Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-04963/USCOURTS-cand-3_15-cv-04963-5/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

THOMAS E. PEREZ, Secretary of Labor,

United States Department of Labor,

Plaintiff,

 v.

i2a TECHNOLOGIES, INC., a California

Corporation, VICTOR BATINOVICH, an

individual,

Defendants. /

No. C 15-04963 WHA

ORDER FINDING DEFENDANTS

IN CIVIL CONTEMPT OF

TEMPORARY RESTRAINING

ORDER AND PRELIMINARY

INJUNCTION

INTRODUCTION

In this wage-and-hour action, the Secretary of Labor seeks an order holding defendants

in civil contempt for failing to comply with a temporary restraining order and subsequent

preliminary injunction. At a hearing, defendants were ordered to show cause why they should

not be held in civil contempt. For the reasons stated below, the motion of the Secretary of

Labor is GRANTED. 

STATEMENT

Defendant i2a Technologies, Inc., is a California corporation that manufactures

semiconductors. i2a filed a Chapter 11 bankruptcy petition in October 2014 but voluntarily

dismissed the case in April 2015. In connection with that dismissal, i2a entered into an

agreement with its secured creditors, Wells Fargo & Co. and the United States Internal Revenue

Service, which provided for the distribution of proceeds from any sale or liquidation of i2a

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(Dkt. No. 23 at 37–40). i2a’s management and ownership attempted to sell the company to new

investors to no avail.

At all material times, defendant Victor Batinovich owned at least sixty-five percent of

i2a and maintained sole authority over the company’s bank account. Batinovich was (and

remains) one of three members of the board of directors of i2a. He also served as the

company’s chief executive officer, has never officially resigned, and appears still to have such

authority. i2a required Batinovich’s signature in order to pay employees, utilities bills, rent,

bank loans, or any vendors (and still does). Batinovich held the authority to hire and fire

employees. The California Secretary of State lists Batinovich as the agent for service of process

for i2a (Nlemigbo Decl. at 1–2; Pham Decl., Exh. E; Solomon Decl. at 1).

The Department of Labor began investigating i2a in May 2015 based on tips from

employees that the company failed to pay its workers for certain bi-weekly pay periods. This

investigation revealed that i2a’s workers had not been paid for the bi-weekly pay periods that

ended on August 24, 2014, September 7, 2014, September 21, 2014, October 5, 2014, April 19,

2015, May 3, 2015, May 17, 2015, May 31, 2015, June 14, 2015, October 4, 2015, October 18,

2015, November 1, 2015, and November 15, 2015. To date, over two hundred thousand dollars

in promised wages remain outstanding (Pham Decl. ¶¶ 6–10, 16, 19 –24, Exh. C).

Batinovich stated that he left i2a in July 2015, but he never communicated his departure

to i2a’s employees and never directed them to stop working. Batinovich failed to resign his

positions on the board of directors or as the chief executive officer of the company. Batinovich

returned to i2a’s premises intermittently since July and signed paychecks as late as September

29 (or allowed pre-signed checks to be used). Batinovich retained sole authority over i2a’s

bank account, and the company fell behind on its utilities bills and rent. Batinovich also

continued his efforts to sell the company to investors (Nlemigbo Decl. at 1–2; Pham Decl., Exh.

E). 

Frederick Solomon, the engineering manager, oversaw the “engineering” work

performed at i2a after Batinovich purportedly left the company (Nlemigbo Decl. at 2). He

testified that he and other employees kept working because “we have a job to do and nobody

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has asked us to stop coming in. . . . [C]ustomers expects [sic] us to do our job” (Solomon Decl.

at 1). Solomon lacked the authority to fire the employees and close i2a’s headquarters.

The Secretary commenced this action for violations of the Fair Labor Standards Act in

October 2015 and shortly thereafter moved for a temporary restraining order. The Secretary

served Batinovich and i2a (through Batinovich, its agent for the service of process) with its

motion for a temporary restraining order, supporting declarations, the complaint, and the order

setting a hearing on the temporary restraining order by mailing the documents overnight to i2a’s

headquarters, addressed to Batinovich. On November 3, after a hearing at which Batinovich did

not appear, a temporary restraining order issued. That order provided, in relevant part (Dkt. No.

12 at 3):

1. Defendants are enjoined and restrained from violating the

provisions of Section 15(a)(1) of the Fair Labor Standards

Act, 29 U.S.C. 215(a)(1), in any of the following manners: 

Defendants shall not transport, ship, deliver, or sell in

commerce, or offer to do so, any goods produced by i2a

Technologies, Inc., or Victor Batinovich as to which the

U.S. Department of Labor notifies or has notified

Defendants in writing that it has a good faith basis to believe

were produced by employees who were not paid at least

minimum wage in violation of Section 6 of the FLSA, 29

U.S.C. 2016;

2. Defendants shall make good on the payrolls due to their

employees including paying their employees at least the

federal minimum wage of $7.25 per hour as required by

Section 6 of the FLSA, 29 U.S.C. 206; and

3. Defendants are enjoined from violating the provisions of

Section 15(a)(3) of the FLSA, 29 U.S.C. 215(a)(4) and shall

not discourage employees in any way not to pursue their

rights under the FLSA or coerce them in any way to work

without pay.

The order only referred to defendants’ failure to pay any wages for the pay periods that ended

on October 4, 2015, and October 18, 2015, and further pay periods as they came due (id. at 2). 

Finally, that order also ordered Batinovich to show cause why a preliminary injunction should

not issue. The Secretary served the temporary restraining order and order to show cause, its

motion and supporting declarations, and the complaint by hand delivering the documents to

Batinovich’s adult son at i2a’s headquarters and by mailing those documents to Batinovich at

the same address. 

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On November 17, after a hearing at which Batinovich appeared pro se, an order

converted the temporary restraining order to a preliminary injunction (Dkt. No. 19). Counsel

for the Secretary personally served Batinovich with the temporary restraining order and the

complaint in this action at that hearing. Batinovich indicated that he could receive further

service at the headquarters of i2a. At the hearing, the undersigned ordered Batinovich to appear

at a hearing on December 1 to show cause why he should not be held in contempt of the

temporary restraining order (Dkt. No. 23 at 47–50). Following the November 17 hearing, the

hourly employees ceased coming in to i2a’s headquarters. Only Solomon and Batinovich’s son,

Andrew, continue to perform any work for the company.

To date, neither i2a nor Batinovich has made good on any of the intermittent missed

payrolls since 2014, and they have missed the last four consecutive payrolls (those ending on

October 4, October 18, November 1, and November 15). All hourly employees ceased working

on November 17, following the preliminary injunction hearing. 

Although all thirteen missed payrolls remain outstanding, the temporary restraining

order and the preliminary injunction only required the defendants to make good on the payrolls

for the pay periods that ended on October 4 and October 18, and further payrolls that came due

since the temporary restraining order issued (i.e., those for the pay periods ending November 1

and November 15, which came due after the temporary restraining order issued). The missed

payrolls for the time period covered by the temporary restraining order and the preliminary

injunction total $56,470.42 (Pham Decl., Exh. C).

The Secretary now seeks to hold Batinovich and i2a in civil contempt for violating the

temporary restraining order and subsequent preliminary injunction by failing to make good on

those payrolls. Batinovich has not responded to the Secretary’s motion. This order follows the

Secretary’s brief, oral argument, and the sworn in-court testimony of Batinovich, Solomon, and

one hourly worker.

ANALYSIS

The Secretary seeks to hold i2a in contempt of the temporary restraining order because it

failed to pay their employees back wages for the pay periods that ended on October 4 and 18

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and for further failing to pay wages as they came due for the pay periods that ended on

November 1 and November 15. The Secretary also seeks to hold Batinovich personally liable

for those same violations as an employer within the meaning of Section 3(b) of the Fair Labor

Standards Act.

1. CIVIL CONTEMPT.

Federal courts have the power to enforce compliance with their orders. One way is

through holding a party in civil contempt. International Union v. Bagwell, 512 U.S. 821, 831

(1994). To establish a prima facie case for civil contempt, the moving party must establish by

clear and convincing evidence that the defendants: (1) violated a court order, (2) beyond

substantial compliance, and (3) such violation was not based on a good faith and reasonable

interpretation of the order. Labor/Community. Strategy Center v. Los Angeles County

Metropolitan Transportation Authority, 564 F.3d 1115, 1123 (9th Cir. 2009). The temporary

restraining order and subsequent preliminary injunction required defendants to pay their

employees’ wages as they became due. The Secretary has provided clear and convincing

evidence, in the form of sworn statements from i2a’s remaining managers and some of its other

employees, that neither i2a nor Batinovich paid their employees since for the pay periods

ending on October 4, 2015, October 18, 2015, November 1, 2015, and November 15, 2015. 

Such failure plainly violated the temporary restraining order and subsequent preliminary

injunction beyond substantial compliance, and there is no indication that either defendant acted

based on a good faith interpretation of the order.

The issue remains whether Batinovich may be held personally liable for violations of the

FLSA, as now discussed.

2. BATINOVICH’S PERSONAL LIABILITY.

Section 203(d) of Title 29 of the United States Code provides that for the purposes of

the FLSA, “[e]mployer includes any person acting directly or indirectly in the interest of an

employer in relation to an employee . . . .” That definition “is not limited by the common law

concept of employer, but is to be given an expansive interpretation in order to effectuate the

FLSA’s broad remedial purposes.” Lambert v. Ackerley, 180 F.3d 997, 1011–12 (9th Cir.

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 Solomon is not named as a defendant in this action, so this order does not address whether Solomon

could be liable as an employer under the FLSA. As our court of appeals held in Boucher, numerous officers

with control over various aspects of the business may be jointly liable as employers for that purpose. Solomon’s

role in overseeing the ongoing work does not preclude a finding that Batinovich is an employer for FLSA

purposes.

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1999). Our court of appeals evaluates whether the circumstances of the working relationship

demonstrates that an individual is acting as an employer as a matter of “economic reality.” 

Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983). Our

court of appeals has held that a manager or officer of a company is an employer for the purposes

of the FLSA if he holds a “significant ownership interest” and maintains the control of the dayto-day functions of the company. Boucher v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009) (citing

Lambert, 180 F.3d at 1012). Boucher specifically held that each of three individual defendants

met the definition of employers under FLSA: (1) an individual responsible for handling labor

and employment matters for a company, who held a thirty percent ownership stake, (2) a second

individual who served as chairman and chief executive officer for a company, who held a

seventy percent ownership stake, and (3) a third individual who served as chief financial officer

and oversaw cash management. Ibid.

Although Batinovich purportedly attempted to walk away from i2a, he maintained a

sixty-five percent ownership stake in the company and controlled the company’s finances. This

included control over payroll. Solomon oversaw the employees’ “engineering” work, but he

continued to report to Batinovich (Solomon Decl. at 2).1

 Moreover, Batinovich effectively

admitted that he retained control over personnel assignments at i2a with the following exchange

at the preliminary injunction hearing (Dkt. No. 23 at 49–50):

The Court: That’s the jam you’re up against. So every day that

goes by, they continue to work, you’re running it up even worse. 

So that’s the problem you’re up against here.

Mr. Batinovich: Today I’m asking — I have not asked anybody to

come to work. I have not asked. If somebody comes and

volunteers and stuff like that, that’s —

The Court: It doesn’t matter what you do — it does matter what

you do, but your company that you own, you are allowing them to

continue to come to work and they’re not being paid. Now, the

only way for you to get out from — well, maybe the only way. I

don’t know. One way to get out from underneath that would be — 

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Mr. Batinovich: Chase them out.

In other words, Batinovich allowed (or suffered) the work force to continue working. The

company appears to have scraped by during his purported absence, but according to Solomon,

i2a is approaching its demise: “Utilities, bank loans and rent are not paid, we are in trouble and

if money is not coming in something will happen, whatever comes first, we don’t know in what

order it will happen” (Solomon Decl. at 2). 

Batinovich is the owner of the company and continued to allow the workers to labor for

the company and thus for his benefit. He was and remains the one with authority to lay people

off and to shut down the company. He cannot simply walk away and pretend the labor force is

working for someone else or running on auto-pilot. He has the power to control this situation

and to benefit from it. Thus, he was and remains legally responsible for the outstanding

payrolls as an employer under the FLSA, and his failure to make good on those payrolls places

him in contempt of the temporary restraining order and preliminary injunction in this matter. 

3. REMEDIAL SANCTIONS.

The purpose of civil contempt is to coerce compliance with the court’s order rather than

punish disobedience. Spallone v. United States, 493 U.S. 265, 280 (1990). The Secretary

requests that if defendants fail to make good on the $56,470.42 in wages due since September

29 the defendants should be fined, jointly and severally, $10,000 plus $500 per day for future

violations. Our court of appeals has upheld an identical fine for civil contempt against a

corporation for refusing to produce certain documents relating to a collective bargaining

agreement to the National Labor Relations Board. See National Labor Relations Board v.

A-Plus Roofing, Inc., 39 F. 3d 1410, 1419 (9th Cir. 1994). The Secretary further requests that if

defendants fail to timely pay the outstanding payrolls, they should be required to deposit all of

i2a’s revenues into an escrow account, to be held there until the payments are made. Finally,

the Secretary requests its reasonable costs and attorney’s fees in bringing this motion.

This order finds Victor Batinovich and i2a in civil contempt of the temporary restraining

order dated November 3, 2015 and the preliminary injunction dated November 17, 2015 by

reason of their failure to pay the payroll for the periods ending October 4, 2015, October 18,

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2015, November 1, 2015, and November 15, 2015. Batinovich and i2a may purge this contempt

by paying the outstanding $56,470.42 to their employees by DECEMBER 31. The Secretary may

immediately begin discovery into Batinovich’s personal financial circumstances, including

taking records and taking the depositions of Batinovich, his spouse, and i2a. On JANUARY 1 or

thereafter, the Court will then entertain a motion for further specific sanctions. Defendants are

hereby ORDERED not to hide or dispose of their assets or income sources other than for

ordinary living expenses.

CONCLUSION

For the reasons stated above, this order finds that both defendants are in civil contempt

of the temporary restraining order and subsequent preliminary injunction. Defendants may

purge themselves of civil contempt by paying employees the $56,470.42 in outstanding wages

by DECEMBER 31. The Clerk shall please SERVE this order on Victor Batinovich at the address

he provided at the preliminary injunction hearing. 

IT IS SO ORDERED.

Dated: December 2, 2015. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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