Perez v. El Tequila, LLC
847 F.3d 1247
10th Cir.2017Background
- El Tequila, a Tulsa restaurant chain owned by Carlos Aguirre, was investigated by the DOL Wage and Hour Division after employee complaints. Initial investigation (Harvard location) found only recordkeeping problems based on summary "middle sheets."
- A subsequent unannounced investigation uncovered withheld and altered time sheets, employees reporting 60–70 hour workweeks paid as salary, and admissions by Aguirre that he coached employees to lie and altered records. El Tequila agreed to pay back wages for the Harvard location.
- Later investigations of three other locations (Memorial, Owasso, Broken Arrow) found similar FLSA violations; the Secretary estimated substantial unpaid wages across locations and later sued when El Tequila refused to pay for certain periods.
- El Tequila failed to timely answer the Third Amended Complaint (TAC); the district court denied leave to file an out-of-time answer (no excusable neglect) and deemed certain TAC allegations admitted, including that managers manually altered electronic time reports.
- The district court granted summary judgment for the Secretary on liability (minimum wage, overtime, recordkeeping) and most damages; a jury trial then addressed willfulness, which the jury found against the Secretary, but the district court granted the Secretary JMOL on willfulness and entered final damages totaling $2,137,627.44. The Tenth Circuit affirmed.
Issues
| Issue | Secretary's Argument | El Tequila's Argument | Held |
|---|---|---|---|
| Whether discretionary bonuses were improperly included in regular rate for overtime | Secretary included all remuneration; employer bears burden to prove and exclude discretionary bonuses | Bonuses were discretionary and should be excluded; Secretary should have identified them | Court: Employer bears burden; El Tequila failed to show discretionary bonuses — summary judgment for Secretary affirmed |
| Whether failure to timely answer TAC was excusable neglect | Denial proper because reason given was failure to docket deadline; counsel’s medical issues were not offered as reason | Counsel’s calendaring error and medical condition justified late answer | Court: No abuse of discretion; excusable neglect not shown; denial affirmed |
| Whether deeming TAC allegation admitted and relying on it at summary judgment was improper sanction | Admission resulted from failure to answer; using deemed admission in summary judgment is proper | Treating admission as sanction without proper analysis was improper | Court: Reliance was not a sanction but the effect of Rule 8(b)(6); use in summary judgment proper |
| Whether JMOL on willfulness was improper after jury verdict for defendant | Evidence (altered records, coached lies, withholding records) supported willfulness; Rule 50(a)/(b) arguments were preserved | Jury could reasonably find non-willful (credit accountant, later record edits, calculation errors) | Court: JMOL proper; evidence pointed only one way that violations were willful; judgment affirmed |
Key Cases Cited
- Yousuf v. Cohlmia, 741 F.3d 31 (10th Cir. 2014) (standard for de novo review of summary judgment)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380 (1993) (factors for excusable neglect)
- Quigley v. Rosenthal, 427 F.3d 1232 (10th Cir. 2005) (abuse of discretion review for filing extensions)
- Spradling v. City of Tulsa, 95 F.3d 1492 (10th Cir. 1996) (burden on employer to prove discretionary bonus exclusion)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988) (definition of willfulness under the FLSA)
- Adler v. Wal-Mart Stores, Inc., 144 F.3d 664 (10th Cir. 1998) (court not required to search the record for non-movant's facts)