LeMASTER v. ALTERNATIVE HEALTHCARE SOLUTIONS INC.

Decision Date21 June 2010
Docket NumberCase No. 3:08-1101.
Citation726 F.Supp.2d 854
PartiesPatricia Jo LeMASTER, Terri Jo LeMaster, and Peggy McComas, Plaintiffs, v. ALTERNATIVE HEALTHCARE SOLUTIONS, INC., Mickey Ruggiero, Gia Ruggiero, Volunteer Staffing, Inc., Home Health Care of Middle Tennessee, LLC, and Baley Allred, III, Defendants.
CourtU.S. District Court — Middle District of Tennessee

OPINION TEXT STARTS HERE

COPYRIGHT MATERIAL OMITTED.

Charles P. Yezbak, III, Yezbak Law Offices, Nashville, TN, Richard J. Burch, Bruckner Burch PLLC, Houston, TX, Cynthia J. Cutler, Law Office of Cynthia J. Cutler, Nashville, TN, for Plaintiffs.

Lance B. Mayes, Nashville, TN, Thomas Michael O'Mara, O'Mara & Johnson, PLLC, Cookeville, TN, for Defendants.

MEMORANDUM

ALETA A. TRAUGER, District Judge.

Pending before the court is the Motion for Summary Judgment filed by the plaintiffs (Docket No. 61), the response filed by defendants Volunteer Staffing, Inc. and Baley Allred III (Docket No. 67), the response filed by defendant Home Health Care of Middle Tennessee LLC (Docket No. 68), and the plaintiffs' reply ( Docket No. 70). For the reasons discussed below, the plaintiffs' motion will be granted in part and denied in part.

FACTS

The defendants are all involved in an arrangement that provides nurses for long-term 24-hour in-home care, known as “private duty” nursing care. 1 Defendant Alternative Healthcare Solutions, Inc. (AHS) is a nursing and domestic staffing company that recruits nurses and refers them to home healthcare agencies and nursing homes. Together, defendants Mickey and Gia Ruggiero own 100% of AHS. Defendant Home Health Care of Middle Tennessee, LLC (HHC) provides home healthcare to patients throughout Tennessee. HHC contracted with AHS to provide Licensed Practical Nurses (“LPNs”) for some of HHC's private duty patients. AHS billed HHC for the total number of hours worked by the nurses it provided over each billing period. AHS then contracted with Volunteer Staffing, Inc. (VSI) to process its payroll and pay the nurses' wages. Defendant Baley Allred, III and his wife own 50% of VSI, and Allred also owns 50% of HHC.

The plaintiffs are LPNs who worked under this arrangement for the defendants. They were hired at different times in 2006, and they all stopped working for the defendants in March or April 2007. AHS was in charge of the hiring process, but it had to meet certain requirements set out by HHC. HHC required AHS, among other things, to have candidates complete job applications, submit references, complete a background check, complete Federal I-9 Authorization to Work forms, submit a copy of a valid nursing license, and submit a copy of a valid social security card. HHC also participated in the hiring process directly with its policy of obtaining various documents from LPN candidates, including a signed receipt of job description, a signed receipt of HHC's Employee Handbook, a signed receipt of HHC's drug policy, and a completed competency and pharmacology quiz.

Gia Ruggiero interviewed the plaintiffs for their jobs as LPNs, and Mickey Ruggiero hired them and set their pay rate. In addition to the forms discussed above, the plaintiffs had to fill out Independent Contractor Agreements (“ICAs”) with VSI. Gia informed the plaintiffs that they had to complete the ICAs to work for AHS. VSI used the agreements pursuant to advice it received from its attorney. The attorney drafted the ICAs and advised VSI on the use of independent contractors, although she never mentioned the application of the Fair Labor Standards Act to the nurses.

Once hired, the plaintiffs received work assignments from Gia Ruggiero and turned in weekly time sheet forms, provided by HHC, to AHS. AHS was the plaintiffs' point of contact for all aspects of their work. The job involved performing in-home nursing care for HHC patients and documenting the care they provided on “Private Nursing Narrative” forms given to them by HHC. The plaintiffs provided their own stethoscopes and blood pressure cuffs but otherwise did not provide any medical equipment for use at patients' homes. VSI paid the plaintiffs' wages based on the HHC time sheets that they filled out and turned in to AHS.

During this time, the plaintiffs were paid a single hourly rate for all of the hours they worked, including those beyond forty hours per week. A Department of Labor (“DOL”) investigation, prompted by a complaint from the plaintiffs, determined that the LPNs, including the plaintiffs, were employees, not independent contractors, and that AHS had violated the Fair Labor Standards Act by not paying them time and one-half for overtime. The DOL ordered AHS to pay back wages to the affected employees, but Mickey Ruggiero refused. The DOL then sent letters to plaintiffs Patricia and Terry LeMaster to inform them that it was not bringing a lawsuit against AHS to force the payment of back wages. (Docket No. 62 Ex. 2 at 40-43.) However, the letter explained that they could file a lawsuit on their own to recover the back wages. ( Id.)

The Ruggieros claimed that the affected employees from the DOL investigation were actually employees of VSI, so the DOL opened an investigation of VSI in January 2008. It found that VSI had failed to pay overtime to seven of its nearly 400 employees, 2 none of whom included the plaintiffs or any of VSI's nurse independent contractors. In June 2008, however, the DOL re-opened the investigation and determined that the relationship between AHS and the nurse independent contractors required VSI to pay overtime. VSI now admits that it was one of the plaintiffs' employers.

The plaintiffs filed this suit against Mickey Ruggiero and AHS on November 14, 2008, alleging that they violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and seeking all unpaid overtime compensation, an equal amount in liquidated damages, and attorneys' fees, costs, and expenses. The plaintiffs subsequently amended their Complaint to add claims against Gia Ruggiero, VSI, HHC, and Allred, alleging that all of the defendants were joint employers and were thus jointly and severally liable under the FLSA. (Docket No. 41.)

ANALYSIS

The plaintiffs have now filed a Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56, seeking judgment on all of their claims.

I. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) requires the court to grant a motion for summary judgment if “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” If a moving defendant shows that there is no genuine issue of material fact as to at least one essential element of the plaintiff's claim, the burden shifts to the plaintiff to provide evidence beyond the pleadings “set[ting] forth specific facts showing that there is a genuine issue for trial.” Moldowan v. City of Warren, 578 F.3d 351, 374 (6th Cir.2009); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “In evaluating the evidence, the court must draw all inferences in the light most favorable to the [plaintiff].” Moldowan, 578 F.3d at 374.

[T]he judge's function is not ... to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial.’ Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). But “the mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient,” and the plaintiff's proof must be more than “merely colorable.” Anderson, 477 U.S. at 249, 252, 106 S.Ct. 2505. An issue of fact is “genuine” only if a reasonable jury could find for the plaintiff. Moldowan, 578 F.3d at 374 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

II. Relevant Statutory Framework

[1] Congress passed the Fair Labor Standards Act in 1938 to ensure a “minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). The FLSA requires employers to pay covered employees who work more than 40 hours in one workweek a rate of one and one-half times their regular rate of pay. Id. § 207(a)(1). “Employee” is defined as “any individual employed by an employer.” Id. § 203(e)(1). ‘Employees are those who as a matter of economic reality are dependent upon the business to which they render service.’ Crouch v. Guardian Angel Nursing, Inc., No. 3:07-cv-00541, 2009 WL 3737887, at *12, 2009 U.S. Dist. LEXIS 103832, at *36 (M.D.Tenn. Nov. 4, 2009) (quoting Donovan v. Brandel, 736 F.2d 1114, 1116 (6th Cir.1984)).

[2] The statute defines an “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). Courts have defined employer broadly in light of the remedial purposes of the FLSA, basing the determination more on “economic realities” than on common law concepts of agency. Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965 (6th Cir.1991). In Dole, the Sixth Circuit held that more than one employer can be held jointly liable for FLSA violations. Id. Additionally, ‘a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages.’ Id. (quoting Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir.1983)).

Employers in violation of § 207 are liable to affected employees for the amount of unpaid overtime compensation, as well as for an equal amount in liquidated damages, reasonable attorney's fees, and costs for the action. 29 U.S.C § 216(b). Courts can, at their discretion, deny or decrease the liquidated damages award if the employer shows that it acted in good faith and that it “had reasonable...

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