Campusano v. Lusitano Constr. LLC

• Decision Date: 21 November 2012
• Docket Number: No. 1529,Sept. Term, 2011.,1529
• Citation: 56 A.3d 303,208 Md.App. 29
• Parties: Roberto CAMPUSANO, et al. v. LUSITANO CONSTRUCTION LLC, et al.
• Court: Court of Special Appeals of Maryland

208 Md.App. 29

56 A.3d 303

Roberto CAMPUSANO, et al.

v.LUSITANO CONSTRUCTION LLC, et al.

No. 1529, Sept. Term, 2011.

Court of Special Appeals of Maryland.

Nov. 21, 2012.

Richard S. Ugelow, Washington College of Law, American University Law School, Washington, DC, for appellant.

No briefs submitted. Argument did not happen on behalf of the appellee.

Panel: KRAUSER, C.J., WRIGHT, and MATRICCIANI, JJ.

MATRICCIANI, J.

On February 10, 2010, appellants, Roberto Campusano, Justo Portocarrero, Ivan Mello, and David Rosales, brought suit against appellees, Lusitano Construction, LLC, Geoffrey de Oliveira (“Geoffrey”), and Francisco de Oliveira (“Francisco”), in the Circuit Court for Montgomery County. Appellants alleged violations of §§ 206 and 207 of the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. §§ 201 et seq., as well as §§ 3–502 and 3–505 of the Maryland Wage Payment and Collection Law (“Payment and Collection Law”), Md.Code (1991, 2008 Repl.Vol., 2010 Suppl.), §§ 3–501 et seq. of the Labor and Employment Article (“LE”). On November 1, 2010, the trial court entered judgment against Geoffrey and Lusitano Construction for treble damages of $57,400.00. The court's judgment did not address appellants' claims for attorney's fees and costs or their claims against Francisco. On November 10, 2010, appellants moved to amend the judgment to award attorney's fees and costs and to enter judgment in favor of Francisco for purposes of appeal. The court denied appellants' motion on September 8, 2011, and this timely appeal followed on September 15, 2011.

Questions Presented

Appellants present two questions, which we quote:

I. Is Francisco de Oliveira an employer within the meaning of the Fair Labor Standards Act and the Maryland Wage and Payment Collection Law?

II. Did the Circuit Court err by denying the Plaintiffs as prevailing parties an award of their reasonable attorney's fees and costs?

For the reasons that follow, we answer no to the first question, but we answer yes to the second question and remand for further proceedings in the Circuit Court for Montgomery County.

Factual and Procedural History

Geoffrey de Oliveira was the sole owner of Lusitano Construction, LLC, which in 2007 and 2008 was under contract to complete two interior renovation projects: the Oro Pomodoro Restaurant in Rockville, MD, and the Valley Terrace Apartments in Baltimore, MD. Appellants worked on both projects at various times as construction laborers.

Geoffrey supervised the Oro Pomodoro project while Geoffrey's father, Francisco de Oliveira, supervised the Valley Terrace project. In that capacity, Francisco set appellants' work schedule, assigned their tasks, managed supplies, maintained work logs, and “occasionally” distributed paychecks drafted by Geoffrey or Lusitano Construction.

Francisco testified that he did not hire appellants or set their wages. Portocarrero and Mallo corroborated Francisco's testimony. Rosales testified that he merely “communicated” with Francisco about employment and salary. Campusano testified that Geoffrey hired him and that he “thinks” Francisco may have had some influence on his wages because Francisco was his supervisor.

At some point in 2007, Geoffrey stopped issuing payment to appellants. Francisco told the workers that Geoffrey would pay them with money from other projects once those projects finished.¹

Francisco testified that he purchased supplies for the Valley Terrace project with personal funds, and the evidence showed that Geoffrey had an unspecified $50,000.00 line of credit with his father discharged in bankruptcy in 2009.² Campusano testified that Francisco paid some of his wages from personal funds, but Francisco denied this.³

On February 10, 2010, appellants brought suit against appellees for violations of FLSA §§ 206–207, as well as §§ 502 and 505 of the Payment and Collection Law. Appellants sought unpaid wages and overtime under FLSA § 216(b)⁴ and Payment and Collection Law § 507.2, which provides:

(a) In general.—Notwithstanding any remedy available under § 3–507 of this subtitle, if an employer fails to pay an employee in accordance with § 3–502 or § 3–505 of this subtitle, after 2 weeks have elapsed from the date on which the employer is required to have paid the wages, the employee may bring an action against the employer to recover the unpaid wages.

Appellants also sought attorney's fees and costs under FLSA § 216(b) and Payment and Collection Law § 507(b)(1).

At the conclusion of a one-day trial on October 27, 2010, the trial court found Geoffrey liable under the FLSA and the Payment and Collection Law, and found that Francisco was not an “employer” under either law. Accordingly, the court entered judgment against Geoffrey and Lusitano Construction for treble damages of $57,400.00 on November 1, 2010. The judgment did not address appellants' claims for attorney's fees or their claims against Francisco. On November 10, 2010, appellants moved to amend the judgment to award attorney's fees and costs and to enter judgment in favor of Francisco. The court denied appellants' motion on September 8, 2011, and this timely appeal followed on September 15, 2011.

Discussion

I.

Appellants argue that Francisco was an “employer” under the FLSA and the Payment and Collection Law according to the four-factor “economic reality” test of “control” developed by federal courts for the FLSA and applied in Newell v. Runnels, 407 Md. 578, 649–54, 967 A.2d 729 (2009), to the Maryland Wage and Hour Law (“Wage and Hour Law”), Md.Code (1991, 2008 Repl.Vol., 2010 Suppl.), §§ 3–401 et seq. Their argument challenges both factual findings, which we review for clear error, and conclusions of law, which we review de novo. Blackwell v. Wyeth, 408 Md. 575, 611–12, 971 A.2d 235 (2009). For the following reasons, we decide—as a matter of first impression—that the test also applies to the Payment and Collection Law.

The U.S. Court of Appeals for the Third Circuit succinctly summarized the history of the general “economic reality” test in Haybarger v. Lawrence County Adult Prob. & Parole, 667 F.3d 408, 418 n. 8 (3d Cir.Pa.2012):

The “economic reality” test is a broad test for determining whether an employment relationship exists, and is not limited to evaluating whether a supervisor is an employer for purposes of individual liability. In 1944, the Supreme Court first looked to the “underlying economic facts” to distinguish between employees and independent contractors under the National Labor Relations Act. N.L.R.B. v. Hearst Publ'ns, Inc., 322 U.S. 111, 129, 64 S.Ct. 851, 88 L.Ed. 1170 (1944) (citing N.L.R.B. v. Blount, 131 F.2d 585 (8th Cir.1942)). Seventeen years later, the Supreme Court looked to the “economic reality” of the employment relationship to hold that members of a work cooperative qualified as employees under the FLSA. Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961) (quoting United States v. Silk, 331 U.S. 704, 713, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947)) (additional citation omitted). Since then, we and other circuits have applied the economic reality test to decide whether entities qualify as employers under the FLSA. See, e.g., Hodgson [ v. Arnheim & Neely, Inc., 444 F.2d 609, 612 (3d Cir.Pa.1971) ]; Baystate Alt. Staffing v. Herman, 163 F.3d 668, 675 (1st Cir.1998); Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir.1983).

The general “economic reality” test is now nearly ubiquitous in the federal courts of appeal. See, e.g., Herman v. RSR Sec. Servs., 172 F.3d 132, 140 (2d Cir.N.Y.1999); Haybarger v. Lawrence County Adult Prob. & Parole, 667 F.3d 408, 417–18 (3d Cir.Pa.2012); Brennan v. Gilles & Cotting, Inc., 504 F.2d 1255, 1262 (4th Cir.1974); Donovan v. Grim Hotel Co., 747 F.2d 966, 971–72 (5th Cir.Tex.1984); Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965–66 (6th Cir.Mich.1991); Karr v. Strong Detective Agency, Inc., Div. of Kane Services, 787 F.2d 1205, 1207 (7th Cir.Wis.1986); Blair v. Wills, 420 F.3d 823, 829 (8th Cir.Mo.2005); Patel v. Wargo, 803 F.2d 632, 637–38 (11th Cir.Fla.1986).

Our Court of Appeals has not applied the economic reality test to the Payment and Collection law, but it has applied the test to the Wage and Hour Law because the latter is the State parallel of the FLSA. Newell, 407 Md. at 649, 967 A.2d 729. Appellants assume that the test should be applied in their case, but as the U.S. District Court for the District of Maryland rightly noted in Watkins v. C. Earl Brown, Inc., 173 F.Supp.2d 409, 416 (D.Md.2001), the Maryland Wage and Hour Law, not the Payment and Collection Law, is the state's equivalent of the FLSA. First, the Wage and Hour Law defines “employer” identically to the FLSA. Compare29 USCS § 203(d) (“ ‘Employer’ includes any person acting directly or indirectly in the interest of an employer in relation to an employee ...”) to MWHL § 3–401(b) (“ ‘Employer’ includes a person who acts directly or indirectly in the interest of another employer with an employee.”). Second, the FLSA governs primarily minimum wages and maximum hours, whereas the Payment and Collection Law sets specific terms for payment mandated elsewhere in the Wage and Hour Law.

Despite its differences from the Wage and Hour Law, the Payment and Collection Law is sufficiently similar for the economic reality test to apply. Payment and Collection Law § 501(b) defines an employer to include “any person who employs an individual in the State or a successor of the person.” The word “employ” is defined broadly by LE § 3–101(c) as “to engage an individual to work,” and the term includes “(i) allowing an individual to work; and (ii) instructing an individual to be present at a work site.” Because of this expansive definition and the Payment and Collection Law's remedial purposes, see Friolo v. Frankel, 373 Md. 501, 517–18, 819 A.2d 354 (2003); Stevenson v. Branch Banking & Trust Corp., 159 Md.App. 620, 644, 861 A.2d...