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Cruz v. Home & Garden Concepts, LLC

United States District Court, D. Maryland

July 12, 2016

NEEMIAS E. CRUZ, et al. Plaintiffs,
v.
HOME & GARDEN CONCEPTS, LLC, et al. Defendants.

          REPORT AND RECOMMENDATION

          WILLIAM CONNELLY UNITED STATES MAGISTRATE JUDGE

         This Report and Recommendation addresses Plaintiffs Neemias E. Cruz, Santos Aristides Majano Reyes, Eleazar Cruz Zavala and Marvin A. Hernandez (hereinafter "Plaintiffs")' Request for Judgment by Default. ECF No. 7.[1] Defendants Home & Garden Concepts, LLC and Sanoj Dhamindranath (hereinafter "Defendants") have not filed a response and the deadline for their response elapsed on April 4, 2016. See Loc. R. 105.2.a. Having reviewed the filings, no hearing is deemed necessary. See Loc. R. 105.6. For the reasons stated herein, the undersigned recommends that, following the time to object to this Report and Recommendation, Plaintiffs' Motion for Default Judgment be GRANTED.

         I. FACTUAL AND PROCEDURAL HISTORY

         Neemias E. Cruz, Santos Aristides Majano Reyes, Eleazar Cruz Zavala and Marvin A. Hernandez are adult residents of Maryland. ECF No. 1 at 2 (Compl. ¶ 3). Defendant Home & Garden Concepts, LLC ("Home & Garden"), a Maryland corporation[2], has forfeited its status[3] and presently is not in good standing.[4] See Home & Garden Concepts LLC, Maryland Corporates-Company Profiles of Maryland, http://www.marylandcorporates.com/corp. 702494.html (last visited June 6, 2016). Home & Garden is owned by Defendant Sanoj Dhamindranath. ECF No. 1 at 2 (Compl. ¶ 5).

         Defendant Sanoj Dhamindranath controlled the daily operations of Home & Garden. He supervised directly or indirectly the Plaintiffs. He had the power to hire, suspend, discipline or fire the Plaintiffs. The Plaintiffs' work schedules were directly or indirectly set and controlled by Defendant Sanoj Dhamindranath, or he had the power to do so. The rate and method of the Plaintiffs' pay were directly or indirectly set and determined by Defendant Sanoj Dhamindranath, or he had the power to do so. Id. ¶¶ 10-14.

         Both Defendant Sanoj Dhamindranath and Defendant Home & Garden are employers within the meaning of the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201, et seq., the Maryland Wage & Hour Law ("MWHL"), Md. Code Ann., Lab. & Empl. § 3-401, et seq., and the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann., Lab. & Empl. § 3-501, et seq. At all times relevant, Defendants have at least two or more employees engaged in commerce or "handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person[.]" 29 U.S.C. § 203(s)(1)(A)(i). "Defendants negotiate and purchase from producers and suppliers who operate in interstate commerce and serve customers in interstate commerce." ECF No. 1 at 3 (Compl. at ¶ 8). At all times relevant, Defendants' annual gross volume of sales made or business done is not less than $500, 000.00. Id. ¶ 6. Further, at all times relevant, Defendants constituted an "enterprise" as defined by 29 U.S.C. § 203(r).

         Plaintiff Neemias E. Cruz was employed as a project manager by the Defendants from September 1, 2011 through February 8, 2013. Mr. Cruz was paid $2, 500.00 per month. Defendants did not pay Mr. Cruz for hours worked during his final four months of employment, October 2012 through January 2013. For this period of time the Defendants owe Mr. Cruz $10, 000.00 in unpaid wages which Defendants withheld absent a bona fide dispute. See ECF No. 1 at 4 (Compl. ¶¶ 18-20); ECF No. 7-1 at 2 (Cruz Decl.).

         Plaintiff Santos Aristides Majano Reyes was employed as a carpenter by the Defendants for approximately one year and two months. Mr. Reyes was paid an hourly rate of $12.00. He worked an average of fifty-seven (57) hours per week. Mr. Reyes was never compensated at the required overtime rate (1.5 times his regular hourly rate) for those hours he worked in excess of forty (40) hours per week. He seeks the difference between the overtime rate for sixty (60) weeks (one year and two months) he should have been paid minus the regular hourly rate he was paid. Further, for his last few weeks of employment Defendants failed to pay Mr. Reyes for 160 hours of work. Mr. Reyes is owed $1, 920.00 for unpaid wages at his regular hourly rate (160 hours x $12.00/hour). Defendants owe him $6, 120.00 in unpaid overtime wages. This amount is derived as follows: $12.00/hour x 1.5 equals $18.00/hour. The difference between $18.00/hour and $12.00/hour is $6.00/hour. Mr. Reyes routinely worked 57 hours per week, or 17 hours per week overtime. The difference in the overtime rate is calculated as follows: 17 hours x $6.00/hour equals $102.00. Sixty (60) weeks x $102.00 equals $6, 120.00. See ECF No. 1 at 4 (Compl. ¶¶ 21-24); ECF No. 7-2 at 2 (Reyes Decl.).

         Plaintiff Marvin A. Hernandez was employed as a carpenter by the Defendants for fifty-three (53) weeks. Mr. Hernandez was paid an hourly rate of $12.00. He routinely worked 57 hours per week on average. Mr. Hernandez was never compensated at the required overtime rate (1.5 times his regular hourly rate) for those hours he worked in excess of 40 hours per week. He seeks the difference between the overtime rate he should have been paid minus the regular hourly rate he was paid. See computation supra. Mr. Hernandez routinely worked 57 hours per week, or 17 hours per week overtime. See computation supra. Fifty-three (53) weeks x $102.00 equals $5, 406.00. See ECF No. 1 at 5 (Compl. ¶¶ 25-27); ECF No. 7-3 at 2 (Hernandez Decl.).

         Plaintiff Eleazar Cruz Zavala was employed as a carpenter by the Defendants for fifty-two (52) weeks. Mr. Zavala was paid an hourly rate of $12.00. He routinely worked 57 hours per week on average. Mr. Zavala was never compensated at the required overtime rate (1.5 times his regular hourly rate) for those hours he worked in excess of 40 hours per week. He seeks the difference between the overtime rate he should have been paid minus the regular hourly rate he was paid. See computation supra. Mr. Zavala routinely worked 57 hours per week, or 17 hours per week overtime. See computation supra. Fifty-two (52) weeks x $102.00 equals $5, 304.00. See ECF No. 1 at 5 (Compl. ¶¶ 28-30); ECF No. 7-4 at 2 (Zavala Decl.).

         On January 23, 2015 the Plaintiffs filed a Complaint against the Defendants alleging the Defendants willfully violated clear and well-established straight time wages and overtime provisions of the FLSA, MWHL, and MWPCL. ECF No. 1. The Plaintiffs seek compensatory and statutory damages as well as attorneys' fees and costs.

         This Court's jurisdiction is based on federal question, 28 U.S.C. § 1331, as this civil action arises under "the Constitution, laws, or treaties of the United States." See 29 U.S.C. § 216(b) ("An action to recover the liability prescribed . . . may be maintained against any employer . . . in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated."). This Court exercises supplemental jurisdiction over the state (Maryland) law claims in accordance with 28 U.S.C. § 1367(a) ("in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.").

         On January 27, 2015 a summons and a copy of the Complaint were issued by the Clerk of Court. ECF No. 2. Almost three months later, on April 22, 2015, Murray A. Kivitz, Esq. filed an Affidavit of Acceptance of Service acknowledging he accepted the service of the Complaint and Writ of Summons issued to Home & Garden Concepts, LLC and Sanoj Dhamindranath on April 15, 2015. ECF No. 3. The Defendants' Answers were due May 6, 2015. Neither Defendant filed an Answer by this deadline.

         On July 31, 2015 the Plaintiffs moved for Clerk's entry of default for want of answer or other defense against the Defendants. ECF No. 4. The deadline for Defendants' response in opposition was August 17, 2015. No response in opposition was filed by either Defendant by the deadline.

         On September 1, 2015 the Clerk's Entry of Default was docketed against both Defendants. ECF No. 5. Approximately six months elapsed without any apparent activity. On an undisclosed date the parties attempted to reach a settlement of this case. The case was not settled but Defendants made certain partial payments.

Accordingly, the following amounts should be deducted from the judgment. Five Thousand Two Hundred and Seventy ($5, 270.01) Dollars 01/100 in attorney fees and Nine Thousand Seven Hundred and Twenty-Nine ($9, 729.99) 99/100 Dollars to Plaintiffs totaling Fifteen Thousand ($15, 000.00) 00/100 Dollars.

ECF No. 7 at 4 ¶ 26.

         On March 11, 2016 Judge Hazel issued an Order directing the Plaintiffs, within thirty (30) days, to file and serve by mail on the Defendants a motion for default judgment, or submit a report explain why such a motion would be inappropriate. ECF No. 6. Five days later, the Plaintiffs moved for default judgment. ECF No. 7. On April 20, 2016 Judge Hazel referred the case to the undersigned for a report and recommendation. ECF No. 8.[5]

         II. DISCUSSION

         Federal Rule of Civil Procedure 55(b) governs the entry of default judgments. Pursuant to Rule 55(b), the clerk may enter a default judgment "[i]f the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, " and the defendant is in default for failing to appear and is "neither a minor nor an incompetent person." Fed.R.Civ.P. 55(b)(1). Additionally, when a defendant is an individual, the plaintiff must certify or declare to be true under penalty of perjury whether the defendant is in military service. 50 U.S.C. app. § 521(b)(1) ("In any action or proceeding covered by this section, the court, before entering judgment for the plaintiff, shall require the plaintiff to file with the court an affidavit-(A) stating whether or not the defendant is in military service and showing necessary facts to support the affidavit; or (B) if the plaintiff is unable to determine whether or not the defendant is in military service, stating that the plaintiff is unable to determine whether or not the defendant is in military service.").[6]

         The entry of default judgment is a matter within the discretion of the Court. SEC v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005) (citing Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002)). As the Court noted in Disney Enterprises, Inc. v. Delane, 446 F.Supp.2d 402 (D. Md. 2006), "[t]he United States Court of Appeals for the Fourth Circuit has a ‘strong policy that cases be decided on the merits.'" Id. at 405 (quoting United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993)). Nonetheless, "default judgment is available when the ‘adversary process has been halted because of an essentially unresponsive party.'" Id. (quoting Lawbaugh, 359 F.Supp.2d at 421).

         In determining whether to award a default judgment, the Court takes as true the well-pleaded factual allegations in the complaint, other than those pertaining to damages. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) ("The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established." (citation and internal quotation marks omitted)); see Fed. R. Civ. P. 8(b)(6) ("An allegation-other than one relating to the amount of damages-is admitted if a responsive pleading is required and the allegation is not denied."). It remains, however, "for the court to determine whether these unchallenged factual allegations constitute a legitimate cause of action." Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494 (D. Md. 2010); 10A Charles Alan Wright et al., Fed. Prac. and Proc. Civ. § 2688 (3d ed. 1998) ("[L]iability is not deemed established simply because of the default . . . and the court, in its discretion, may require some proof of the facts that must be established in order to determine liability."); id. (explaining that the court must "consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law").

         If the Court finds that "liability is established, [it] must then determine the appropriate amount of damages." Samler, 725 F.Supp.2d at 494 (citing Ryan, 253 F.3d at 780-81). This is so because "an allegation ‘relating to the amount of damages' is not deemed admitted based on a defendant's failure to deny in a required responsive pleading." Hartford Fin. Servs. Grp. Inc. v. Carl J. Meil, Jr., Inc., No. WDQ-10-2720, 2011 WL 1743177, at *7 (D. Md. May 5, 2011) (quoting Fed.R.Civ.P. 8(b)(6)); Trs. of the Elec. Welfare Trust Fund v. MH Passa Elec. Contracting, LLC, No. DKC-08-2805, 2009 WL 2982951, at *1 (D. Md. Sept. 14, 2009) ("Upon default, the well-pled allegations in a complaint as to liability are taken as true, although the allegations as to damages are not."); Int'l Painters & Allied Trades Indus. Pension Fund v. Metro Glass & Mirror, Inc., No. ELH-11-2389, 2012 WL 893262, at *2 (D. Md. Mar. 14, 2012) ("The court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations.").

         In sum, the Court must make two determinations. First, the Court must decide "whether the unchallenged facts in plaintiff['s] complaint constitute a legitimate cause of action[.]" Samler, 725 F.Supp.2d at 494. Second, if the Court finds that liability is established, it must "make an independent determination regarding the appropriate amount of damages." Id.

         A. Liability

         One year and three months have elapsed since Defendants Home & Garden and Sanoj Dhamindranath were served with the Plaintiffs' Complaint, yet the Defendants have not pleaded or otherwise asserted a defense by filing an Answer. As a result, all of the factual allegations made in the Plaintiffs' Complaint not pertaining to damages are deemed admitted. Fed.R.Civ.P. 8(b)(6); Ryan, 253 F.3d at 780.

         The Plaintiffs moved for a default judgment on March 16, 2016 and the Defendants have not responded. It is within the Court's discretion to grant default judgment when a defendant is unresponsive. See Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 897 (4th Cir. 1987) (upholding a default judgment awarded where the defendant lost its summons and did not respond within the proper period); Disney Enterprises, 446 F.Supp.2d at 405-06 (finding appropriate the entry of default judgment where the defendant had been properly served with the complaint and did not respond, despite repeated attempts to contact him). Accordingly, the Court should grant default judgment on the Complaint if the Plaintiffs establish the Defendants' liability.

         That accepting as true the Plaintiffs' well-pleaded allegations, the undersigned finds the Plaintiffs have proven the following:

a. Defendant Home & Garden is a Maryland corporation;
b. Defendant Sanoj Dhamindranath is the owner of Home & ...

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