Ricks v. Handi-House Mfg. Co., CIVIL ACTION NO.: 6:17-cv-89

CourtUnited States District Courts. 11th Circuit. United States District Court (Southern District of Georgia)
Writing for the CourtR. STAN BAKER UNITED STATES DISTRICT JUDGE SOUTHERN DISTRICT OF GEORGIA
PartiesHAROLD H. RICKS; ROGER SMITH; SHON BUTLER; and MALIK BRANTLEY, Administrator of the Estate of Leroy Brantley, Jr., Plaintiffs, v. HANDI-HOUSE MFG. CO.; and DONALD FLANDERS, Defendants.
Docket NumberCIVIL ACTION NO.: 6:17-cv-89
Decision Date25 March 2019

HAROLD H. RICKS; ROGER SMITH; SHON BUTLER;
and MALIK BRANTLEY, Administrator of the Estate of Leroy Brantley, Jr., Plaintiffs,
v.
HANDI-HOUSE MFG.
CO.; and DONALD FLANDERS, Defendants.

CIVIL ACTION NO.: 6:17-cv-89

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA STATESBORO DIVISION

March 25, 2019


ORDER

This matter comes before the Court on Defendants HandiHouse Manufacturing Company and Donald Flanders' Motions for Summary Judgment. (Docs. 87, 88.) The Court has reviewed the parties' briefs and supporting materials regarding Defendants' Motions. During that review, the Court resolved all factual disputes to Plaintiffs' benefit and construed the facts in Plaintiffs' favor. Even when affording Plaintiff those benefits, the Court finds that Defendants are entitled to judgment as a matter of law. To be clear, the Court does not condone the payday loan scheme at the core of Plaintiff's claims. However, no rational juror could find that HandiHouse Manufacturing Company or Donald Flanders participated in or profited from that scheme. Consequently, the Court GRANTS Defendants' Motions for Summary Judgment, (docs. 87, 88), and DIRECTS the Clerk of Court to ENTER a final judgment in favor of Defendants and to CLOSE this case.

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PROCEDURAL BACKGROUND

On June 29, 2017, Plaintiffs filed a putative class action against Handi-House Mfg. Co., Handi-House Financial Corporation, Handi-House Rent to Own, LLC, and employees Donald Flanders, James Akridge, John Wilkerson, Stephanie Flanders, and Brenda Williamson. (Doc. 1.) Alleging an illegal payday lending scheme within the manufacturing facility of Handi-House Mfg. Co., Plaintiffs initially asserted the following twelve causes of action: (1) a claim pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, against all Handi-House entities for paying wages below the federal statutory minimum; (2) a claim pursuant to the Georgia Minimum Wage Law, O.C.G.A. § 34-4-6, against all Handi-House entities for paying wages below the state statutory minimum; (3) a claim pursuant to the Georgia Industrial Loan Act, O.C.G.A. §§ 7-3-1 to -29, against all Defendants for making payday loans of an amount under $3,000.00 without a license; (4) a claim pursuant to the Georgia Payday Lending Act, O.C.G.A. §§ 16-17-1 to -10, against all Defendants for making payday loans; (5) a common law conversion claim against all Defendants; (6) a claim pursuant to O.C.G.A. § 7-4-1 against all Defendants for making usurious loans; (7) a claim pursuant to 18 U.S.C. §§ 1581, 1593A, and 1595 against all Defendants for holding Plaintiffs in debt servitude; (8) a claim pursuant to the Federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), (d), against all individual defendants for conspiring and participating in the unlawful collection of debt; (9) a claim pursuant to the Georgia RICO Act, O.C.G.A. § 16-14-1, against all individual defendants for conspiring and participating in racketeering activities; (10) a claim pursuant to 42 U.S.C. § 1981 against all Handi-House entities for civil rights violations and racial discrimination; (11) a claim pursuant to O.C.G.A. § 41-2-1 against all Defendants for creating a public nuisance; and (12) a claim for punitive damages under O.C.G.A. § 51-12-5.1.

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(Id.)

On July 27, 2018, the Court denied Plaintiffs' motion for a collective action class under FLSA because Plaintiffs failed to show there are employees similarly situated to Plaintiffs who wish to opt into a class action. (Doc. 109.) The Court denied Plaintiffs' motion to certify a class under Federal Rule of Civil Procedure 23 because Plaintiffs did not identify an administratively feasible method for identifying class members. (Id.)

On February 19, 2018, Plaintiffs moved for sanctions, arguing James Akridge and John Wilkerson, as agents of Handi-House, perpetrated the loan scheme and intentionally destroyed lists of employee loans. (Docs. 65, 65-1.) On May 15, 2018, pursuant to stipulation of the parties, the Court dismissed without prejudice all defendants except Mr. Flanders and Handi-House Mfg. Co. ("Handi-House") as well as the following two causes of action: (1) the claim in count seven, brought pursuant to 18 U.S.C. §§ 1581, 1593A, and 1595, alleging conditions of debt servitude; and (2) the claim in count ten brought pursuant to 42 U.S.C. § 1981. (Doc. 85.)

On July 11, 2018, the Court denied Plaintiffs' Motion for Sanctions because Plaintiffs failed to carry their burden of proving Mr. Flanders and Handi-House destroyed any loan lists. (Docs. 106.) On July 28, 2018, Plaintiffs requested reconsideration, and the Court conducted an evidentiary hearing on October 30, 2018. (Docs. 108, 126, 132.) On November 28, 2018, the Court again denied the sanctions Motion, even though the testimony established intentional destruction of at least one loan list by Messrs. Akridge and Wilkerson, because Messrs. Akridge and Wilkerson were no longer Defendants and there was no evidence of any involvement in the loan scheme or spoliation by Handi-House and Mr. Flanders. (Doc. 131.)

FACTUAL BACKGROUND

The Court gleans the following facts from Defendants' Statements of Material Facts,

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Plaintiffs' response, and the evidentiary record. Handi-House manufactures portable storage buildings in Swainsboro, Georgia, employing approximately 150 workers, and sells them to retailers throughout the Southeast. (Flanders Aff., doc. 87-3, ¶¶ 3, 8; Handi-House Dep., doc. 87-14, pp. 11-13.) Defendant Don Flanders purchased Handi-House in 1979 and is Chief Executive Officer ("CEO"). (Flanders Dep., doc. 87-8, p. 7.) Two former Defendants are related Handi-House companies. Formed in 1987, Handi-House Financial Corporation issues consumer loans to purchasers of Handi-House portable storage buildings. (Flanders Aff. ¶¶ 4, 5.) Formed in 2009, Handi-House Rent-To-Own, LLC, sells consumer goods on a rent-to-own basis in retail sales lots throughout the Southeast. (Id. at ¶¶ 6, 7.) Plaintiffs are current and former employees of Handi-House who earned hourly wages at the manufacturing facility within the range of $7.25 to $9.00 during the period of approximately 2013 to 2018. (Butler Dep., doc. 87-6, pp. 20-21, 31; Williamson Aff., doc. 87-15, ¶ 3; Smith Dep., doc. 87-5, p. 18; Ricks Dep., doc. 87-7, p. 24; Brantley Dep., doc. 87-4, p. 87; Brantley Aff., doc. 96-2, ¶ 7.)

It is undisputed Messrs. Akridge and Wilkerson issued payday loans to Plaintiffs and other employees at the manufacturing facility, typically charging an exorbitant fee of six dollars for every twenty dollars borrowed. (Wilkerson Dep., pp. 37-38; Brantley Aff. ¶ 4; Ricks Aff., doc. 96-3, ¶ 4.; Smith Aff., doc. 96-4, ¶ 4; Butler Dep., p. 50.) James Akridge has worked at Handi-House for forty years and is currently a sales and general manager with an annual salary of $59,020.00. (Akridge Dep., doc. 87-10, p. 7; doc. 103-2, p. 2; Handi-House Dep., p. 18; doc. 87-13, ¶ 5.) John Wilkerson, now deceased, worked at Handi-House for thirty-three years and last served as Plant Manager with an annual salary of $39,100.00. (Wilkerson Dep., doc. 87-11, pp. 9-10; Thompson Economic Report, doc. 63, p. 1.) Messrs. Akridge and Wilkerson used their

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own money to fund their loan scheme1 and split all profits. (Akridge Dep., p. 37; Wilkerson Dep., pp. 37-38, 44; Ricks Dep., p. 81.) As Plaintiffs' counsel conceded at the sanctions hearing, the loan scheme was a side venture by Messrs. Akridge and Wilkerson, and neither Handi-House nor Mr. Flanders participated in nor profited from it. (Sanctions Hr'g Tr., doc. 132, pp. 19-20.)

Messrs. Akridge and Wilkerson collected loan payments on payday. (Butler Dep., pp. 39-40.) Brenda Williamson, the payroll clerk, typically asked Mr. Akridge to sign paychecks because he was always at the plant and Mr. Flanders was frequently on Handi-House business trips. (Williamson Dep., p. 19; Handi-House Dep., pp. 19-20.) Ms. Williamson distributed the signed paychecks to department heads, and they distributed the checks to their employees. (Williamson Dep., pp. 19-20.) However, when Ms. Williamson separated the checks by department, she made a separate pile for employees listed on a sheet of paper given to her by Mr. Wilkerson. (Doc. 58-2, p. 10; Wilkerson Dep., pp. 45-46; Williamson Dep., pp. 23-29.)

The list contained the names of employees who owed Messrs. Akridge and Wilkerson money, but Ms. Williamson did not understand this or know why Mr. Wilkerson asked her to separate the checks of these employees. (Wilkerson Dep., pp. 45-46; Williamson Dep., pp. 23-29.) Messrs. Akridge and Wilkerson delivered the segregated checks to their debtor employees for endorsement, cashed the endorsed checks at the bank, paid themselves the loan balances, and remitted the remaining cash, minus any change, to the debtor employees. (Butler Dep., pp. 39-40; Akridge Dep., pp. 23-24; Smith Dep., pp. 127-28; Brantley Dep., p. 64.)

Mr. Flanders was generally aware Messrs. Akridge and Wilkerson issued loans to Handi-

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House employees but testified he did not know the loan terms, i.e., the six-dollar fee for every twenty dollars borrowed, until the filing of this lawsuit. (Flanders Dep., pp. 37-45, 58; Williamson Dep., p. 23.) He did not inquire because he believed it was not his business. (Id. at 40, 45.) Immediately upon receipt of the lawsuit, Mr. Flanders "instructed Akridge and Wilkerson that they were to discontinue all lending activities on [Handi-House] property." (Flanders Aff. ¶¶ 26-28.)

Plaintiffs contend Mr. Flanders knew about the exorbitant fees charged by Messrs. Akridge and Wilkerson. (Doc. 95, pp. 4-9.) The only evidence Mr. Flanders knew about loan terms is the testimony of Mr. Leroy Brantley, who testified he complained to Mr. Flanders a long time ago, in the 1990s, about the high loan fees Mr. Akridge charged him. (Brantley Dep., pp. 52-55.) Mr. Flanders purportedly responded, "he didn't have...

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