Scalia v. KDE Equine, LLC
| Decision Date | 11 September 2020 |
| Docket Number | Civil Action No. 3:15-CV-562-CHB |
| Citation | 486 F.Supp.3d 1089 |
| Parties | Eugene SCALIA, Secretary of Labor, United States Department of Labor, Plaintiff, v. KDE EQUINE, LLC, d/b/a/ Steve Asmussen Stables and Steve Asmussen, Defendants. |
| Court | U.S. District Court — Western District of Kentucky |
Matt S. Shepherd, Thomas J. Motzny, U.S. Department of Labor, Nashville, TN, for Plaintiff.
Clark O. Brewster, Mark B. Jennings, Mbilike Mwafulirwa, Brewster & De Angelis, PLLC, Tulsa, OK, Kelleene A. Holden, Dressman Benzinger LaVelle PSC, Cincinnati, OH, Kent Wicker, Kayla M. Campbell, Dressman Benzinger LaVelle PSC, Louisville, KY, for Defendants.
This matter is before the Court for disposition after a bench trial. Plaintiff (the Secretary of Labor) seeks an award of back wages under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA") for more than 100 employees1 who worked for Defendants KDE Equine, LLC d/b/a Steve Asmussen Stables ("KDE") (a horse training business) and Steve Asmussen (the principal of KDE and a professional thoroughbred horse trainer). [See R. 129-4 at 28:1-4] Plaintiff seeks these back wages for the period that Defendants produced payroll records covering (June 25, 2013 to December 2015) as well as the period thereafter, for which Defendants did not produce payroll records (from January 1, 2016 to the present). [R. 128 at pp. 13, 14] Plaintiff also seeks an injunction restraining future violations of the FLSA. The Court now issues its findings of fact and conclusions of law in accordance with Federal Rule of Civil Procedure 52(a)(1) and (c).
By way of background, Steve Asmussen is a successful thoroughbred horse trainer.
He and his business (KDE) train thoroughbred racehorses across the United States. As it turns out, however, Asmussen is a much better horse trainer than he is an employment record keeper, given his long history with the Department of Labor. In 2013, after an investigation by the DOL into Asmussen's horse training business in New York, Defendants entered into a Consent Judgment with the DOL in which they agreed to pay back wages and further agreed to entry of an injunction requiring their future compliance with the FLSA. That injunction was entered on January 24, 2013, by the United States District Court for the Eastern District of New York. Just two and a half years after entry of that injunction, the DOL filed suit in this case, alleging that Defendants continue to flout FLSA laws. This time, the FLSA violations are related to their training operations in Kentucky. As explained in detail below, the Court generally agrees with the DOL (except as to the allegations of minimum wage violations).
The Court concludes that the Plaintiff has proven his claims for violations of the overtime and recordkeeping provisions of the FLSA. However, the Court finds that Defendants are entitled to judgment on the Plaintiff's claim for violations of the FLSA's minimum wage provision. The Court will deny Defendants' Motion for Judgment except as to the minimum wage claim; grant judgment to the Plaintiff on the other claims; grant the request for an injunction; require Defendants to produce additional payroll records; require the Plaintiff to recalculate the damages in accordance with the principles outlined herein; give Defendants an opportunity to object to the recalculated damages; and issue a separate judgment in accordance with this opinion after receiving the new damages calculations and any objections thereto.
Prior to trial, the parties stipulated that the employees were non-exempt and were required to be paid overtime compensation. [See R. 64] These employees worked for the Defendants as "hot walkers" and/or "grooms" at various times during the relevant time period. [See R. 64] Hot walkers cool down horses after a training session by walking them around the track; grooms ready the horses for their next training session, handle the horses for races, and clean the horses' stalls. [See R. 129-4 at 46:1–49:25]. Most employees (both grooms and hot walkers) live in the racetracks in rooms located above and at the ends of the horse barns. [R. 129-4 at 49:11-24]
A. General Compensation Structure for Both Hotwalkers and Grooms
Asmussen testified that grooms were paid $900.00 and (after a pay raise) $1,000.00 every two weeks, while hot walkers were paid $652.00 every two weeks. [R. 129-4 at 59:15–19; 62:12–14] Pete Belanto (an accountant who worked for KDE processing its payroll and who testified by deposition designation under Fed. R. Civ. P. 30(b)(6) ) testified that Defendants paid the employees "a guaranteed minimum" plus extra sums for performing specific tasks. [Compare R. 129-4 at 618:15–619:5 with R. 129-4 at 87:5–10] Belanto and Asmussen described these bi-weekly lump sums as pay for a set schedule of regular and overtime hours as follows:
[R. 129-4 at 104:14–21; 620:6–10; 674:6–14] Asmussen testified that the salaries did not vary with the hours the employees worked and did not change even if employees worked fewer hours than the schedule (which he characterized as a "schedule of the maximum hours they may work"), and explained that the employees were "paid a salary to exceed the hours in which they work." [R. 129-4 at 64:11–65:13; 87:6–7] Several employees, along with Assistant Trainers Galen Pruitt and Scott Blasi (who held management positions), likewise testified that employees received the salaries even if they worked fewer hours.2 [R. 129-4 at 180:18–181:1; 206:6–10; 253:3–9; 314:5–13; 381:9–17; 422:13–17] Indeed, two of the grooms agreed on cross-examination that the time records that they kept were not what determine their salaries, and that the guaranteed schedule is what determines their pay. [R. 206 at 11-14; 216:12–25]
As mentioned, in addition to the "guaranteed minimum salary," both grooms and hot walkers were paid additional sums for performing "extra" tasks, such as walking a horse to a race, feeding and watering horses, holding horses for the blacksmith, and doing laundry. [R. 129-4 at 87:8–10; 65:14–65:6; 307:2–308:17] According to Belanto, sometimes these tasks were done during "normal hours," and sometimes they were done "later on in the day." [R. 129-4 at 630:13–16; 631:17–19] It is clear from the testimony that at least some of the extras were done outside the normal schedule of working hours. For example, Pruitt testified that the horses were fed at 11:00 a.m., which is outside the scheduled hours for both hot walkers and grooms. [R. 129-4 at 363:22–23]
Asmussen testified that employees were always paid "[a] set amount that exceeds the hours in which [sic] the task takes" for such extras. [R. 129-4 at 66:3–5] As the Court's previous Memorandum Opinion found, Belanto testified that the set amounts "would always compensate the employees at a rate of at least time and a half." [R. 74 at p. 3 ()] Belanto declined to characterize these payments as a flat fee, explaining that "[i]t's an hourly deal" and that Defendants "estimate ... the amount of hours it will take to do" a task and then paid time and a half on that estimate. He further explained that if employees performed the task in less time than the estimate, they received the full amount according to the estimate, while if it took longer (which he testified it seldom does), employees would get paid more. [R. 129-4 at 631:22–632:10] The Court notes, however, that many if not all of these purportedly estimated–hours–based payments for extras were not multiples of 8 or 9 (the purported hourly rates for straight-time hours) nor 12 or 13.50 (which would be 1.5 times the respective straight-time rates). [See, e.g. , 129-4 at 66:3–7 (); 630:2–6 (testifying that two extra hours corresponded to $25.00)]
Whether performed in "straight-time" (non-overtime) hours or in overtime hours, it is clear Defendants did not track the actual time employees spent working their normal schedules or performing these extra tasks. Employees did fill out at least some timesheets for the relevant period. But as discussed below, it is abundantly clear that the timesheets were highly inaccurate to the point of being almost unusable (despite the fact that, according to at least one hot walker, the foremen told the hot walkers how many hours they had worked on the Wednesday before payday, and that was the number of hours that hot walkers turned in and the foremen reported). [R. 129-4 at 166:21–25] For example, at least one employee testified that he filled out his timesheets for the Thursday and Friday before pay period in advance. [R. 129-4 at 166:1-25] Further, Asmussen himself admitted at trial to numerous specific examples of the timesheets not matching the payroll records. [R. 129-4 at 67:1-87:7] In fact, he testified he would not be surprised if the timesheets "never" matched the times listed on the payroll records. [R. 129-4 at 70:3-8] Pruitt testified that if a hot walker finished his work an hour or two earlier than normal, he or she would record on the timesheet the set schedule rather than the actual hours worked. [R. 129-4 at 318:9–20] When asked by the Court what the purpose of the timesheet was given that it only recorded the schedule and not the reality of actual hours worked, Pruitt responded "payroll," and agreed that Defendants would pay the employees according to the set schedule regardless of what the timesheet reflected, but explained, "you got to have names, employees' names." [R. 129-4 at 381:23–382:5] Blasi similarly testified...
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