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Acosta v. Emerald Contractors, Inc.

United States District Court, D. Maryland, Southern Division

September 19, 2019

R. ALEXANDER ACOSTA, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff
v.
EMERALD CONTRACTORS, INC., et al., Defendants.

          REPORT AND RECOMMENDATION

          Charles B. Day United States Magistrate Judge.

         This Report and Recommendation addresses Plaintiff's Motion for Default Judgment (“Plaintiff's “Motion”). ECF No. 19. Plaintiff R. Alexander Acosta, Secretary of Labor of the United States Department of Labor (“Plaintiff”) filed a complaint against Defendants Emerald Contractors, Inc., d/b/a Emerald Plumbing Co. (“Emerald Plumbing”) and Roderick Neither, Sr. (collectively “Defendants”), alleging Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 206, 207, 211(c), 215(a)(2), and 215(a)(5).[1] Pl.'s Compl., ECF No. 1.[2]Plaintiff seeks damages under 29 U.S.C. § 216(c) and an injunction under 29 U.S.C. § 217. Id. at ¶ 11. Pursuant to 28 U.S.C. § 636 and Local Rules 301, the Honorable Theodore D. Chuang referred this matter to the undersigned for the making of a Report and Recommendation concerning default judgment and/or damages. ECF No. 20.

         For the reasons stated herein, I recommend the Court GRANT IN PART AND DENY IN PART WITHOUT PREJUDICE, Plaintiff's Motion.

         I. Factual Background

         On December 6, 2018, Plaintiff commenced this action against Defendants alleging that Defendants violated provisions of the FLSA. Pl.'s Compl. ¶¶ 7-9. The Complaint states that Defendant Emerald Plumbing is a corporation with its principal office located in Temple Hills, Maryland, providing “plumbing services in addition to specialty services, such as drain cleaning, heating, air-conditioning, and electrical work.” Id. at ¶ 2. Defendant Neither is the President and owner of Emerald Plumbing. Id. at ¶ 3. In his capacity as President and owner, Mr. Neither oversaw the day-to-day operations and employment practices of Emerald Plumbing. Id.

         From December 6, 2015 through June 25, 2017 (“the Investigative Period”), Emerald Plumbing employed individuals as plumbers, laborers, and technicians. Id. at ¶ 6. Plaintiff alleges that throughout the Investigative Period, Defendants paid the Employees less than minimum wage because the Employees were paid “the same, fixed biweekly payment regardless of the number of hours employees worked.” Id. at ¶ 7a. Plaintiff alleges that this practice resulted in the Employees receiving an hourly rate that was less than $7.25.[3] Id.

         Plaintiff further alleges that Defendants failed to pay the Employees overtime pay despite the Employees having worked approximately 43 to 51 hours each week during the Investigative Period. Pl.'s Compl. ¶ 8a. Instead, Defendants paid the Employees a fixed biweekly payment based on their normal pay rate. Id. The fixed payment did not include overtime pay for hours worked over 40 hours per week. See Id.

         Lastly, Plaintiff alleges that Defendants failed to make, keep, and preserve records containing the hours the Employees worked each workday, the total pay for overtime hours, and accurate hire and termination dates for the Employees. Id. at ¶ 9.

         On March 17, 2019, Plaintiff served Emerald Plumbing with process. ECF No. 7. On April 2, 2019, Plaintiff served Mr. Neither with process. ECF No. 9. On April 17, the Clerk entered an order of default against Emerald Plumbing. ECF No. 13. On April 25, 2019, the Clerk entered an order of default against Mr. Neither. ECF No. 16.

         On June 14, 2019, Plaintiff's Motion was filed seeking judgment by default against both Defendants for the sum $873, 198.08. Pl.'s Mem. in Supp. 10, ECF No. 19-7. Plaintiff further seeks to permanently enjoin Defendants from violating Sections 206, 207, 211(c), 215(a)(2) and 215(a)(5) of the FLSA. Id. at 10-11.

         II. Legal Background

         Rule 55 of the Federal Rules of Civil Procedure governs entries of default and default judgments. Fed.R.Civ.P. 55. Rule 55(a) provides that “[w]hen 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). A party may request a default judgment in two ways: (1) if a plaintiff's claim is for a sum certain or a sum that can be made certain with computation, a plaintiff may file a request with the Clerk attaching an affidavit showing the amount due; or (2) in all other cases, the party seeking default judgment must apply to the Court. Fed.R.Civ.P. 55(b)(1)-(2). In considering a motion for default judgment, the Court accepts as true the well-pleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (citation omitted); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (“The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.”); see also 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.”). However, the entry of “default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover.” Ryan, 253 F.3d at 780 (citations omitted). The Court “must, therefore, determine whether the well-pleaded allegations in [the] complaint support the relief sought.” Id.; 10A Charles Alan Wright, Arthur R. Miller & Mary K. Kane, Federal Practice & Procedure Civil § 2688.1 (4th ed. 2019) (“Liability 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.”).

         The Fourth Circuit has repeatedly expressed a “strong policy that cases be decided on the merits.” United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993); Colleton Preparatory Acad., Inc. v. Hoover Univ., Inc., 616 F.3d 413, 417 (4th Cir. 2010) (“We have repeatedly expressed a strong preference that, as a general matter, defaults be avoided and that claims and defenses be disposed of on their merits.”). However, default judgment “may be appropriate when the adversary process has been halted because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).

         Still, “acceptance of [the] undisputed facts does not necessarily entitle [the non-defaulting party] to the relief sought.” Ryan, 253 F.3d at 780-81. If the plaintiff establishes liability, the Court then turns to the determination of damages. CGI Finance, Inc. v. Johnson, No. ELH-12-1895, 2013 WL 1192353, at *1 (D. Md. Mar. 21, 2013). In determining damages, the Court cannot accept Plaintiff's factual allegations as true and must make an independent determination. Id.; see also Lawbaugh, 359 F.Supp.2d at 422. Rule 54(c) of the Federal Rules of Civil Procedure limits the type and amount of damages that may be entered as a result of a party's default, stating that a “default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c); Diaz v. Mi Mariachi Latin Restaurant Inc., No. GJH-18-636, 2019 WL 528185, at *2 (D. Md. Feb. 11, 2019) (quoting In re Genesys Data Techs., Inc., 204 F.3d 124, 132 (4th Cir. 2000)) (“In entering default judgment, a court cannot, therefore, award additional damages ‘because the defendant could not reasonably have expected that his damages would exceed' the amount pled in the complaint.”). While the Court may conduct an evidentiary hearing to determine damages, it is not required to do so “if the record supports the damages requested.” Monge v. ...


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