Herman v. Palo Group Foster Home, Inc.

• Decision Date: 21 August 1997
• Docket Number: No. 1:96 CV 280.,1:96 CV 280.
• Citation: 976 F.Supp. 696
• Parties: Alexis HERMAN, Secretary of Labor, United States Department of Labor (successor to Robert Reich), Plaintiff, v. PALO GROUP FOSTER HOME, INC., a Michigan Corporation; Abraham Joshua, Individually, and Doing Business as Ramsdell Foster Care, and Ramsdell Foster Care, Defendants.
• Court: U.S. District Court — Western District of Michigan

976 F.Supp. 696

Alexis HERMAN, Secretary of Labor, United States Department of Labor (successor to Robert Reich), Plaintiff, v. PALO GROUP FOSTER HOME, INC., a Michigan Corporation; Abraham Joshua, Individually, and Doing Business as Ramsdell Foster Care, and Ramsdell Foster Care, Defendants.

No. 1:96 CV 280.

United States District Court, W.D. Michigan.

August 21, 1997.

COPYRIGHT MATERIAL OMITTED

Denise C. Hockley-Cann, J. Davitt McAteer, Richard J. Fiore, United States Department of Labor, Office of the Solicitor, Chicago, IL, for Plaintiff.

John H. Hess, Hess & Hess, P.C., Grand Rapids, MI, for Defendants.

AMENDED OPINION¹

ENSLEN, Chief Judge.

Plaintiff Alexis Herman, Secretary of Labor for the United States Department of Labor (DOL),² brings this civil action to enforce the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201-219 (1997) [hereinafter "FLSA" or "the Act"], on behalf of several employees of Palo Group Foster Home, Inc. (hereinafter "Palo") and Ramsdell Foster Care (hereinafter "Ramsdell"), seeking unpaid back wages, liquidated damages, and injunctive relief. Defendants are Abraham Joshua, the President of Palo and Owner/Administrator of Ramsdell, as well as the two business entities themselves. This matter is before the Court on plaintiff's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56(c), or, in the alternative, for partial summary judgment with regard to liability. Plaintiff alleges that defendants have violated FLSA by failing to adhere to the minimum wage, overtime, and record-keeping provisions of the Act. Upon review, the Court finds that no genuine issues of material fact remain for resolution, and, therefore, grants plaintiff's motion for summary judgment.

A. STANDARD

The purpose of the summary judgment procedure is to "pierce the pleadings and assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indust. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed. R. Civ. Pro, note following Rule 56). Thus, summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). On a Rule 56 motion, the Court cannot resolve issues of fact, or weigh the evidence submitted, but rather is empowered to determine only whether such issues exist. Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir.1987). Furthermore, in reviewing the evidence, the Court must view the "`inferences to be drawn from the underlying facts ... in the light most favorable to the party opposing the motion."' Matsushita Electric Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)).

The moving party, here the plaintiff, carries the initial burden of informing the Court of the basis for its motion and of identifying those portions of the record which demonstrate the absence of a material issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). However, "[w]hen a motion for summary judgment is made and supported as provided by this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided ..., must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. Pro. 56(e). If after adequate discovery, however, the Court determines that "the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356 (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)).

B. BACKGROUND

The Court begins by noting that there is a vast disparity between the body of evidence presented by plaintiff and that presented by defendants. In support of her motion for summary judgment, the Secretary has presented the Court with numerous pieces of documentary evidence, including: affidavits from each of the employees on whose behalf this suit was brought, affidavits from the investigating agents at the DOL, and several documents containing defendants' admissions. Attached as supporting exhibits to these documents are pay stubs, work schedules, job descriptions, and correspondence between the DOL and defendants spanning an 11-year period. Defendants, in response, have provided the Court with only three uncertified documents, which are virtually meaningless without sworn affidavits to explain the circumstances of their origin. As they are, it is unclear to the Court to what extent these documents are probative of anything, much less supportive of, defendants' opposition to summary judgment. Indeed, they appear to support plaintiff's case that defendants were fully aware of the requirements of FLSA when these claims accrued. Nevertheless, the Court considers them to the extent that they are relevant. The effect of presenting such scant evidence, however, is that the better part of plaintiff's evidence goes unrebutted.

Palo and Ramsdell are two business entities which provide adult foster care to the sick, aged, and mentally ill in western Michigan. Defendant Abraham Joshua, the president of the now defunct Palo, and owner and administrator of Ramsdell, was at all times relevant to this proceeding the primary individual in charge of establishing both entities' personnel practices. In 1983, defendant Joshua's business practices first came under DOL scrutiny when the DOL investigated Palo. During that investigation, the DOL discovered violations of the Act's minimum wage and overtime requirements which reflected $1,073.02 in unpaid wages to Palo employees. The DOL Compliance Officer also discovered that defendants had failed to keep the records required by the Act. During a final conference with DOL agents, the Compliance Officer informed Mr. Joshua of these deficiencies. At the conclusion of that meeting, Mr. Joshua agreed to future compliance with the requirements of the Act.

The DOL revisited defendants Joshua and Palo in 1985. Investigating defendants' activities for the period of 1983-1985, the DOL again believed that defendants Joshua and Palo were in violation of the Act. Mr. Joshua was again informed of the requirements of the Act relevant to his business by DOL agents. Specifically, the agents discussed the Act's requirement that, in order to claim credit for meals or lodging provided to his employees, Mr. Joshua was required to keep accurate records of the actual costs of those services. The agents also stated that any credits approved for the periods being investigated were only applicable to offset past unpaid wages. In order to offset future wages, such records would be required. To reiterate the point, the agents provided Mr. Joshua with informational pamphlets issued by the DOL detailing the application of the Act to facilities like Palo.

The DOL again initiated an investigation of defendant Joshua's business endeavors at Palo in 1995. This time, however, the DOL also probed Ramsdell, noting that Joshua had a hand in that organization as well. As a result of that investigation, the DOL Compliance Officer found three ways in which the defendants' practices resulted in undercompensation of their employees: 1) defendants failed to consider the hours worked during sleeping shifts compensable; 2) defendants paid their employees set wages for every shift regardless of the number of hours they actually worked; and finally 3) defendants had taken deductions for the provisions of meals and lodging, despite the fact that they could not provide records of the actual costs of those services in accordance with the Act. In reconstructing the back wages due the Palo and Ramsdell employees, the DOL agent determined that the Palo employees were owed $47,509.27 in unpaid wages for the period between April 8, 1993 and June 1, 1996 and Ramsdell employees were owed $13,044.39 for the period between May 1993 and April 20, 1996. In making these calculations, Compliance Officer Charlene Babcock allowed the employers some deductions for the provision of facilities despite the fact that no records supporting such deductions were produced.²

On April 8, 1996, plaintiff commenced the instant action against defendants Abraham Joshua, Palo Group Foster Care, Inc., and Ramsdell Foster Care.

C. LIABILITY

The Fair Labor Standards Act sets the federal minimum wage and overtime standards for the majority of employers in the United States. Under the Act, employers are generally required to compensate their employees at or above the stated minimum wage for the first 40 hours of work and at one and one-half times the employee's regular wage for overtime. Id. at §§ 206, 207; Wilson-Jones v. Caviness, 99 F.3d 203 (6th Cir.1996). Though certain exemptions to these requirements exist, the burden falls upon the employer to prove that an exemption is applicable, Douglas v. Argo-Tech Corp., 113 F.3d 67 (6th Cir.1997), and those exemptions are to be narrowly construed against the employer seeking to assert them. Auer v. Robbins, ___ U.S. ___, ___, 117 S.Ct. 905, 911, 137 L.Ed.2d 79 (1997) (citing Arnold v. Ben Kanowsky Inc., 361 U.S. 388, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960)).

1. FLSA Applicability

To state a prima facie case to recover back pay under FLSA, plaintiff must satisfy the threshold requirements for FLSA...