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Andrews v. America's Living Centers, LLC

United States District Court, W.D. North Carolina, Asheville Division

August 11, 2017

STELLA ANDREWS, individually and on behalf of similarly situated persons, Plaintiff,
v.
AMERICA'S LIVING CENTERS, LLC, et al., Defendants.

          MEMORANDUM OF DECISION AND ORDER

          MARTIN REIDINGER UNITED STATES DISTRICT JUDGE.

         THIS MATTER is before the Court on the Plaintiff's Motion for Default Judgment [Doc. 77].

         I. PROCEDURAL BACKGROUND

         The Plaintiff Stella Andrews first filed suit on June 4, 2010, against the Defendants America's Living Centers, LLC (“ALC”) and Kenneth Hodges (“Hodges”) (collectively, “Defendants”), [1] asserting claims under the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201, et seq. (“FLSA”). [Civil Case No. 1:10-cv-00114-MR-DLH, Doc. 1]. On July 29, 2010, the Defendants moved to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Id., Doc. 15]. Before the motion was ruled on, the Plaintiff decided to voluntarily dismiss her action pursuant to Federal Rule of Civil Procedure 41(a)(1), and she immediately filed the present action. [Doc. 1]. Shortly after the Plaintiff re-filed her action, three additional employees --Betty Dean Gosnell, Sheila Annette Barnard, and Sherry Marie Hensley --filed notices indicating their consent to opt in and become party plaintiffs. [Docs. 20, 23].

         The Defendants moved to stay this action pending the Plaintiff's payment of costs of the prior action pursuant to Federal Rule of Civil Procedure 41(d). [Doc. 26]. The Court granted the Defendants' motion and ordered the Plaintiff to pay an award of attorneys' fees and other expenses that had been incurred by the Defendants in defending the first action. [Docs. 30, 36].

         The Plaintiff appealed to the Court of Appeals. That appeal was dismissed because the amount of the award had yet to be determined. [Doc. 41]. On remand, this Court awarded $13, 403.75 in attorneys' fees to the Defendants and stayed the case pending payment. [Doc. 50]. The Plaintiff did not pay the costs, but before the case was dismissed for nonpayment, she filed a second appeal. [Doc. 51]. After oral argument before the Fourth Circuit, the Plaintiff moved to voluntarily dismiss the appeal, which motion was granted. [Doc. 57]. In the interim, counsel for the Defendants moved to withdraw. This motion was granted on May 22, 2015, leaving both Defendants unrepresented. [Docs. 61, 62].

         On June 10, 2015, the Court dismissed this action for failure of the Plaintiff to pay the awarded attorneys' fees. [Doc. 63]. The Plaintiff then appealed for a third time. On June 28, 2016, the Court of Appeals vacated the award of attorneys' fees and remanded the case for further proceedings. [Doc. 69]. The Court of Appeals' mandate issued on July 20, 2016. [Doc. 70].

         Following the last remand, none of the Defendants filed an Answer. The Plaintiff, however, made no effort to prosecute the case. On August 24, 2016, the Court ordered the Plaintiff to file an appropriate motion or otherwise take further action with respect to each Defendant within fourteen (14) days of entry of the Order, or the Court would dismiss this action. [Doc. 71]. The Plaintiff subsequently moved for an entry of default against the Defendants. [Doc. 75]. On September 7, 2016, the Clerk entered default against the Defendants. [Doc. 76]. On September 20, 2016, the Plaintiff filed the present motion for default judgment on behalf of herself and the “opt-in” plaintiffs. [Doc. 77]. In her motion, the Plaintiff specifically requested that the Court not set an evidentiary hearing. Instead, the Plaintiff requested a period of sixty (60) days to assemble the necessary documentation to support her and the “opt-in” plaintiffs' claims for damages. [Doc. 77 at 2]. The Plaintiff filed a supplemental memorandum and supporting documentation in support of her claims and that of opt-in plaintiff Betty Gosnell[2] on November 22, 2016. [Doc. 78].

         This matter is now ripe for disposition.

         II. STANDARD OF REVIEW

         Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default when “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.” Fed.R.Civ.P. 55(a). Once a defendant has been defaulted, the plaintiff may then seek a default judgment. If the plaintiff's claim is for a sum certain or can be made certain by computation, the Clerk of Court may enter the default judgment. Fed.R.Civ.P. 55(b)(1). In all other cases, the plaintiff must apply to the Court for a default judgment. Fed.R.Civ.P. 55(b)(2).

         “The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact . . . .” Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). A defendant, however, “is not held . . . to admit conclusions of law.” Ryan, 253 F.3d at 780 (quoting Nishimatsu, 515 F.2d at 1206). The Court therefore must determine whether the facts as alleged state a claim. GlobalSantaFe Corp. v. Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003).

         III. PLAINTIFF'S FACTUAL ALLEGATIONS

         The well-pleaded factual allegations of the Plaintiff's Complaint having been deemed admitted by virtue of the Defendants' default, the following is a summary of the relevant facts.

         The Plaintiff was employed as a “Supervisor in Charge” at the Transylvania Living Center (“TLC”), one of multiple “family care homes”[3] owned and operated by the Defendants, from January 15, 2006 to June 30, 2009. [Complaint, Doc. 1 at ¶¶ 5-6, 80; Declaration of Stella Andrews (“Andrews Decl.”), Doc. 78-1 at ¶ 14].[4]

         As the sole member/manager of ALC, Hodges exercised complete control over all compensation, policy, and personnel decisions for ALC. [Id. at ¶¶ 61, 74-78]. Hodges personally signed many of the checks issued to the Plaintiff for payroll, for expenses that she incurred when she was required to purchase household goods for the facility, and for reimbursement to the Plaintiff for the payment of utility bills that the Plaintiff paid out of her account on the promise that she would be reimbursed for such expense. The checks signed by Hodges were written from an account under the name of “Hodges & Associates.” [Id. at ¶ 60].

         Although the Plaintiff's job title was that of “Supervisor in Charge, ” she did not have any authority to supervise, fire, or hire other employees or to enter into contracts with third parties on behalf of the Defendants. [Id. at ¶¶ 91, 93-95]. Rather, the Plaintiff's job duties were defined in writing, and a manual maintained on site set forth procedures for the day-to-day operation of the facility. [Id. at ¶¶ 92, 97]. Deviation from these procedures carried the threat of disciplinary action by the Defendants. [Id. at ¶ 98; Andrews Decl., Doc. 78-1 at ¶ 12]. The Plaintiff's job duties included: (1) keeping track of the expenses of the home to which she was assigned; (2) paying bills when cut off notices were received in the mail for the home to which she was assigned; (3) purchasing groceries and household supplies for the home; (4) notifying ALC of the need for maintenance at the home to which she was assigned; (5) assisting with the intake of new clients; (6) preparing meals for those clients residing at the home to which she was assigned; (7) performing housekeeping duties in the home to which she was assigned; (8) doing laundry for the clients assigned to her care; (9) preparing medications (four or more times a day) for the clients assigned to her; (10) distributing such medication; (11) tracking the inventory of such medication; (12) maintaining records of the distribution of each client's medication; (13) contacting the appropriate pharmacy or physician to ensure an adequate supply of medication was on hand for each client; (14) transporting clients to physician appointments and/or social functions when transportation was not available from ALC; and (14) coordinating clients' doctor and all service providers' appointments. [Doc. 1 at ¶ 82]. The Plaintiff estimates that she spent between thirty percent (30%) and fifty percent (50%) of her time per week on domestic duties, such as cooking, cleaning, laundry, transporting residents, and administering medications. [Id. at ¶ 104].

         In order to perform her duties of providing care to the residents of TLC, the Plaintiff was required to reside at the facility. [Id. at ¶ 86]. She had to provide her own substitute in the event that she needed to leave TLC. [Id. at ¶¶ 88-89]. She was on duty twenty-four hours a day, seven days a week, and was regularly awakened during the night to administer medication to residents or to prevent residents from leaving the facility without permission. [Id. at ¶¶ 87, 108, 109]. As a result, the Plaintiff rarely received more than five hours of uninterrupted sleep on any given night. [Id. at ¶ 111]. No agreement existed between the Plaintiff and the Defendants regarding the Plaintiff's sleep, rest, or meal periods. [Id. at ¶¶ 107, 110].

         During her employment, the Plaintiff was classified as an independent contractor and was paid a straight salary of between $500 and $600 per week. [Id. at ¶¶ 83-84, 118]. The Plaintiff's salary did not vary, regardless of how many hours she worked or whether she was on duty. [Id. at ¶ 116]. When the Plaintiff requested an IRS Form 1099 from the Defendants, she was told to create her own document. [Id. at ¶ 115].

         Due to the Defendants' failure to pay her minimum wage and overtime as required by the FLSA, the Plaintiff calculates that she was underpaid by $86, 044.08 over the course of her employment. [Doc. 78 at 1]. She seeks that amount in compensatory damages and an equal amount of liquidated damages. [Id. at 2]. She also seeks an award of $45, 496.23 in attorneys' fees and costs. [Id. at 3].

         III. DISCUSSION

         A. Claims of the Opt-In Plaintiffs

         The Plaintiff brought this suit for violations of the FLSA's minimum wage and overtime requirements on behalf of herself as well as “all other similarly situated employees.” [Doc. 1 at ¶ 39]. FLSA collective actions are distinct from Rule 23 class actions in that class members in a FLSA collective action must affirmatively “opt-in, ” that is, consent to become parties to the action. See 29 U.S.C. § 216(b).

         In order for other employees to join a FLSA action, the Court must certify the collective action. Courts generally follow a two-step process to certify a collective action under the FLSA. First, at the notice stage, the court may conditionally certify the class and direct that notice be given to potential class members so that they may opt in. Purdham v. Fairfax Cty. Pub. Schs., 629 F.Supp.2d 544, 547 (E.D. Va. 2009), aff'd, 637 F.3d 421 (4th Cir. 2011); Parker v. Rowland Express, Inc., 492 F.Supp.2d 1159, 1164 (D. Minn. 2007). Once members have opted in and substantial discovery has been completed, the court can then make a factual determination as to whether the collective action members are “truly ‘similarly situated.'” Purdham, 629 F.Supp.2d at 547; Parker, 492 F.Supp.2d at 1164.

         Here, there was no certification, conditional or otherwise, of any collective action prior to the entry of default against the Defendants, and the Plaintiff did not move for a certification of the collective action with her motion for default judgment. See Davis v. Precise Commc'n Servs., Inc., No. 1:07-CV-3128-JOF, 2009 WL 812276, at *1 (N.D.Ga. Mar. 27, 2009) (noting that conditional certification was still required despite defendant's default). Because no determination has been made that the proposed members of the collective action are “similarly situated, ” an entry of a default judgment, if appropriate at all, is proper only as to the named Plaintiff, Stella Andrews. See id.; see also Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 340 (4th Cir. 2006) (where class not certified under Fed.R.Civ.P. 23, default judgment order binds only named plaintiffs and not putative class members); Skeway v. China Nat. Gas, Inc., 304 F.R.D. 467, 472 (D. Del. 2014) (“in cases in which the district courts have entered a default judgment against a defendant and no class has been certified [under Fed.R.Civ.P. 23], only named plaintiffs can recover damages”). Accordingly, the Court will dismiss the claims of the putative collective action members without prejudice and will address the motion for default judgment with respect to the claims of the Plaintiff Stella Andrews only.

         B. Plaintiff's FLSA Claims

         The Plaintiff asserts claims for unpaid minimum wages and unpaid overtime compensation under the FLSA, 29 U.S.C. §§ 206, 207. The FLSA requires covered employers to pay their employees a minimum wage, which is currently set at $7.25 per hour. 29 U.S.C. § 206(a). Covered employers also must also pay their employees an overtime rate of 1½ times the regular rate of pay for each hour worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1).

         In order to determine whether the Plaintiff has adequately stated a claim under the FLSA for unpaid minimum wage and overtime compensation, the Court first must determine whether the named Defendants are “employers” subject to the provisions of the FLSA. Assuming the Defendants are covered employers, the Court must then determine whether the Plaintiff is an “employee” who is not otherwise exempt from FLSA protection. The Court will address each of these issues in turn.

         1. Are the Defendants' Plaintiff's “Employers”?

         The Plaintiff alleges that both Hodges and ALC qualify as her “employer.”

         The FLSA defines “employer” broadly to include “any person” other than a labor organization who “act[s] directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). An individual may be liable for FLSA violations, despite the corporate structure of the employing business, if the individual had extensive managerial responsibilities and “substantial control of the terms and conditions of the work of [plaintiff] employees.” Falk v. Brennan, 414 U.S. 190, 195 (1973); see also Brock v. Hamad, 867 F.2d 804, 808 n.6 (4th Cir. 1989) (imposing FLSA liability on individual who “hired and directed the employees who worked for the enterprise”); Bonham v. Wolf Creek Acad., 767 F.Supp.2d 558, 571 (W.D. N.C. 2011) (noting that “veil piercing” is not required to attach FLSA liability to an individual behind a corporate employer). Here, the Plaintiff's factual allegations, which are deemed admitted, are sufficient to establish that Hodges was the sole member/manager of ALC and thus controlled all aspects of the business, including all personnel decisions. As Hodges had “substantial control” over the terms and conditions of the Plaintiff's employment, Falk, 414 U.S. at 195, the Court concludes that the Plaintiff has established that both Hodges and ALC were her “employers” for the purpose of imposing FLSA liability.

         Having determined that both Defendants employed the Plaintiff, the Court now turns to whether her employers are covered by the FLSA. To recover for minimum wage or overtime violations under the FLSA, a plaintiff must show that either (1) her employer is an “enterprise engaged in commerce or in the production of goods for commerce” or (2) the plaintiff herself has “engaged in commerce or in the production of goods for commerce” in her capacity as an employee. 29 U.S.C. § 203(s)(1)(A)(i). Here, the Plaintiff has alleged that the Defendants are engaged in the operation of “family care homes” for adults who are frail due to age or who suffer from physical or mental infirmities such that they are unable to live by themselves. [Doc. 1 at ¶¶ 48, 50]. Section 203 of the FLSA defines an “enterprise engaged in commerce or in the production of goods for commerce” as including an enterprise that “is engaged in the operation of ... an institution primarily engaged in the care of the sick, the aged, or the mentally ill or defective who reside on the premises of such institution.” 29 U.S.C. § 203(s)(1)(B). The Plaintiff has sufficiently alleged that Hodges and ALC constitute an “enterprise” within the meaning of that provision. Accordingly, the Court concludes that the Defendants are subject to liability for violations of the minimum wage and overtime requirements of the FLSA.

         2. Is Plaintiff a Covered “Employee”?

         Next, the Court evaluates whether the Plaintiff qualifies as a covered employee under the Act.

         The FLSA broadly defines “employee, ” with numerous exceptions not applicable here, to be “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). “In determining whether a worker is an employee covered by the FLSA, a court considers the ‘economic realities' of the relationship between the worker and the putative employer.” Schultz v. Capital Int'l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006) (quoting Henderson v. Inter-Chem Coal Co., 41 F.3d 567, 570 (10th Cir. 1994)). “The focal point is whether the worker is ...


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