Acosta v. Romero Landscaping, Inc.

          MEMORANDUM OPINION

          Paul W. Grimm, United States District Judge.

         R. Alexander Acosta, while still serving as Secretary of Labor for the U.S. Department of Labor (the “Department”)^[1] filed suit against Jose Romero and Romero Landscaping, Inc. (individually “Mr. Romero” and “Romero Landscaping”; together, “Romero”), alleging that they violated various provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (“FLSA” or “Act”), and seeking to recover back wages and liquidated damages and to enjoin them from committing further violations. Compl., ECF No. 1. Pending is the Department's Motion for Summary Judgment, in which it argues that the undisputed facts establish Romero's liability for failing to pay overtime wages and failing to keep sufficient and accurate records of their Employees' hours and wages, as the FLSA requires. ECF No. 21.^[2]

         The undisputed facts on the record before me demonstrate that Romero violated the FLSA's recordkeeping and overtime compensation provisions. See 29 U.S.C. §§ 207(a)(1), (e), (h), 211(c); 29 C.F.R. § 516.2(a). Therefore, summary judgment is granted in the Department's favor as to liability for these violations. While the undisputed facts establish that injunctive relief is warranted and that Defendants must pay back wages and liquidated damages for the overtime hours the Employees worked without compensation, a genuine dispute exists on the record before me as to the number of hours the Employees worked. Accordingly, the Department's Motion is denied as to the amount of damages, and I will schedule a bench trial to resolve the dispute.

         Evidence before the Court

         Discovery closed on June 21, 2018, ECF Nos. 13, 14, and on October 5, 2018, the Department filed the pending Motion for Summary Judgment. The Department based its Motion on Romero's written discovery responses; declarations from eight of the Employees, who asserted that they consistently worked well over 40 hours each week without receiving time and a half compensation for the overtime hours; the scant payroll records that Romero produced in discovery, showing payments by check for no more than 40 hours each week; Mr. Romero's deposition; and Romero's apparent failure to keep any other wage and hour records. See Pl.'s Mem. 5-6; ECF Nos. 21-5 - 21-14, 21-7, 22.

         In response, Defendants filed their Opposition on December 10, 2018, along with affidavits from Romero and two employees, ECF Nos. 25-2, 25-3, 25-5, and seventy-seven pages of timesheets (the “Timesheets”), ECF No. 25-7, that Mr. Romero claimed to have discovered on October 5, 2018 (the date the Department filed its Motion) and passed to his attorney on December 3, 2018, see Romero Aff. ¶¶ 9, 10, ECF No. 25-5. In its Reply, the Department argues that the Timesheets, which Romero never produced in discovery, should be excluded under Rule 37(c)(1).^[3]Pl.'s Reply 8-10. Romero did not seek leave to file a surreply to address this argument. See Docket. Defendants did, however, assert in their Opposition that the delay was not intentional or a form of foul play, insisting that they would have produced the Timesheets sooner if they had located them sooner, as the Timesheets would have provided a defense to the Department's allegation that they kept inadequate records. Defs.' Opp'n 15 n.12.

         In discovery, the Department requested “[a]ll documents showing the hours worked, during the relevant time period, by employees, including but not limited to payroll records, employee lists, employee schedules, time cards and/or work schedules.” Pl.'s First Req. for Prod. of Docs., No. 5, ECF No. 28-1. Defendants did not produce the Timesheets, which they rely on now in support of their arguments that they kept payroll records and paid the Employees adequate wages for all hours worked.

         “If a party fails to provide information . . ., the party is not allowed to use that information . . . to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c). Though district courts have “broad discretion” to decide whether a failure to disclose was substantially justified or harmless, the Fourth Circuit has held courts “should” consider five factors:

(1) the surprise to the party against whom the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the non-disclosing party's explanation for its failure to disclose the evidence.

Sanchez Carrera v. EMD Sales, Inc., No. JKB-17-3066, 2019 WL 3946469, at *4 (D. Md. Aug. 21, 2019) (quoting S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003)). The party that fails to disclose the evidence bears the burden of “establish[ing] that nondisclosure was substantially justified or harmless.” Id. (quoting Wilkins v. Montgomery, 751 F.3d 214, 222 (4th Cir. 2014)).

         Regarding the first factor, Defendants' reliance on the Timesheets clearly was surprising, in light of their failure to produce them in response to the Department's March 29, 2018 request for production of documents; their admission that they did not “maintain an account of hours worked for the employees listed in Schedule A” or the Employees' “overtime earnings” until after the Department's investigation concluded; and their interrogatory answer stating that they did not begin tracking work hours until after the investigation concluded. Defs.' Resp. to Req. for Admissions Nos. 12, 13, ECF No. 21-5; Defs.' Ans. to Interrog. No. 9, ECF No. 21-6. But, as for the second factor, the Department could cure the surprise before trial by seeking to reopen discovery, which it has not done. Certainly, they can no longer cure the surprise for purposes of the pending motion, because they did not ask to stay resolution of the motion while they sought additional discovery. There is not harm in this surprise, however, as consideration of the Timesheets, which cover only a part of the period at issue, does not affect the outcome of the motion. As discussed further below, with or without the Timesheets, no genuine dispute exists as to Defendants' failure to keep adequate records or to pay the Employees time-and-a-half for all of the overtime hours they worked. And, with or without the Timesheets, a genuine dispute exists regarding the amount of overtime wages Defendants now must pay. Thus, this evidence's importance is minimal.

         Generally, when a party “fail[s] to disclose . . . information prior to the close of discovery and the filing of summary judgment motions, ” as Romero did here, this failure “argues strongly in favor of exclusion.” Sanchez Carrera, 2019 WL 3946469, at *4. Yet when, as here, the Court has not scheduled trial yet, the factor concerning disruption of trial “only leans slightly in favor of exclusion, ” even though reopening discovery would prolong resolution of the case. Id. For example, in MCI Communications Services, Inc. v. American Infrastructure-MD, Inc., the Court concluded that this factor was “split between the two parties” because “the trial date ha[d] not been set, ” but the disclosure “[came] in the midst of competing cross-motions for partial summary judgment. No. GLR-11-3767, 2013 WL 4086401, at *9 (D. Md. Aug. 12, 2013).

         Defendants provide very little explanation for the belated disclosure of the Timesheets. But, what they do say is significant: They note that producing the Timesheets was in Romero's best interest when faced with allegations of inadequate record keeping. See Pl.'s Opp'n 15 n.12. Thus, the delayed production does not appear to have been willful. Weighing these factors, it is clear that, despite the surprise, it is curable and admission of the Timesheets is harmless because the Department could seek additional discovery and trial has not been scheduled and, more significantly, the Timesheets do not impact the Court's analysis of the Department's claims. Therefore, I will not exclude the exhibit. See S. States Rack & Fixture, 318 F.3d at 597; Sanchez Carrera, 2019 WL 3946469, at *4.

         Standard of Review

         In reviewing a motion for summary judgment, the Court considers the facts in the light most favorable to the nonmovant, drawing all justifiable inferences in that party's favor. Ricci v. DeStefano, 557 U.S. 557, 585-86 (2009); George & Co., LLC v. Imagination Entm't Ltd., 575 F.3d 383, 391-92 (4th Cir. 2009). Summary judgment is proper when the moving party demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other materials, ” 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), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 & n.10 (1986). The existence of only a “scintilla of evidence” is not enough to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). Instead, the evidentiary materials submitted must show facts from which the finder of fact reasonably could find for the party opposing summary judgment. Id.

         Background

         Romero Landscaping, Inc. “is a residential landscaping company”; Jose Romero owns 100% of the company. Pl.'s Mem. 4; Defs.' Opp'n 6, ¶ 1.^[4] It is undisputed that the company is subject to the provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (“FLSA” or “Act”), and that the employees listed in Schedule A of Plaintiff's Complaint (“Employees”) are covered under the Act. Pl.'s Mem. 4, 9; Defs.' Opp'n 6, ¶ 1. It also is undisputed that Mr. Romero qualifies as an “employer” under the Act, see Pl.'s Mem. 5, ¶ 5; Defs.' Opp'n 6, ¶ 1; Pl.'s Reply 2, and therefore he can be held jointly and severally liable for his company's violations of the Act. See 29 U.S.C. § 203(d).

         The Department investigated Romero's payroll practices from March 7, 2014 to March 7, 2017. Defs.' Opp'n 2; Pl.'s Reply 14. The parties agree that the earliest damages the Department could recover, however, would be from June 8, 2014, and only if the three-year statute of limitations for willful violations applies. Defs.' Opp'n 3; Pl.'s Reply 14. It is undisputed that, during that period, the Employees were paid regular wages for all hours worked, even when they worked overtime. Romero Aff ¶ 12; B. Batz Decl. ¶¶ 3-4, ECF No. 21-8; C. Batz Decl. ¶¶ 4-5, ECF No. 21-9; V. Batz Decl. ¶¶ 3-4, ECF No. 21-13; Lopez Decl. ¶¶ 3-4, ECF No. 21-10; Ramirez Decl. ¶¶ 3, 5, ECF No. 21-12; Rosales Decl. ¶¶ 4-5, ECF No. 21-14; L. Batz Decl. ¶¶ 3-4, ECF No. 21-11.

         Their paystubs for the period at issue reflect the payments of regular wages for up to forty hours per week but no hours worked or wages paid beyond those forty hours. Paystubs, ECF Nos. 21-7, 25-8, 25-9. The Department submitted evidence that the Employees regularly worked overtime, typically working between fifty and sixty-five hours per week, but they were not paid one and one-half times their wages for overtime hours. B. Batz Decl. ¶¶ 4-6; C. Batz Decl. ¶¶ 5-7; V. Batz Decl. ¶¶ 4-6; Lopez Decl. ¶¶ 4, 6-7; Ramirez Decl. ¶¶ 5-7; Rosales Decl. ¶¶ 4-7; L. Batz Decl. ¶¶ 4-5. Defendants agree that the Employees worked overtime, but they submitted evidence to show that it was not as frequent as the Employees claim and that the Employees' extra compensation for the overtime hours satisfies the FLSA requirements. Romero Aff. ¶ 3, 5, 9, 11; E. Cruz Aff. ¶¶ 3, 5, ECF No. 25-2; W. Cruz Aff. ¶¶ 3, 5, ECF No. 25-3; Timesheets.

         Discussion

         The Department seeks summary judgment on its claim that Romero's payroll records do not meet the requirements of the FLSA, as well as its claim that Romero failed to pay the Employees time-and-a-half for overtime hours worked. Pl.'s Mem. 2-3.

         Recordkeeping ...