Rodriguez v. Capital Commercial Solutions, LLC

• Decision Date: 07 September 2017
• Docket Number: Case No. 1:17cv112
• Citation: 353 F.Supp.3d 452
• Parties: Manuel RODRIGUEZ, et al., Plaintiffs, v. CAPITAL COMMERCIAL SOLUTIONS, LLC, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

353 F.Supp.3d 452

Manuel RODRIGUEZ, et al., Plaintiffs,

v.CAPITAL COMMERCIAL SOLUTIONS, LLC, et al., Defendants.

Case No. 1:17cv112

United States District Court, E.D. Virginia, Alexandria Division.

Signed September 7, 2017

ORDER

T.S. Ellis, III, United States District Judge

Plaintiffs are eighteen (18) construction workers, each of whom sued their former employers and/or supervisors, Capital Commercial Solutions, LLC ("CCS"). CCE Specialties, LLC ("CCE"), Ixel R. Morales ("Morales"), and Keren Torres ("Torres"), for violations of the minimum wage and overtime provisions of the Fair Labor Standards Act ("FLSA"), breach of contract and conversion. (Pls.' Am. Compl.) (Doc. 7.) Plaintiffs settled their claims with defendant CCE, who appeared in this matter and agreed to pay all of the plaintiffs' alleged, "actual" damages. See Order Approving Settlement, July 17, 2017 (Doc. 42). Plaintiffs now seek liquidated damages under the FLSA against the defaulting defendants CCS, Morales and Torres.

Plaintiff's motion for default judgment (Doc. 43), which seeks $ 44,749.74 in liquidated, FLSA damages, was referred to Magistrate Judge Anderson for a hearing and entry of a Report and Recommendation ("Report"). Judge Anderson filed his Report on August 11, 2017, recommending that the plaintiffs be awarded $ 39,096.25 in liquidated damages—$ 5,653.49 less than the plaintiffs requested. (Doc. 48.) Eight of the plaintiffs objected to Judge Anderson's Report, claiming that he improperly calculated a portion of their overtime wages. (Doc. 49.) Their objection is now before the Court.

Distilled to its essence, plaintiffs argue that Judge Anderson erred by using the minimum wage as opposed to their contracted rates of pay when calculating their overtime wages for the weeks they were paid nothing by their employers. For the reasons set forth below, plaintiffs are correct and their objection must be sustained.

The FLSA "generally requires employers to compensate employees at the overtime rate for all work performed over 40 hours per week."¹

Roy v. Cty. of Lexington , 141 F.3d 533, 538 (4th Cir. 1998) ; see also Flood v. New Hanover Cty. , 125 F.3d 249, 251 (4th Cir. 1997) ("As a general rule, the FLSA provides that an employer may not employ an employee for a workweek longer than forty hours unless it pays its employee one and one-half times the employee's ‘regular rate’ for all hours in excess of forty."). Employees are due overtime compensation "regardless of whether they work on an hourly, 29 C.F.R. § 778.110, piece-rate, 29 C.F.R. § 778.111, day or job rate, 29 C.F.R. § 778.112, salary, 29 C.F.R. § 778.113, commission, 29 C.F.R. §§ 778.117 to 778.120, or other basis." Regan v. City of Charleston, S.C. , 131 F.Supp.3d 541, 546 (D.S.C. 2015). An employee's "regular rate of pay" is the basis for calculating his overtime rate.

The Department of Labor's regulations, quoting the Supreme Court's decision in Walling v. Youngerman–Reynolds Hardwood Co. , 325 U.S. 419, 424–25, 65 S.Ct. 1242, 89 L.Ed. 1705 (1945), have the following to say about the regular rate of pay: "Once the parties have decided upon the amount of wages and the mode of payment the determination of the regular rate becomes a matter of mathematical computation." 29 C.F.R. § 778.108. Thus, when the parties have contractually agreed to an hourly rate, as opposed to a weekly, monthly or annual rate, that hourly rate is the regular rate of pay. See 29 C.F.R. § 778.110 ("If the employee is employed solely on the basis of a single hourly rate, the hourly rate is the ‘regular rate.’ ");² see also Hunter v. Sprint Corp. , 453 F.Supp.2d 44, 57 (D.D.C. 2006) ("[T]he regular rate for an hourly rate contract is the hourly rate specified by the contract."). Here, plaintiffs contracted with their employers to be paid a certain amount per hour. During some weeks, plaintiffs were paid the agreed-upon-rate; during others they were paid nothing.³ No one contends that Judge Anderson erred in calculating overtime for the weeks plaintiffs were paid the hourly rate as specified in their oral contract(s); but plaintiffs believe Judge Anderson erred by using the minimum wage ($ 7.25) instead of the contracted hourly rate in calculating their regular rate of pay for the weeks they were paid nothing. They are right.

The FLSA establishes a statutorily mandated floor, below which an employer's conduct cannot fall. But the FLSA does not preclude the parties from bargaining for hourly wages above the minimum wage. Here, the employees negotiated their hourly rate and were, in fact, paid their contracted wage for several weeks. Their employers cannot unilaterally reset the plaintiffs' regular rate of pay from the contracted hourly rate to the federally-mandated minimum wage by simply refusing to pay them. To hold otherwise would deprive the plaintiffs of the benefit of their bargain and reward employers for violating the FLSA. The FLSA does not contemplate such a perverse result; and therefore, the established, contracted hourly rate should have been used instead of the minimum wage in calculating the plaintiffs' overtime for the weeks they were not paid by their employers.⁴

Accordingly, and for good cause,

It is hereby ORDERED that plaintiffs' objection (Doc. 49) to the Magistrate Judge's Report is SUSTAINED.

It is hereby ORDERED that the factual findings of the Report (Doc. 48) are ADOPTED, and the legal conclusions are ADOPTED IN PART as modified by this Order.

It is further ORDERED that final judgment will be entered against CCS, Morales, and Torres in the amount of $ 44,749.74.

It is further ORDERED that within fourteen (14) days of the date of this Order, plaintiffs' counsel may file a motion requesting additional attorneys' fees and costs for their efforts in obtaining default judgment against defendants CCS, Morales and Torres.

The Clerk is directed to provide a copy of this Order to all counsel of record, and to place this matter among the ended causes.

PROPOSED FINDINGS OF FACT AND RECOMMENDATIONS

John F. Anderson, United States Magistrate Judge

This matter is before the court on a motion for default judgment filed by plaintiffs Manuel Rodriguez, Juan Rodas, Juan Flores Lopez, Jose Rivera, Pedro Orellana, Jose Benitez, Jaime Alarcon, William Orellana, Vladimir Condori, Kenny Barriantos, Indira Barriantos, Hugo Bermudez, Sandra Bonilla, Cesar Duran, Hermes Marulanda, Ruth Monje, Marcos Flores, and Bernardo Martinez (collectively "plaintiffs")¹ against defendants Capital Commercial Solutions. LLC ("CCS"). Ixel R. Morales ("Morales"), and Keren Torres ("Torres") (collectively "defendants"). (Docket no. 43). Pursuant to 28 U.S.C. § 636(b)(1)(C), the undersigned magistrate judge is filing with the court his proposed findings of fact and recommendations, a copy of which will be provided to all interested parties.

Procedural Background

On January 26, 2017, certain plaintiffs filed a complaint against defendants and CCE Specialists, LLC ("CCE"), alleging violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. , and certain state law claims. (Docket no. 1). CCE waived service of this complaint (Docket nos. 3, 4) and filed its answer asserting crossclaims against CCS, Morales, and Torres on March 30, 2017 (Docket no. 6). Service of the first complaint was not completed on CCS, Morales, or Torres. On March 30, 2017, the District Judge entered a Scheduling Order directing plaintiffs to serve all defendants that had not been served before April 12, 2017. (Docket no. 10). The Scheduling Order also directed cross-claimant to serve all cross-defendants by April 12, 2017, and further ordered all parties required to file a responsive pleading to do so within ten days of being served. (Id. ).

Plaintiffs, along with Carlos Molina and Jhom Montano, filed the amended complaint, on behalf of themselves and all others similarly situated, on March 31, 2017 against defendants and CCE alleging violations of the FLSA and various Virginia state laws. (Docket no. 7) ("Am. Compl."). Specifically, the amended complaint alleges that defendants failed to pay plaintiffs minimum and overtime wages as required by the FLSA. (Am. Compl. ¶ 2). Plaintiffs also assert claims for breach of contract against CCS (Am. Compl. ¶¶ 165–69), and a claim of conversion against CCS and Morales (Am. Compl. ¶¶ 170–71). CCE filed an answer to the amended complaint on April 5, 2017. (Docket no. 15). During May and June 2017, plaintiffs and CCE engaged in discovery, and filed a joint motion to approve their settlement agreement on June 30, 2017 (Docket no. 36), which the court adopted on July 17, 2017 (Docket no. 42).² Pursuant to the settlement agreement, CCE agreed to settle plaintiffs' claims against it for $ 57,455.83 in compensatory damages, plus $ 35,400 for attorney's fees and costs. (Id. ).³ Accordingly, plaintiffs do not bring this motion for default judgment against CCE.

On April 4, 2017, summonses were issued for service on CCS, Morales, and Torres. (Docket no. 12). On April 10, 2017, a return of service indicating that Torres, Morales, and CCS had been served was filed. (Docket no. 16). This return indicated on April 5, 2017 at 5750 General Washington Drive, Alexandria, Virginia 22312, Torres and Morales were served personally, and that CCS was served through personal service on Morales, its registered agent. (Id. ). Pursuant to the Scheduling Order (Docket no. 10), CCS, Torres, and Morales were to file responsive pleadings by April 17, 2017, ten days after service of process. CCS, Torres, and Morales have failed to file a responsive pleading, and the time for doing so has expired.

On May 1, 2017, plaintiffs requested entry of default against defendants (Docket no. 20), which the Clerk of Court entered on May 2, 2017 (Docket no. 21). In the Order granting plaintiffs' and CCE's proposed settlement agreement, the District Judge directed plaintiffs to file a motion for default judgment and memorandum in support by July 28, 2017. (...