In re Hard-Mire Rest. Holdings, LLC
| Decision Date | 25 July 2019 |
| Docket Number | CASE NO. 18-31575-BJH |
| Citation | 605 B.R. 739 |
| Parties | IN RE: HARD-MIRE RESTAURANT HOLDINGS, LLC f/d/b/a Campuzanos Dallas, LLC, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
Eric A. Liepins, Eric A. Liepins, P.C., James P. Moon, James P. Moon, PLLC, Dallas, TX, for Debtor.
Related to ECF No. 57
I. INTRODUCTION
Hard-Mire Restaurant Holdings, LLC, f/d/b/a Campuzanos Dallas, LLC (the "Debtor "), is a reorganized debtor under Chapter 11 of the Bankruptcy Code. The Debtor, at all relevant times, operated a Mexican food restaurant in Dallas, Texas known as "Campuzanos." Prepetition, the Debtor employed Jose Jorge Dominguez ("Claimant " or "Mr. Dominguez ") for about 16 months, as either a cook or a kitchen manager—depending upon whose version of the facts one believes—paying him weekly on a salary basis. Mr. Dominguez did not complain about his pay while employed by the Debtor, but he sued the Debtor in federal court a few months after he was terminated, alleging that he had worked significant overtime on a weekly basis, for which he was never paid. He alleged that $101,253.75 in damages was owing to him, arising from the Debtor's failure to pay him overtime wages in accordance with the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (the "FLSA "). Before the lawsuit could proceed to trial, the Debtor filed its Chapter 11 bankruptcy case. Mr. Dominguez then filed a proof of claim based on his lawsuit, to which the Debtor objected.1 The court held a hearing on the Objection on June 12, 2019 (the "Hearing "). The court heard testimony from seven witnesses (plus considered certain deposition excerpts submitted into evidence) and also allowed approximately a dozen documents into evidence. For the reasons explained below, the court will overrule the Objection, in part. Specifically, the court will allow Claim No. 6 in the reduced amount of $19,357.64, comprised of $9,678.82 in unpaid overtime wages and $9,678.82 in statutory liquidated damages, plus reasonable attorneys' fees to be determined in a separate opinion . This constitutes the court's findings and conclusions in support of the court's ruling, as required by Rule 7052 and 9014 of the Federal Rules of Bankruptcy Procedure in a contested matter.
II. JURISDICTION, VENUE, AND STATUTORY AND CONSTITUTIONAL AUTHORITY
Subject matter jurisdiction exists in this bankruptcy proceeding pursuant to 28 U.S.C. § 1334(b), and this court has authority to exercise bankruptcy subject matter jurisdiction pursuant to 28 U.S.C. § 157(a) and the Standing Order of Reference of Bankruptcy Cases and Proceedings (Misc. Rule No. 33 ) for the Northern District of Texas dated August 3, 1984. The Objection presents a "core" matter under 28 U.S.C. §§ 157(b)(2)(B), and this court has statutory and Constitutional authority to enter final orders and judgments in this proceeding.
III. FINDINGS OF FACT
The Debtor filed its Chapter 11 case on May 4, 2018 (the "Petition Date "). Mr. Dominguez worked for the Debtor for approximately 67 weeks, from mid-July 2014 through the end of October 2015.2 Mr. Dominguez was terminated from his job near the end of October 2015 for reasons that are not relevant to this opinion.
After he was terminated, Mr. Dominguez sued the Debtor, its principal, and an affiliated entity in the District Court for the Northern District of Texas on January 18, 2016, Dominguez v. Kincaid Inc. , Civ. Case No. 3:16-cv-00143-L (the "Lawsuit "). Before the Lawsuit could proceed to trial, the Debtor filed its bankruptcy case.
It its Schedule E/F filed with the court on May 25, 2018, the Debtor lists Mr. Dominguez as holding two claims, each marked as "contingent" and in an unknown amount.3
Mr. Dominguez timely filed Claim No. 6 on August 23, 2018 (the "Claim "). Attached to the Claim was a copy of the 8-page "Complaint Under 29 U.S.C. §§ 201 - 216 Overtime Violations" that had been filed with the District Court, which contained information regarding Mr. Dominguez's alleged claim and the resulting damages. The face of the Claim asserted $101,253.75 as the amount owing for "wages and liquidated damages - see attached FLSA suit."
The Debtor filed its one-and-a-half-page Objection to the Claim on March 11, 2019, merely arguing that "[t]he Debtor denies that any violation of the Fair Labor Standards Act occurred as to Mr[.] Dominguez " and "[t]he Debtor objects to [the] claim of Dominguez until this court makes a determination of the amount if any owed to Dominguez ."4
Mr. Dominguez responded to the Objection on April 10, 2019 [ECF No. 63] (the "Response "). The Response complains, among other things, that the Objection wholly fails to comply with Local Bankruptcy Rule 3007-1, which requires that every objection to a claim "...shall state with particularity the basis for the objection."5 The Response also provided significant briefing to the court regarding the FLSA.
The court then held the Hearing, after which it took the matter under advisement.
At the Hearing, the parties stipulated to the following facts:6 (a) the court has jurisdiction over this case; (b) Mr. Dominguez was an employee of Campuzanos Dallas, LLC;7 (c) Campuzanos Dallas, LLC was a covered enterprise subject to the FLSA during the time that Mr. Dominguez was employed by it; and (d) Mr. Dominguez was employed by Campuzanos Dallas, LLC during the years 2014 and 2015.
At the Hearing, it became clear for the first time that the Debtor's sole defense to the Claim was that Mr. Dominguez was exempt from the overtime pay requirements of the FLSA because, under 29 U.S.C. § 213, Mr. Dominguez was a salaried executive employee —i.e. , a manager of Campuzanos' kitchen . Mr. Dominguez disagreed, arguing that he was merely a cook and, as such, was entitled to overtime pay.
The evidence on this point was that Mr. Dominguez was hired July 19, 2014 at a weekly salary of $550 per week.8 All documentary evidence reflects that he was a cook.9 He received a raise to $650 per week on September 13, 2014.10 Then another raise to $700 per week on March 21, 2015, where his salary stayed until he was terminated near the end of October 2015.11 The court notes anecdotally that if Mr. Dominguez worked 40 hours per week (which he states he did not—he estimates he worked on average 71 hours per week during his entire employment with the Debtor), then his hourly pay rate would have been: (a) $13.75 per hour from July 19, 2014-September 6, 2014 ($550 per week divided by 40 hours); (b) $16.25 per hour from September 13, 2014-March 14, 2015 ($650 per week divided by 40 hours); and (c) $17.50 per hour from March 21, 2015 until his termination in October or November 2015 ($700 per week divided by 40 hours). These facts alone might suggest that Mr. Dominguez was, in fact, no ordinary cook because—by comparison—the other cooks at the Debtor's restaurant were earning on average between $8 and $11 per hour (and, additionally, were rarely if ever working overtime).12 On the other hand, if Mr. Dominguez truly worked 71 hours per week, then his hourly wage would have been: (a) $7.75 per hour from July 19, 2014-September 6, 2014 ($550 per week divided by 71 hours); (b) $9.15 per hour from September 13, 2014-March 14, 2015 ($650 per week divided by 71 hours); (c) $9.86 per hour from March 21, 2015 until his termination in October or November 2015 ($700 per week divided by 71 hours). Mr. Dominguez is seeking overtime for 67 weeks (he was terminated in the middle of his 68th week).
The court finds that, of the 67 weeks Mr. Dominguez worked for the Debtor, he worked eight weeks at the salary of $550 per week (total $4,400 of pay); he worked 27 weeks at the salary of $650 per week (total of $17,500 of pay); and he worked 32 weeks at the salary of $700 per week (total of $22,400 of pay).13 This totals $44,350 of aggregate pay over 67 weeks . If one divides $44,350 of aggregate pay over 67 weeks, this yields an average salary per week of $661.94 per week. If one divides $661.94 salary per week by a 71-hour workweek, this would reflect an effective hourly rate of $9.32 per hour over Mr. Dominguez's entire employment term with the Debtor. But if Mr. Dominguez falls under FLSA's ambit for overtime, he should have received additional compensation for all hours worked in excess of 40 hours each week (i.e. , 31 hours each week). "Time-and-a-half" of a $9.32 hourly rate would be $13.98 per hour for 31 hours each week ($4.66 per hour more than Mr. Dominguez received). Thus, if Mr. Dominguez worked 31 hours of overtime for 67 weeks, this would equal 2,077 hours of overtime, which should have received $4.66 per hour more than what Mr. Dominguez received (and 2,077 times $4.66 equals $9,678.82).14
More on this computation later—which is significantly different from Mr. Dominguez's proof of claim's monetary assertion.
Many witnesses credibly testified that a Mr. Jorge Vazquez (who did not testify; it was represented that he left the restaurant within about 30 days after Mr. Dominguez left) was the manager in charge of the kitchen (doing all of the hiring and firing of kitchen employees and granting days off when employees requested it), and Mr. Dominguez was second-in-charge of the kitchen whenever Mr. Vazquez was not there. In addition to Mr. Vasquez, Campuzanos also employed a separate, front-of-the-restaurant manager named Barto Morales while Mr. Dominguez was employed at the restaurant. The evidence indicated that the kitchen manager, Mr. Vazquez, earned $1,300 per week—obviously significantly more than Mr. Dominguez.15 The evidence reflected that Mr. Dominguez had some responsibilities beyond that of a typical cook. He dealt with vendors some (ordering food), he consulted regarding menu items and created some recipes, and, again, he was second-in-charge if...
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