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Vanegas v. Diaz Granados, Inc.

United States District Court, D. Maryland

January 24, 2017

CESILIA VANEGAS, et al., Plaintiffs,
v.
DIAZ GRANADOS, INC. and FRANCIS J. DIAZ, Defendants.

          MEMORANDUM OPINION

          Paul W. Grimm United States District Judge

         Plaintiffs Cesilia Vanegas, Milena Acosta, Yendy Gonzeles, and Ana Velasquez have filed suit against Defendants to recover unpaid minimum and overtime wages, and Defendants have not responded to the pleadings. Plaintiffs have since filed a Motion for Default Judgment, Pls.' Mot., ECF No. 12, to which Defendants have not responded. Having reviewed the filings, I find that a hearing is unnecessary in this case. See Loc. R. 105.6 (D. Md.). Because notice has not been sought for class members pursuant to a collective action brought under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., nor under Fed.R.Civ.P. 23, this Memorandum Opinion will be limited to the named Plaintiffs in this case. See Fed R. Civ. P. 23(c); 29 U.S.C. § 216(b). Plaintiffs have demonstrated Defendants' liability and have established some, but not all, of the damages they seek. Accordingly, Plaintiffs' Motion for Default Judgment will be granted in part and denied in part.

         Background

         Defendant Diaz Granados, Inc. is a Maryland corporation that is in the restaurant business. Compl. ¶¶ 5-6, ECF No. 1. Defendant Francis J. Diaz owns and manages the restaurant. Id. ¶ 7. As owner, he “is in charge of the day-to-day operations of the restaurant” and “establishes wage rates and determines the schedules of employees.” Id. ¶¶ 7-8.

         Plaintiff Cesilia Vanegas worked as a server at Diaz Granados from August 2010 until August 5, 2015. See Vanegas Decl. ¶ 5, Pls.' Mot. Ex. 1, ECF No. 12-2. During that time, Vanegas asserts that she worked “156 weeks without overtime wages” during the three years prior to filing the Complaint. Id. ¶ 12; Pls.' Mot. ¶ 9. In addition, she was paid “weekly salary of $215.00, ” id. ¶ 9, for 72 hours of work each week, see Id. ¶ 5. Milena Acosta also worked as a server for Diaz Granados. Acosta Decl. ¶ 2, Pls.' Mot. Ex. 2, ECF No. 12-3. She was employed from August 2010 until August 5, 2015, working a total of 106 full weeks during the three years prior to filing the Complaint. See Id. ¶¶ 2, 9; Pls.' Mot. ¶ 14. Acosta was paid a weekly salary of $215, id. ¶ 6, for a total of 72 hours each week, see Id. ¶ 5, and received no overtime pay, id. ¶ 7. Likewise, Yendy Gonzalez worked as a server at Diaz Granados from August 2013 until August 5, 2015, for a total of 106 weeks. See Gonzelez Decl. ¶¶ 2, 9, Pls.' Mot. Ex. 3, ECF No. 12-4. Gonzales was only paid in tips and worked 72 hours each week and received no overtime pay. See Id. ¶¶ 5-7. Finally, Ana Velasquez worked as a cook for Diaz Granados from August 2010 until August 5, 2015, working for a total of 156 weeks during the three years prior to filing the Complaint. See Pls.' Mot. ¶ 24; Velasquez Decl. ¶¶ 2, 9, Pls.' Mot. Ex. 4, ECF No. 12-5. She was paid a weekly salary of $600 and worked 72 hours each week and received no overtime pay. See Id. ¶¶ 5, 6-7.

         As a result, Plaintiffs Vanegas, Acosta, and Gonzles allege that they were paid less than a minimum wage and were never compensated for any overtime hours, as mandated by the FLSA, the Maryland Wage and Hour Law (“MWHL”), Md. Code Ann., Lab. & Empl., §§ 3-401 et seq.; and the Maryland Wage Payment and Collection Law (“MWPCL”), Lab. & Empl., §§ 3-501 et seq. Plaintiff Velasquez alleges only overtime violations. On August 5, 2015, Plaintiffs filed suit in this Court against Defendants Diaz Granados, Inc. and Francis Diaz for unpaid wages and enhanced damages under the FLSA, MWHL, and MWPCL. See Compl. ¶¶ 35, 42, 48, 53. On February 29, 2016, Plaintiffs filed a Motion for Clerk's Entry of Default. ECF No. 10. On May 18, 2016, based on Defendants' failure to respond or otherwise defend in this proceeding and pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, the Clerk issued an Entry of Default as to each Defendant. ECF No. 11. Shortly thereafter, Plaintiffs filed the pending Motion for Default Judgment.

         Standard of Review

         Rule 55 of the Federal Rules of Civil Procedure establishes a two-step process when a party applies for default judgment. First, the rule provides that “when a party . . . has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Following the Clerk's entry of default, “the plaintiff [then may] seek a default judgment.” Godlove v. Martinsburg Senior Towers, LP, No. 14-CV-132, 2015 WL 746934, at *1 (N.D. W.Va. Feb. 20, 2015); see also Fed. R. Civ. P. 55(b). “The Fourth Circuit has a ‘strong policy' that ‘cases be decided on their merits.' ” S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 420 (D. Md. 2005) (citing Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002)). However, “default judgment may be appropriate when the adversary process has been halted because of an essentially unresponsive party.” Id. at 420-22.

         In determining whether to grant a motion for 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). If the Court finds that “liability is established, [it] must then determine the appropriate amount of damages.” Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 484 (citing Ryan, 253 F.3d at 780-81). In order to do so, “the court may conduct an evidentiary hearing, or may dispense with a hearing if there is an adequate evidentiary basis in the record from which to calculate an award.” Mata v. G.O. Contractors Grp., Ltd., No. TDC-14-3287, 2015 WL 6674650, at *3 (D. Md. Oct. 29, 2015); see also Fed. R. Civ. P. 55(b).

         Discussion

         Liability

         Plaintiffs' well-pleaded factual allegations, taken as true, establish liability under the FLSA, MWHL, and MWPCL.

Pursuant to the FLSA, an employer must pay an employee an hourly wage no less than the federal minimum wage[, ] and overtime pay for each hour worked in excess of forty hours per week. The MWHL similarly requires that employers pay the applicable minimum wage to their employees and, in [§§ 3-415 and 3-420 of the Labor and Employment Article], that they pay an overtime wage of at least 1.5 times the usual hourly wage for each hour worked in excess of forty hours per week.

         McFeeley v. Jackson St. Entm't, 47 F.Supp.3d 260, 275-76 (D. Md. 2014), aff' d 825 F.3d 235 (4th Cir. 2016) (alterations in original) (internal quotation marks and citations omitted); see also 29 U.S.C. §§ 206(a)(1), 207(a)(1); Md. Code Ann. Lab. & Empl. § 3-413.

         A three-year statute of limitations applies to MWHL claims, while a two-year statute of limitations applies to non-willful FLSA violations. See Md. Code Ann., Cts. & Jud. Proc. § 5- 101; 29 U.S.C. § 255(a). An employer commits a “willful” FLSA violation where it was “not merely negligent” but “knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute.” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). Plaintiffs plead that Defendants committed willful FLSA violations, Compl. ¶ 27, but they provide no facts to support their assertion. As the MWHL provides a longer statute of limitations, I will analyze Defendants' liability and Plaintiffs' entitlement to damages under the state law. As discussed infra, however, Plaintiffs cannot recover enhanced damages under the MWHL but can under the FLSA. Accordingly, the FLSA. 's two-year statute of limitations will apply for my analysis of enhanced damages.

         The federal weekly minimum wage was $7.25 per hour throughout the time period at issue in this case, which translates to a $290 weekly minimum wage for full-time work. See 29 U.S.C. § 206(a)(1)(C). Employers may credit a portion of an employee's tips towards his or her minimum wage, but in order to do so, the employer must pay an alternative minimum wage applicable to tipped employees and notify the employee of the “tip-credit” provision. ...


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