United States District Court, D. Maryland
R. ALEXANDER ACOSTA, Secretary of Labor United States Department of Labor Wage and Hour Division, Plaintiff,
VERA'S WHITE SANDS BEACH CLUB, LLC, et al., Defendants.
XINIS UNITED STATES DISTRICT JUDGE
before the Court are two competing motions-Defendant Steven
Stanley's motion to vacate entry of default and Plaintiff
R. Alexander Acosta,  Secretary of Labor, United States
Department of Labor (“Secretary”)'s motion
for default judgment against Stanley and Vera's White
Sands Beach Club, LLC (“Vera's”). ECF Nos.
69, 72. The issues have been fully briefed, and a recorded
call was held on April 11, 2019. For the following reasons,
Stanley's motion to vacate order of default is GRANTED
and the Secretary's motion for entry of default judgment
is GRANTED as to Vera's and DENIED as MOOT as to Stanley.
Factual Background 
Stanley is part-owner of Vera's, a full-service
restaurant and night club located in the State of Maryland.
ECF No. 37 ¶ II. Stanley, together with the
restaurant's manager, Casey St. John, have hired and
directed the work of employees, and determined their rates of
pay. Id. ¶¶ III, IV. Between September 15,
2013 and October 25, 2015, Vera's paid its cooks a single
hourly wage and did not pay overtime rates for hours worked
in excess of forty hours per week. Id. ¶
VII(1). In addition, Defendants classified Michael Maguire,
an employee who primarily cooked and cleaned, as exempt from
wage and hour requirements. Id. ¶ VII(2).
Defendants paid Maguire a salary of $400 per week with no
overtime. Id. The restaurant also paid
manager/bartender Dustin Crigger a daily rate of $125.00,
which resulted in a weekly salary of $375.00 on weeks when
Mr. Crigger worked for three days only. Id. ¶
the same period, the restaurant required tipped employees to
tip out ten percent of their food sales to cooks, who were
non-tipped employees. Id. ¶ VIII. Defendants
also deducted five dollars each day from each bartender,
which Defendants used to tip out non-tipped staff such as
“expo persons/runners.” Id. ¶
VIII(3). Defendants did not pay the tipped staff the regular
minimum wage of $7.25 per hour and did not pay cash wages to
bartenders and servers when their credit card tips added up
to $8.50 per hour. Id. ¶ VIII(5). Additionally,
the restaurant regularly failed to pay out tips earned by
servers and bartenders, id. ¶ VIII(2), and
failed to make, keep, or preserve adequate records of
employee wages, hours, and employment conditions. Id.
¶ IX. Defendants, more particularly, did not make
or maintain any records of the hours worked by Maguire and
Crigger. Id. ¶ VIII(4).
March 16, 2016, the Secretary of Labor brought this action
against Defendants Vera's and Casey St. John, the
restaurant manager. ECF No. 1. The Secretary sought to enjoin
the restaurant and its manager from violating Sections 6, 7
and 11 of the Fair Labor Standards Act of 1938, as amended,
(“Act” or “FLSA”), and for judgment
against Defendants for $85, 437.71 in back wage compensation
and $85, 437.71 in liquidated damages. 29 U.S.C. § 201,
et seq.; ECF No. 1 ¶ XI.
17, 2017, the Secretary amended the Complaint to add Stanley,
the restaurant's partial owner, as a Defendant. ECF No.
37 ¶ III. Vera's and Stanley jointly answered the
amended Complaint. ECF No. 48. St. John, who was represented
by separate counsel, did not join in the answer. On October
30, 2017, Vera's and Stanley filed a motion to withdraw
their answer. ECF No. 54. Counsel for Vera's and Stanley
also filed a separate motion to withdraw as counsel. ECF No.
53. Vera's and Stanley instructed their counsel to file
both motions because they no longer wished to defend this
action due to the cost and “so that Plaintiff can seek
a default judgment.” ECF No. 54 ¶ 5. On November
20, 2017, the Court granted the motions to withdraw counsel
and the answer. ECF No. 62. On January 4, 2018, the Court
entered a Consent Judgment against Casey St. John in the
amount of $10, 000.00, and St. John was subsequently
terminated as an individual defendant. ECF No. 65.
eight months later, Vera's and Stanley having failed to
answer, the Secretary moved for Clerk's entry of default
pursuant to Rule 55(a) of the Federal Rules of Civil
Procedure. ECF No. 66. The Clerk of the Court entered default
as to both Defendants on July 25, 2018. ECF No. 68. Two
months later, Stanley, having retained new counsel, moved to
vacate the Clerk's entry of default. ECF No. 69. The
Secretary had not yet moved for default judgment against
Vera's and Stanley; it did so about a month after
Stanley's motion, which Stanley opposed. ECF Nos. 72, 74.
The Court addresses each motion in turn.
Motion to Vacate Clerk's Entry of Default
moves to vacate the entry of default, contending that at the
time he agreed to withdraw his answer and allow default
judgment to be entered, he did not appreciate that he could
be held personally liable for the losses in this case. ECF
No. 69. Stanley further confirmed, during the Court's
recorded teleconference, that he moves to set aside default
judgment solely to challenge whether he meets the definition
of “employer” under the FLSA, a position
consistent with Stanley's assertion that he did not
appreciate the implications of default
to Federal Rule of Civil Procedure 55(c), a court may
“set aside an entry of default for good cause.”
Fed.R.Civ.P. 55(c). The United States Court of Appeals for
the Fourth Circuit has announced a “strong policy that
cases be decided on their merits.” United States v.
Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993).
Therefore, a motion to vacate default must be
“liberally construed in order to provide relief from
the onerous consequences of defaults and default
judgments.” Tolson v. Hodge, 411 F.2d 123, 130
(4th Cir. 1969). “Any doubts about whether relief
should be granted should be resolved in favor of setting
aside the default so that the case may be heard on the
merits.” Id. The moving party “should
proffer evidence that would permit a finding for the
defaulting party.” Russell v. Krowne, DKC-08-
2468, 2013 WL 66620, at *2 (D. Md. Jan. 3, 2013).
considering whether to set aside an entry of default, the
Court weighs six factors: (1) whether the movant has a
meritorious defense, (2) whether the movant acted with
reasonable promptness, (3) whether the movant bears personal
responsibility for the entry of default, (4) any prejudice to
the non-moving party, (5) any history of dilatory action, and
(6) the availability of lesser sanctions short of default
judgment. See Colleton v. Hoover Universal, Inc.,
616 F.3d 413, 417 (4th Cir. 2010); see also Payne ex rel.
Estate of Calzada v. Brake, 439 F.3d 198, 203 (4th Cir.
2006). The Court considers each factor as pertinent to
Stanley has demonstrated the possibility of a meritorious
defense. A defense is meritorious when the defendant makes a
factual showing that “would permit a finding for the
defaulting party.” Russell, 2013 WL 66620 at
*2. A movant's burden for proffering a meritorious
defense is not onerous; all that is necessary
“‘is to allege sufficient facts that, if true,
would constitute a defense.'” Id. (quoting
U.S. v. Signed Pers. Check No. 730 of Yubran S.
Mesle, 615 F.3d 1085, 1094 (9th Cir. 2010)); see
also Augusta Fiberglass Coatings, Inc., v. Fodor
Contracting, 843 F.2d 808, 812 (4th Cir. 1988)
(considering “‘whether there is some possibility
that the outcome . . . after a full trial will be contrary to
the result achieved by the default'”) (quoting 10
C. Wright, A. Miller & M. Kane, Fed. Prac. & Proc.
§ 2697, at 531 (2d ed.1983)).
intends to defend this action solely on the grounds that he
was not an employer subject to personal liability under the
FLSA. In determining whether an individual defendant is an
employer, courts look “at the ‘economic
reality' of an individual's status in the
workplace.” Gionfriddo v. Jason Zink, LLC, 769
F.Supp.2d 880, 890 (D. Md. 2011) (quoting Schultz v.
Capital Int'l Sec., 466 F.3d 298, 304 (4th Cir.
2006)). Factors include “the person's job
description, his or her financial interest in the enterprise,
and whether or not the individual exercises control over the
employment relationship.” Gionfriddo, 769
F.Supp.2d at 890.
avers, by affidavit, that he “had no role in the
management of the restaurant.” ECF Nos. 69 ¶ 2,
69-1. Instead, contends Stanley, Defendant St. John was
responsible for “[a]ll restaurant management
duties.” ECF Nos. 69 ¶ 3, 69-1. Although stated in
general terms, this factual proffer is sufficient to
demonstrate Stanley's potential success at trial. See
United Sheet Metal, Inc., v. Federal Ins., PWG-13-3791,
2014 WL 1761122, at *2 (D. Md. Apr. 29, 2014) (finding that
while the defendant's affidavit was not detailed, it was
“more than a ‘bald allegation'; it [was]
evidentiary proof”) (quoting Dahl v. Kanawha Inv.
Holding Co., 161 F.R.D. 673, 684-85 (N.D. Iowa 1995));
Caseres v. S&R Mgmt., 2012 WL 5250561, at *5 (D.