Sаra WILSON, On behalf of herself and all others similarly situated, Plaintiff, v. HUNAM INN, INC., et al., Defendants.
Civ. Action No. 14-1522 (EGS)
United States District Court, District of Columbia.
Signed September 1, 2015
Emmet G. Sullivan, United States District Judge
Joseph Peter Harkins, Steven E. Kap-lan, Littler Mendelson, P.C., Washington, DC, for Defendants.
MEMORANDUM OPINION
Emmet G. Sullivan, United States District Judge
Plaintiff Sara Wilson, on behalf of herself and all others similarly situated, brings this action against Defendant Hunam Inn, Inc., and individual Defendants Donald Eric Little, and David Perruzza, alleging violations of the Fair Labor Standards Act (FLSA),
I. BACKGROUND
Ms. Wilson is a former bartender at a D.C. nightclub operated by Defendant Hunam Inn, Inc. Compl., ECF No. 1 at ¶¶ 1, 2. Hunam Inn, Inc. is a D.C. corporation doing business under the names “Cobalt” and “30 Degrees.” Id. at ¶ 2. Defendant Donald Eric Little is the sole owner and President of Hunam Inn, Inc. Id. at ¶ 3; see also Defs.’ Mot., ECF No. 8-2 at ¶ 3. Defendant David Perruzza is a corporate officer at Hunam Inn, Inc., whose responsibilities include signing payroll checks. Compl., ECF No. 1 аt ¶ 4; Defs.’ Mot. at 8-2 at ¶ 4.
Ms. Wilson alleges that while employed as a bartender at Cobalt, she was not paid minimum wage or overtime. Compl., ECF No. 1, at ¶¶ 14, 15. Ms. Wilson alleges that her employers used an invalid “tip pooling” arrangement to avoid paying their employees minimum wage. Id. at ¶¶ 18, 53, 55. While under certain circumstances the FLSA allows employers to pay “tipped employees” at an hourly rate below the minimum wage, Ms. Wilson argues that the tip pooling arrangement used at Cobalt failed to meet the statutory criteria. Id. at 56. First, Ms. Wilson alleges that under the tip pool system, she and the other bartenders were forced to share their tips with non-tipped employees, such as “bar backs” and “floor employees,” who do nоt ordinarily receive tips from customers. Id. at ¶ 55. Second, at some point during Ms. Wilson‘s employ with Cobalt, the nightclub‘s cleaning staff was fired and Ms. Wilson and the other bartenders were required to assume additional cleaning duties, such as cleaning the nightclub bathrooms. Id. at ¶¶ 18-19. Ms. Wilson argues that these additional cleaning duties were not exempt from the minimum wage requirement and that thе bartenders should have been paid minimum wage for time spent performing this work. Id. at ¶ 18. She further alleges that the Defendants failed to provide her adequate notice that she would be compensated under the “tipped employee” exemption to the FLSA‘s minimum wage requirement. Id. at ¶ 60. Finally, Ms. Wilson alleges that
On October 21, 2014, Defendants moved for partial dismissal of the Plaintiff‘s complaint pursuant to
In the alternative, Defendants move for partial summary judgment. First, Defendants argue that Ms. Wilson never worked more than 40 hours per week and therefore, the Court should grant summary judgment for the Defendants on Ms. Wilson‘s overtime claims under the FLSA and DCMWA. Dеfs.’ Mot., ECF No. 8-3 at 10-11. Second, Defendants rearticulate their claims that Mr. Little and Mr. Perruzza are not Ms. Wilson‘s employers and seek summary judgment as to themselves individually. Id. at 13-16.
II. STANDARDS OF REVIEW
A. Motion to Dismiss
A motion to dismiss under
When ruling on a
B. Motion for Summary Judgment
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.”
III. ANALYSIS
A. Ms. Wilson has sufficiently pleaded that Mr. Little and Mr. Perruzza are her employers under the FLSA and DCMWA
Mr. Little and Mr. Perruzza argue that Ms. Wilson‘s allegations are insufficient to establish that they were her “employers” under the FLSA or DCMWA. Defs.’ Mot., ECF No. 8-3 at 6. Accordingly, the individual Defendants seek dismissal of the complaint.1 The FLSA defines employer to include “any person acting directly or indirectly in the interest of the employer in relation to any employee...”
The Supreme Court has emphasized the “expansiveness of the Act‘s definition of ‘employer.‘” Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 38 L.Ed.2d 406 (1973). Indeed, the definition of employer is “necessarily a broad one in accordance with the remedial purpose of the Act.” Morrison v. Int‘l Programs Consortium, 253 F.3d 5, 11 (D.C.Cir.2001).2 In determining whether a party should bear liability as an employеr, courts look to the “economic reality” of the employment relationship. Morrison, 253 F.3d at 10-11. Courts must assess the “totality of the circumstances,” considering factors such as whether the putative employer (1) had the power to hire and fire the employees; (2) supervised and controlled employee work; (3) determined the rate and method of payment, and (4) maintained employment records. Id. at 11 (quoting Henthorn v. Dept. of Navy, 29 F.3d 682, 684 (D.C.Cir.1994)).
An employee may have more than one employer under the FLSA. Ventura v. BEBO Foods, Inc., 595 F.Supp.2d 77, 85 (D.D.C.2010). Application of the economic reality test may demonstrate that corporate officers, along with the corporation itself, are liable as employers. Id. Indeed, the “overwhelming weight of
Ms. Wilson‘s complaint allegеs that the individual Defendants were officers of Hunam Inn, Inc. with “primary responsibility for the operation and management of the Establishment, including establishing working conditions and controlling the schedule and wages paid to individuals working for Defendant Hunam Inn, Inc.” Compl. ECF No. 1 at ¶¶ 3, 4. According to Ms. Wilson, “Defendants hired Plaintiff and all similarly situated bartenders, had the ability to discipline them, fire them, schedule them, and adjust their schedules and wages.” Id. at ¶ 24. Further, Ms. Wilson alleges that the Cobalt employees’ pay and “opportunity for wages and income was limited to the pay method set exclusively by Defendants.” Id. at ¶ 26.
In moving to dismiss Plaintiff‘s complaint as to themselves individually, Defendants Mr. Little and Mr. Perruzza do not dispute that they are corporate officers of Hunam Inn, Inc. Dеfs.’ Mot., ECF No. 8-2 at ¶¶ 3, 4. Defendants’ only argument is that Ms. Wilson‘s complaint is legally insufficient because her allegations are “nothing more than a formulaic recitation of various prongs of the economic reality test” and that her allegations are “insufficient to raise Plaintiff‘s right to relief above a speculative level.” Id., ECF No. 8-3 at 7.
Mr. Little is the owner of Hunam Inn, Inc. Compl., ECF No. 1 аt ¶ 3. A Defendant‘s ownership interest in an employer corporation, while not dispositive of employer status under the FLSA, certainly raises a plausible inference that the individual possessed the requisite “operational control” over the covered entity. See Ruffin, 800 F.Supp.2d at 269; Villar, 664 F.Supp.2d at 97.
As Vice President of Hunam Inn, Inc., Mr. Perruzza is a corporate officer. Corporate officers are liable as employers under the FLSA as long as the officer acts, or has the power to act, on behalf of the corporation vis-à-vis its employees. See Donovan, 712 F.2d at 1511 (citing Donovan v. Sabine Irrigation CO., Inc., 695 F.2d 190, 194 (5th Cir.1983) (abrogated on other grounds)); see also Finke v. Kirtland Cmty. College Bd. of Trustees, 359 F.Supp.2d 593, 598-599 (E.D.Mich.2005).
In sum, Ms. Wilson alleges that Mr. Little and Mr. Perruzza supervised Ms. Wilson‘s working conditions and controlled her schedule and wages. Compl., ECF No. 1 at ¶¶ 3, 4. They had the ability to hire and fire the corpоration‘s employees and to set their wages and schedules. Id. at ¶¶ 24, 26. These allegations are sufficient to state a plausible claim under the economic reality test. Accordingly, Defendants’ motion to dismiss the complaint as to Mr. Little and Mr. Perruzza is denied.
B. Given the fact-intensive nature of the willfulness inquiry, dismissing Ms. Wilson‘s “third-year” claim prior to discovery would be premature
Defendants argue that Plaintiff has failed to allege facts capable of supporting
The FLSA contains a two-year statute of limitations on actions to enforce its provisions, but allows a three-year limitations period for a “cause of action arising оut of a willful violation.”
The determination of willfulness for purposes of the FLSA is necessarily fact-specific. Figueroa v. District of Columbia, 923 F.Supp.2d 159, 167 (D.D.C.2013). As such, the issue of willfulness is often left to the ultimate trier of fact. See Figueroa, 923 F.Supp.2d at 167; Youngblood v. Vistronix, Inc., No. 05-CIV-21, 2006 WL 2092636, at *5 (D.D.C. July 27, 2006); Wright v. U-Let-Us Skycap Servs., 648 F.Supp. 1216, 1218 (D.Colo.1986). Indeed, some courts consider determination of the willfulness issue wholly inappropriate at the motion to dismiss stage. Acosta Colon v. Wyeth Pharm. Co., 363 F.Supp.2d 24, 29 (D.P.R.2005); see also Hunter v. Sprint Corp., 453 F.Supp.2d 44, 54 (D.D.C. 2006) (“a determination about the applicable statute of limitations cannot precede a determination that the employer is, in fact, liable.“). Other courts have allowed a Plaintiff‘s complaint to survive a
The Court finds it plausible on the facts alleged that Ms. Wilson will be able to demonstrate a willful FLSA violation. Here, Plaintiff alleges a fairly elaborate tip pooling scheme wherein Defendants (1) fired those employees to whom they would have to pay minimum wage, such as the cleaning staff, (2) required their bartenders to perform cleaning duties, for which the bartenders were neither tipped nоr paid minimum wage, and (3) required the bartenders to share their tips with non-tipped employees. Compl., ECF No. 1 at ¶¶ 16-23. As Defendants acknowledge, the ultimate merits of Plaintiff‘s minimum wage claim will turn on whether the scheme employed by Defendants complied with the FLSA‘s “tipped employee” exemption. Defs.’ Mot., ECF No. 8-3 at 12. Defendants maintain that their policy is compliant. Id. at 2 n.2, 12.
Thе Court need not comment on the propriety of the Defendants’ tip pooling scheme for purposes of ruling on this motion. Regardless of the ultimate outcome on that issue, Ms. Wilson alleges that Defendants never notified her that Defendants would be using the tipped employee exception to the FLSA‘s minimum wage
C. Ms. Wilson is entitled to discovery on her overtime claims
The Defendants argue that they are entitled to summary judgment on Ms. Wilson‘s overtime claims because, according to Defendants, Ms. Wilson never worked more than 40 hours per week. Defs.’ Mot., ECF No. 8-3 at 10. In support of this contention, Defendants attach a declaration from Steven Smith, payroll manager for Hunam Inn, Inc., and a series of photocopies purporting to be Plaintiff‘s time records. Id. at 8-4, 8-5. In his declaration, Mr. Smith provides that “[e]аch week the bar managers provide me with time records of the bartenders,” and that “[a]ccording to the time records, Ms. Wilson never worked more than 40 hours in a workweek in the time period reflected in the records.” Id., ECF No. 8-4 at ¶¶ 2-3. The attached records do not reflect Plaintiff working in excess of 40 hours per week during any workweek reflected in the recоrds. Id., ECF No. 8-5. Plaintiff argues that she needs discovery to test the veracity of Mr. Smith‘s claims and the accuracy of the purported time records. Pl.‘s Op. at 18.
Generally, courts are reluctant to consider a motion for summary judgment prior to discovery. Convertino v. Dep‘t of Justice, 684 F.3d 93, 99 (D.C.Cir.2012) (“summary judgment is premature until all parties have had a full opportunity for discovery“) (internal citations and quotation mаrks omitted); Americable Int‘l v. Dep‘t of Navy, 129 F.3d 1271, 1274 (D.C.Cir.1997) (“summary judgment ordinarily is proper only after the [P]laintiff has been given adequate time for discovery“) (internal citations and quotation marks omitted).
Upon review of the parties’ filings, the Court concludes that Defendants’ motion for summary judgment is premature. Ms. Wilson should be allowed to develop her claims through discovery. Further,
D. Ms. Wilson is entitled to discovery on whether the individual Defendants are her employers under the FLSA and DCMWA
As stated above, Ms. Wilson has plausibly stated a claim against Mr. Little and Mr. Perruzza under the economic reality test. Further, in light of the broad policy of allowing both parties an adequate opportunity for discovery prior to ruling on a motion for summary judgment, Defendants’ motion is premature at this time. Should the evidence ultimately reveal that defendants are not, in fact, Ms. Wilson‘s employers, defendants remain free to renew their motion for summary judgment upon the close of discovery. Accordingly, Defendants’ motion for summary judgment as to Mr. Little and Mr. Perruzza will be denied without prejudice.
IV. CONCLUSION
For the foregоing reasons, Defendants’ Motion to Partially Dismiss Plaintiff‘s Complaint or, in the alternative, for Partial Summary Judgment is DENIED. An appropriate order accompanies this Memorandum Opinion.
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