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Acosta v. Mezcal, Inc.

United States District Court, D. Maryland

June 20, 2019

R. ALEXANDER ACOSTA, Secretary of Labor, U.S. Department of Labor, Plaintiff,
v.
MEZCAL, INC. d/b/a MEZCAL MEXICAN RESTAURANT & BAR, et al., Defendants,

          MEMORANDUM

          James K. Bredar Chief Judge.

         Plaintiff R. Alexander Acosta, Secretary of Labor, United States Department of Labor ("the Secretary"), filed suit against Mezcal, Inc., a corporation, d/b/a Mezcal Mexican Restaurant & Bar ("Mezcal"), and Carlos Ulloa, Mezcal's owner, alleging multiple violations of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. ("FLSA" or "the Act"). The Secretary seeks back wages, liquidated damages, and injunctive relief. 29 U.S.C. §§ 216(b), 217. Now pending before the Court is the Secretary's Amended Motion for Summary Judgment. (ECF No. 53.) No. hearing is required. Local Rule 105.6 (D. Md. 2018). For the reasons set forth below, the Secretary's Motion will be granted in part and denied in part.

         I. Background

         This lawsuit follows an investigation by the Department of Labor ("DOL") into possible violations of the FLSA's minimum wage, overtime, and recordkeeping requirements at Mezcal Restaurant and Bar. 29 U.S.C. §§ 206(a), 207(a)(1), 211 (c); see also Id. § 215(a)(2), (a)(5) (making violations of the foregoing provisions illegal). The suit seeks to collect unpaid wages owed to sixty-two current and former employees listed in Schedule A of the Amended Complaint. (Am. Compl. at 7, ECF No. 6.) The Secretary alleged that Defendants violated the FLSA's minimum wage requirements by paying bartenders and servers less than minimum wage, failing to provide required notice, and operating an invalid tip pool. (Id. ¶ 6.) He also alleged that Defendants failed to pay the overtime premium to employees working in excess of forty hours per week and failed to keep required records of all employees' names, schedules, and pay. (Id. ¶¶ 7-8.) The Secretary alleged that these violations were willful, (id. ¶¶ 6-9), which would extend the statute of limitations to three years, 29 U.S.C. § 255(a), and sought liquidated damages and injunctive relief, in addition to back pay for Schedule A employees. (Am. Compl. at 4-5.)

         II. Legal Standard for Summary Judgment

         "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). The moving party bears the burden of demonstrating the absence of any genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the non-moving party, then a genuine dispute of material fact exists, and summary judgment should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). But, the "mere existence of a scintilla of evidence in support of the [non-moving party's] position" is insufficient. Id. at 252. The non-moving party may not rest upon the pleadings but instead must, by evidentiary showing, set out specific facts showing a genuine dispute for trial. Fed.R.Civ.P. 56(c)(1). Facts and inferences must be viewed in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 380 (2009).

         III. Analysis

         A. Evidentiary Challenges

         Before addressing the substantive claims, the Court will consider Defendants' objections to certain evidence relied on by the Secretary. Defendants argue that several cited exhibits are inadmissible unsworn declarations, are not properly authenticated, and/or contain hearsay. (Opp'n M.S.J, at 5-7, ECF No. 54 (objecting to Plaintiffs Exhibits G, H, and I).)

         The Court turns first to Plaintiffs Exhibit G, which purports to contain signed but unsworn statements from current and former Mezcal employees taken by a DOL investigator during the investigation. (PI. Exh. G, ECF No. 53-9.) Under the 2010 amendment to Rule 56, exhibits need not be in admissible form to be considered at summary judgment, provided they could be put in admissible form at trial. Fed.R.Civ.P. 56(c)(2); see also Kurland v. ACE Am. Ins. Co., Civ. No. JKB-15-2668, 2017 WL 354254, at *3 n.2 (D. Md. Jan. 23, 2017). The rule "contemplates a 'multi-step process by which a proponent may submit evidence, subject to objection . . . and an opportunity [after an objection] for the proponent to either authenticate the document or propose a method [of] doing so at trial."' Kurland, 2017 WL 354254, at *3 n.2 (quoting Ridgell v. Astrue, Civ. No. DKC-10-3280, 2012 WL 707008, at *9 (D. Md. Mar. 2, 2012)) (first alteration in original).

         Because the employee statements are not notarized or taken under seal, they are not self-authenticating under Federal Rule of Evidence 902, and Defendants argue that they do not comport with the statute under which an unsworn declaration may be treated as functionally the same as a sworn statement or oath. 28 U.S.C. § 1746; see also Fed. R. Evid. 902(10). Under section 1746, unsworn declarations must to be in writing, signed, dated, and made "in substantially the following form:... 'I declare (or certify, verify or state), under penalty of perjury that the foregoing is true and correct.'" § 1746(2). Courts construing the statute consider the requirements that an unsworn declaration be (1) avowed to be "true and correct" and (2) made "under penalty of perjury" to be independent elements. See, e.g., In re World Trade Ctr. Disaster Litig., 722 F.3d483, 488 (2d Cir. 2013) (per curiam); DIRECTV, Inc. v. Budden, 420 F.3d 521, 530-31 (5th Cir. 2005); Pollock v. Pollock, 154 F.3d 601, 611 n.20 (6th Cir. 1998); United States v. Ericson, Civ. No. 13-00551-LEK-KSC, 2014 WL 6749120, at *5 (D. Haw. Nov. 30, 2014).

         The employee statements offered by the Secretary fall into two categories. Some "declare" certain facts "under the pains penalties [sic] of perjury." (PI. Exh. G at 1-4, 9, 16-17).[1] Others, appearing on DOL forms, declare that "the aforementioned is correct." (Id. at 5-8, 10-15.) None declares both that the statements are true and that they were made under penalty of perjury. The specific words required by section 1746 are not mere formalities; they are "indicia of truthfulness." Davenport v. Bd. of Trs. of State Ctr. Cmty. Coll. Dist., 654 F.Supp.2d 1073, 1083 (E.D. Cal. 2009). A bedrock presumption of our legal system is that the presence of certain words- words that assert the veracity of the statements made and accept the risk of a specific legal penalty for falsehoods-alert declarants to the gravity of their undertaking and thereby have a meaningful effect on truth-telling and reliability. Because none of the statements contains both required incantations, they do not conform with 28 U.S.C. § 1746.

         In reply, the Secretary argues that the employee statements should nonetheless be considered under the business records exception to the hearsay rule, Fed.R.Evid. 803(6). He offers a declaration from the investigator who purportedly took the statements as authentication. (Reply at 3, ECF No. 63; O. Blanco Decl., ECF No. 63-1.) Documents properly admitted under the business records exception are treated as self-authenticating, but only if their compliance with the exception's requirements is "shown by a certification of the [record's] custodian or another qualified person that complies with a federal statute" or rule. Fed.R.Evid. 902(11); see also Fed. R. Evid. 803(6)(D). The Blanco declaration, however, suffers from the same deficiencies as the statements themselves-although executed under penalty of perjury, it is unsworn and lacks an avowal that the statements contained are true and correct. As such, it does not adhere to 28 U.S.C. § 1746 and cannot be used to authenticate the employee statements in Exhibit G.[2]

         Defendants' remaining evidentiary objections concern failures to provide sworn affidavits authenticating two other exhibits: a list of names, purportedly of kitchen staff, alongside amounts and dates of payment, (PI. Exh. H, ECF No. 53-10); and a sample of payroll records, (PI. Exh. I, ECF No. 53-11). For the same reason that the Blanco declaration fails to authenticate the employee statements, it fails to authenticate these exhibits, as well. However, affidavits or declarations are not the only possible methods of authentication. Authentication only requires "evidence sufficient to support a finding that the item is what the proponent claims it is," which may include "distinctive characteristics" discernible from the face of the document, such as its appearance or contents. Fed.R.Evid. 901(a), (b)(4). Exhibit I includes a heading reading "Mezcal Inc.," a footer reading "Payroll by Payee," and columns containing employee information, dates, hours, and pay amounts, all of which is sufficient for the Court to find that the documents are what the Secretary claims: payroll records from three employees for pay periods between April 2014 and November 2015. Defendants, who are in the best position to dispute the accuracy or provenance of these records, raise no such substantive challenges to their reliability. The Court will therefore consider them.

         Exhibit H, however, lacks such distinctive characteristics. It contains several pages of typed lists of first names, alongside dates, amounts, and handwritten annotations, but no heading or other marking identifying it on its face as a record kept by Defendants. The Court concludes that the Secretary failed to sufficiently authenticate Exhibit H, and it will not be considered.

         The reasons for excluding Exhibits G and H from consideration may appear technical, but exclusion is nonetheless warranted. The Secretary bears the burden of proof in this case, a case in which the Government seeks to wield its disproportionate enforcement powers against private citizens. The Court will not make excuses for the Government when it improperly cuts corners in the discharge of those powers.[3]

         B. FLSA Liability

         Considering only admissible evidence, the Court now turns to the claimed violations. "The FLSA is 'best understood as the minimum wage/maximum hour law, '" enacted to '"protect all covered workers from substandard wages and oppressive working hours.'" U.S. Dep 7 of Labor v. Fire & Safety Investigation Consulting Servs., LLC, 915 F.3d 227, 280 (4th Cir. 2019) (quoting Trejo v. Ryman Hosp. Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015)). Courts construe the Act "'liberally to apply to the furthest reaches consistent with congressional direction.'" Roy v. Cty. of Lexington, 141 F.3d 533, 540 (4th Cir. 1998) (quoting Tony & Susan Alamo Found, v. Sec'y of Labor, 471 U.S. 290, 296 (1985)); see also Purdham v. Fairfax Cty. Sch. Bd, 637 F.3d 421, 427 (4th Cir. 2011) ("The FLSA should be broadly interpreted and applied to effectuate its goals.").

         It is undisputed that Defendant Mezcal is an employer subject to the Act's minimum wage, overtime, and recordkeeping provisions, and that those provisions apply to Schedule A employees. 29 U.S.C. § 203(d), (s)(1). (Ans. ¶¶ 4-5, ECF No. 8; C. Ulloa Dep. At 16:21-17:16, 24:12-20, PI. Exh. A, ECF No. 53-3 (admitting engagement in commerce and that Mezcal's sales exceed the minimum required by 29 U.S.C. § 203(s)(1)(A)(ii)); Opp'n M.S. J. at 5 (conceding employer status for purpose of the pending motion).) See also Speert v. Profwio Mortg. Ventures, LLC, Civ. No. JKB-10-718, 2011 WL 2417133, at *2 (D. Md. June 11, 2011) (finding stipulation to the statutory text of § 203(s)(1) sufficient to support summary judgment). It is also undisputed that Defendant Ulloa, as Mezcal's sole owner, is an employer subject to individual liability under the Act. Individual employer status is determined under the "economic realities test," id. at *3 (citing Howard v. Malcolm, 852 F.2d 101, 104-05 (4th Cir. 1988)), which considers authority to hire, fire, and control employee hours, working conditions, pay, and records, id. (citing Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999)). Ulloa admitted that he had such supervisory and decision-making authority for Schedule A employees. (Ulloa Dep. at 9:2-17; PI. First Req. for Admission Nos. 4-7, PL Exh. B, ECF No. 53-4 (deemed admitted in ECF No. 20); see also Opp'n M.S.J, at 5 (conceding individual employment status for the purpose of the motion).)

         Accordingly, the Secretary has shown as a matter of law that Mezcal and Ulloa are employers subject to the FLSA's recordkeeping, minimum wage, and overtime obligations with respect to Schedule A employees.

         1. ...


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