Al Stewart v. Loving Kindness Healthcare Sys., Civil Action No. 2:20-cv-1087-RJC

CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
Writing for the CourtJudge Robert J. Colville
Docket NumberCivil Action No. 2:20-cv-1087-RJC
Decision Date16 February 2021


Civil Action No. 2:20-cv-1087-RJC


February 16, 2021

Judge Robert J. Colville


Presently before the Court is a Motion for Default Judgment (ECF No. 21) filed on behalf of Milton Al Stewart, Secretary of Labor, United States Department of Labor ("Secretary" or "Plaintiff"). The Secretary moves for default judgment against Defendants Loving Kindness Healthcare Systems, LLC ("LKHS" or "Employer") and Scott Taylor ("Taylor") (collectively referred to as "Defendants"). Specifically, the Secretary contends Defendants violated (1) the Fair Labor Standards Act ("the FLSA or "the Act")'s provision mandating time-and-one-half compensation for overtime hours worked, 29 U.S.C. § 207 (2006) ("§ 7"); and (2) the FLSA requirement that employers keep accurate records of their employees' hours and compensation, 29 U.S.C. § 211(c) (2006) ("§11(c)"). The Secretary argues that these violations were willful and that this court should award back wages, liquidated damages, and injunctive relief. Defendants have failed to appear.

For the reasons stated herein, the motion is granted.

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I. Background1

LKHS is a limited liability company organized under the laws of the Commonwealth of Pennsylvania, with a registered office at 155 North Craig Street, Suite 160, Pittsburgh, PA 15213 within the jurisdiction of this Court. (ECF No. 1 ¶ 2). Taylor is an owner of LKHS at the same address.2 (ECF No. 1 ¶ 3; Declaration of Michael Sheuy in Supp. of Pl.'s M. for Def. J (ECF No. 21-3) (hereinafter, "Shuey Decl") ¶ 3).

During the relevant period, Defendant LKHS was an enterprise within the meaning of section 3(r) of the Act, 29 U.S.C. § 203(r), in that it was, through unified operation or common control, engaged in the performance of related activities for a common business purpose. (ECF No. 1 ¶ 4). Defendant LKHS employed persons in domestic service, which affects commerce per section 2(a)(5) of the Act, 29 U.S.C. § 202(a)(5). (ECF No. 1 ¶ 4). Defendant LKHS's employees assist disabled and elderly clients with activities of daily living such as shopping, cooking, and housekeeping, which involves handling or otherwise working on goods or materials that have been moved in or produced for commerce. (ECF No. 1 ¶ 4). LKHS has had an annual gross volume of sales made or business done in an amount not less than $500,000.00. (ECF No. 1 ¶ 5). Therefore, the employees of Defendant are employed in an enterprise engaged in commerce or has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce within the meaning of section 3(s)(1)(A), 29 U.S.C. § 203(s)(1)(A), of the Act.

Defendant Taylor meets the definition of an employer under section 3(d) of the Act, 29 U.S.C. § 203(d). The FLSA provides in pertinent part, that an employer "includes any person

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acting directly or indirectly in the interest of an employer in relation to an employee...." 29 U.S.C. § 203(d) ("§ 3"). Courts have interpreted § 3's terms broadly in order to better effectuate the statute's sweeping remedial objectives. See, e.g., Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965 (6th Cir.1991). Defendant Taylor has been actively involved in the day-to-day operations of LKHS, and he has directed employment practices and directly or indirectly acted in the interest of LKHS in relation to its employees at all relevant times, including hiring and firing employees, setting employees' conditions of employment, setting rates and methods of compensation, and supervising employees day-to-day. (ECF No. 1 ¶3; Shuey Decl. ¶ 3).

On August 14, 2020, Defendants were served with the complaint filed in this matter in accordance with Fed. R. Civ. P. 4(e), and they returned executed waivers of service, which the Secretary filed on September 18, 2020. (ECF Nos. 14, 14-1). An answer to the complaint was due on October 15, 2020. Fed. R. Civ. P. 12(a). Plaintiff stipulated to an additional thirty days for Defendants to file an answer. (ECF No. 15). No answer to the complaint was ever filed. On November 20, 2020, the Secretary filed a request to enter default against the Defendants. (ECF No. 6). The Clerk entered default against the Defendants on November 23, 2020. (ECF No. 18).

On December 18, 2020, Plaintiff filed a Motion for Default Judgment (ECF No. 21), a Memorandum of Law in support thereof (ECF No. 24), and attached to the motion several declarations and other exhibits (ECF Nos. 21-3, 21-4, 21-5, 21-6), all of which the court has reviewed. The motion also included a certificate of service to Defendants (ECF No. 21-7). On that same date, the Court scheduled hearing, and a copy of that order was mailed to Defendants at their last known address of record (ECF No. 22). On December 18, 2020 Plaintiff's counsel filed a Notice of Service that he also served the order scheduling this hearing to Defendants via email (ECF No. 23). Notice of the hearing was also placed on the Court's official calendar.

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A hearing was held on February 3, 2021, via video-conference. (ECF No. 26). No representative from either Defendant appeared at the hearing. Michael A. Shuey, Investigator, Wage and Hour Division ("WHD") of United States Department of Labor testified. His testimony reiterated the facts stated in his affidavit, cited supra, as well as explained the Secretary's calculations of damages. The following exhibits were admitted into evidence:

Defts' Weekly timekeeping & pay rate records (10/1/17 - 10/14/17)
Defts' Daily timekeeping & pay rate records (9/29/19 - 11/19/20)
Transactions by Payroll Item - May 25, 2019- October 12, 2019
Back wage computations - 10/07/2017 to 09/28/2019
Back wage computations - 11/26/2016 to 09/30/2017
Back wage computations - 10/05/2019 to 10/24/2020
Declaration of Michael A. Shuey, Investigator, Wage and Hour Division

(ECF Nos. 26-1 through 26-8).

Mr. Shuey explained that he participated in the investigation of LKHS, to determine if Defendants were in compliance with the FLSA. The investigation period was from October 7, 2017 through September 28, 2019. In the course of the investigation, interviews of Taylor and employees were conducted. Those interviews revealed the fact that from November 20, 2016 through October 28, 2020 ("the relevant period") Defendants did not pay their employees the required overtime premium when the employees worked more than forty hours in a week. Defendants paid their employees their straight-time regular rates for all hours worked, including all overtime hours worked over 40 in the workweeks covered by the investigation period. Defendants' employees regularly worked over 40 hours per week, with several working 100 hours

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per week or more in some workweeks. Defendant Taylor admitted he directed employment practices and directly acted in the interest of LKHS in relation to its employees, including hiring, firing, supervising, setting pay rates, and setting the conditions of employment for employees. He also admitted to determining which employees were paid overtime and which were not for certain portions being investigated.

In fact, according to Mr. Shuey, Taylor admitted that Defendants continue to pay a number of their employees at their regular rates for hours worked in excess of 40 hours per week. Defendants' timekeeping records show the weekly overtime hours worked per affected employee. Defendants paid caregivers wages between $8.00 and $24.00 per hour. During the relevant period, the affected employees worked at least one hour in excess of forty per workweek, and many employees worked in excess of approximately ten hours of overtime per workweek on average. Defendants only paid these employees their straight-time hourly rates for all hours worked, and did not pay the required one and one-half premium rate for overtime hours worked.

II. Discussion

A. Applicable Standard

Rule 55(b) of the Federal Rules of Civil Procedure provides for entry of default judgment against a defendant who has not appeared and who is neither a minor nor an incompetent person. Fed. R. Civ. P. 55(b). When a party has defaulted and all of the procedural requirements for a default judgment are satisfied, the decision to enter default judgment under Rule 55(b)(2) rests in the discretion of the district court. Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir.1987). In undertaking this evaluation, the Court must consider: (1) whether the plaintiff will be prejudiced if the default is denied; (2) whether the defendant has a meritorious defense; and (3) whether the defaulting defendant's conduct is excusable or culpable. See, e.g., Chamberlain v. Giampapa, 210

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F.3d 154, 164 (3d Cir.2000) (citing United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)). When a defendant has failed to appear or respond in any fashion to the complaint, this analysis is necessarily one-sided.

As noted supra, generally, courts treat all pleadings and allegations of the plaintiff as true on a motion for default judgment. See Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). However, the Court is not required to accept Plaintiffs' conclusions of law and, therefore, "it remains for the [C]ourt to consider whether the unchallenged facts constitute a legitimate cause of action" against Defendants. Directv, Inc. v. Asher, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (quoting Charles A. Wright, Arthur R. Miller & Mary Kay Kane, 10A Federal Practice and Procedure § 2688, at 58-59, 63 (3d ed. 1998)); accord Louisiana Counseling & Family Servs., 543 F. Supp. 2d at 364; Comcast Cable Commc'ns v. Bowers, No. 06-1664, 2007 WL 1557510, at *2 (D. N.J. May 25, 2007).

B. The FLSA's Overtime...

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