paystubs, instead leaving these paystub sections blank." (Compl. ¶ 23.)

On June 4, 2014, Plaintiff filed suit in this court, seeking to recover the overtime pay that he contends Defendants owe him under the FLSA. (Compl. ¶¶ 24-30.) Defendants now move to dismiss. They broadly make five assertions: that (1) Maryland law exempts gasoline service stations such as D&S from paying overtime wages to their employees pursuant to the FLSA; (2) an agreement between Plaintiff and Defendants about how Defendants would pay Plaintiff exempts Defendants from the FLSA's overtime wage requirements, pursuant to 29 U.S.C. § 207(g); (3) Danny and In Sook Shin are not liable for D&S's actions because Plaintiff has not stated a legal basis to pierce the corporate veil; (4) laches bars Plaintiff from seeking relief or, in the alternative, Plaintiff's claims are limited by Maryland's three-year statute of limitations for civil actions; and (5) neither Plaintiff nor Defendants engaged in interstate commerce, as defined in the FLSA.⁴ (Danny Shin Mot. Dismiss 1-4; In Sook Shin Mot. Dismiss1; D&S Mot. Dismiss 4-8.)

LEGAL STANDARD

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) challenges the adequacy of the complaint. Stewart v. Bierman, 859 F. Supp. 2d 754, 758 (D. Md. 2012) (citing Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Generally, thecomplaint must satisfy only the pleading standard of Fed. R. Civ. P. 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Johnson v. Prosperity Mortg. Corp., No. 11-CV-02532-AW, 2011 WL 5513231, at *2 (D. Md. Nov. 3, 2011) (citation and internal quotation marks omitted). The Supreme Court has clarified that under Rule 8(a), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Aschroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In other words, a complaint must consist of "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted).

In considering a motion to dismiss, the court must construe the complaint in the manner most favorable to the plaintiff and take all the facts alleged as true. Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. 2d 452, 463 (D. Md. 2013). The court also may consider documents attached to the complaint and the motion to dismiss if they are authentic and central to the complaint. Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citations omitted).

DISCUSSION

Congress passed the FLSA "to eliminate 'labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency, and general well-being of workers.'" Gionfriddo v. Jason Zink, LLC, 769 F. Supp. 2d 880, 889 (D. Md. 2011) (quoting Pub. L. No. 75-718, 52 Stat. 1060 (1938) (codified as amended at 29 U.S.C. § 201 et seq.)). The FLSA thus "generally requires most employers to compensate employees for all of the hours worked, at a rate that is notless than the federal minimum wage rate." Id. (citing 29 U.S.C. § 206(a)(1)). It also requires most employers to provide their employees with overtime pay for hours worked in excess of forty hours per week. 29 U.S.C. § 207(a).

A. Whether Maryland Law Exempts Defendants from Paying Overtime Wages Mandated by the FLSA

Much like the FLSA, the Maryland Wage and Hour Law ("MWHL"), Md. Code Ann., Labor & Empl. § 3-401 et seq., requires that "each employer shall pay an overtime wage of at least 1.5 times the usual hourly wage." Md. Code Ann., Labor & Empl. § 3-415(a). Before recent amendments, and during Plaintiff's period of employment at D&S, the MWHL provided an exemption for employers "considered a gasoline service station because the employer is engaged primarily in selling gasoline and lubricating oil, even if the employer sells other merchandise or performs minor repair work." Md. Code Ann., Labor & Empl. § 3-415(b)(4) (repealed 2014). According to Danny and In Sook Shin, this exemption releases them from the overtime wage obligations of the FLSA. (Danny Shin Mot. Dismiss 2-3.)

While Defendants recognize that Plaintiff's cause of action is brought solely under the FLSA, and not the MWHL, Defendants offer no rationale for applying an exemption that exists only under the state law to the federal law. In fact, exemptions from the applicability of the MWHL do not limit the applicability of the FLSA and, therefore, do not exempt Defendants from the FLSA's overtime wage requirements. See Mould v. NJG Food Serv. Inc., No. JKB-13-1305, 2014 WL 2768635, at *3 (D. Md. June 17, 2014) (citing Anderson v. Sara Lee Corp., 508 F.3d 181, 195 (4th Cir. 2007)) (dismissing a state law claim pursuant to the state law exemption while maintaining theclaim under the FLSA); see also J.S. ex rel. Duck v. Isle of Wight Cnty. Sch. Bd., 402 F.3d 468, 478 (4th Cir. 2005) (discussing the Supremacy Clause, U.S. Const. art. 6, cl. 2, and the inability to "engraft state-law elements upon a federal statute"). Consequently, Defendants' motions to dismiss on the basis that gasoline service stations are exempted from the MWHL is denied.

B. Whether Agreements Between Plaintiff and Defendants Exempt Defendants from the FLSA

D&S maintains that its overtime wage obligations under the FLSA fall within the exception set forth in 29 U.S.C. § 207(g), which states that:

"No employer shall be deemed to have violated subsection (a) of this section by employing any employee for a workweek in excess of the maximum workweek applicable to such employee under such subsection if, pursuant to an agreement or understanding arrived at between the employer and the employee before performance of the work, the amount paid to the employee for the number of hours worked by him in such workweek in excess of the maximum workweek applicable to such employee under such subsection--

(1) in the case of an employee employed at piece rates, is computed at piece rates not less than one and one-half times the bona fide piece rates applicable to the same work when performed during nonovertime hours."

(D&S Mot. Dismiss 5 (emphasis in original) (footnote omitted) (quoting 29 U.S.C. § 207(g)).) D&S asserts that, because Plaintiff worked on a piece rate basis and entered into an employment contract with D&S, (Danny Shin Mot. Dismiss Ex. A), the terms of that agreement supersede the FLSA's overtime wage requirements. (D&S Mot. Dismiss 5-6.)

The remedial nature of the FLSA requires that its exemptions "'be narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within [the exemptions'] terms andspirit.'" Hurd v. NDL, Inc., No. CCB-11-1944, 2012 WL 642425, at *2 (D. Md. Feb. 27, 2012) (brackets in original) (quoting Darveau v. Detecon, Inc., 515 F.3d 334, 337-38 (4th Cir. 2008)); accord Desmond v. PNGI Charles Town Gaming, LLC, 564 F.3d 688, 691 (4th Cir. 2009). Moreover, employers bear the burden of proving "by clear and convincing evidence" that an employee qualifies for exemption. Desmond, 564 F.3d at 691; Hurd, 2012 WL 642425, at *2 (citing Clark v. J.M. Benson Co., 789 F.2d 282, 286 (4th Cir. 1986); Shockley v. City of Newport News, 997 F.2d 18, 21 (4th Cir. 1993)). Consequently, courts have held that "the issue of whether defendants are entitled to an exemption is not normally appropriate for resolution in a motion to dismiss." Farrell v. Pike, 342 F. Supp. 2d 433, 439 (M.D.N.C. 2004); see Bohn v. Park City Grp., Inc., 94 F.3d 1457, 1461 (10th Cir. 1996); Dalheim v. KDFWTV, 918 F.2d 1220, 1226 (5th Cir. 1990). This court agrees and, therefore, denies Defendants' motions to dismiss on this basis. Defendants may seek to prove the existence of a...