Court Opinion

ID: 2832888
Source: CourtListenerOpinion
Date Created: 2015-09-01 21:01:30.202968+00
Date Added: 2024-06-11T13:23:19.322462
License: Public Domain

UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF COLUMBIA
_______________________________
                                )
SARA WILSON,                    )
On behalf of herself and all    )
others similarly situated,      )
                                )
          Plaintiff,            )
                                ) Civ. Action No. 14-1522 (EGS)
     v.                         )
                                )
HUNAM INN, INC., et al.         )
                                )
          Defendants.           )
                                )

                         MEMORANDUM OPINION

       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), 29 U.S.C. § 201 et seq., and the D.C. Minimum Wage

Act (DCMWA), D.C. Code § 32-1001 et seq. Defendants move for

partial dismissal of Ms. Wilson’s complaint, or in the

alternative, for partial summary judgment. Upon consideration of

the motion, the response and reply thereto, the entire record,

and the applicable law, Defendants’ motion is DENIED.

  I.     BACKGROUND

       Ms. Wilson is a former bartender at a D.C. nightclub

operated by Defendant Human Inn, Inc. Compl., ECF No. 1 at ¶¶ 1,

2. Human 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 Human Inn,

Inc. Id. at ¶ 3; see also Defs.’ Mot., ECF No. 8-2 at ¶ 3.

Defendant David Perruzza is a corporate officer at Human Inn,

Inc., whose responsibilities include signing payroll checks.

Compl., ECF No. 1 at ¶ 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 not

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

                                 2
were not exempt from the minimum wage requirement and that the

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 she worked an average of 32 to 42 hours per

week, but was not compensated for overtime work. Id. at ¶ 19.

       On October 21, 2014, Defendants moved for partial dismissal

of the Plaintiff’s complaint pursuant to Federal Rule of Civil

Procedure 12(b)(6), or in the alternative, for partial summary

judgment pursuant to Rule 56. Defs.’ Mot., ECF No. 8-3.

Defendants first move to dismiss Plaintiff’s complaint as to Mr.

Little and Mr. Perruzza, arguing that Mr. Little and Mr.

Perruzza are not “employers” under the FLSA or DCMWA and

therefore not liable under the law. Id. at 6-8. Second,

Defendants argue that Ms. Wilson has failed to sufficiently

plead a “willful” violation of the FLSA, and that therefore,

Plaintiff’s “third year” FLSA claims should be dismissed. Id. at

8-9.

       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

                                  3
overtime claims under the FLSA and DCMWA. Defs.’ 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 Federal Rule of Civil Procedure

12(b)(6) “tests the legal sufficiency of a complaint.” Browning

v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint must

contain a “short and plain statement of the claim showing that

the pleader is entitled to relief, in order to give the

[D]efendant fair notice of what the . . . claim is and the

grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal quotation marks omitted). While

detailed factual allegations are not necessary, Plaintiff must

plead enough facts to “raise a right to relief above the

speculative level.” Id.

      When ruling on a Rule 12(b)(6) motion, the court may

consider “the facts alleged in the complaint, documents attached

as exhibits or incorporated by reference in the complaint, and

matters about which the Court may take judicial notice.”

Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002).

The court must construe the complaint liberally in Plaintiff’s

                                 4
favor and grant Plaintiff the benefit of all reasonable

inferences deriving from the complaint. Kowal v. MCI Commc’ns

Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). The Court must not

accept inferences that are “unsupported by the facts set out in

the complaint.” Id. “Nor must the court accept legal conclusions

cast in the form of factual allegations.” Id. “[O]nly a

complaint that states a plausible claim for relief survives a

motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

       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.” Fed. R. Civ.

P. 56(a). The party seeking summary judgment bears the “initial

responsibility of informing the district court of the basis for

its motion, and identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, which it believes

demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)(internal

quotation marks omitted). To defeat summary judgment, the non-

moving party must “designate specific facts showing there is a

genuine issue for trial”. Id. at 324. A dispute is “genuine”

only if a reasonable fact-finder could find for the non-moving

party; a fact is only “material” if it is capable of affecting

                                5
the outcome of the litigation. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986); Laningham v. U.S. Navy, 813 F.2d 1236,

1241 (D.C. Cir. 1987). In considering whether there is a genuine

dispute as to material fact, the court must draw all reasonable

inferences in favor of the non-moving party. Tao v. Freeh, 27
F.3d 635, 638 (D.C. Cir. 1994).

    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. . .” 29 U.S.C. § 203(d). The DCMWA

contains nearly identical language. See D.C. Code § 32-1002

(“The term ‘employer’ includes any individual, partnership,

association, corporation, business trust, or any other person or

group of persons acting directly or indirectly in the interest

of an employer in relation to an employee. . .”). Accordingly,

courts construe the federal and local statues coterminously for

1 Hunam Inn, Inc. does not dispute that it was Ms. Wilson’s
employer.
                                  6
purposes of determining who is liable as an employer. See

Guevara v. Ischia, Inc., 47 F. Supp. 3d 23, 26 (D.D.C. 2014);

Villar v. Flynn Architectural Finishes, Inc., 664 F. Supp. 2d
94, 96 (D.D.C. 2009).

       The Supreme Court has emphasized the “expansiveness of the

Act’s definition of ‘employer.’” Falk v. Brennan, 414 U.S. 190,

195 (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 employer, 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)).

2See also United States v. Rosenwasser, 323 U.S. 360, 361 (1945)
(“[t]his legislation was designed to raise substandard wages and
to give additional compensation for overtime work as to those
employees within its ambit, thereby helping to protect this
nation ‘from the evils and dangers resulting from wages too low
to buy the bare necessities of life and from long hours of work
injurious to health.’” (Quoting S. Rep. No. 75-844, at 4
(1937)).
                                  7
     An employee may have more than one employer under the FLSA.

Ventura v. Bebo Foods, Inc., 739 F. Supp. 2d 1, 5 (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

authority” considers a corporate officer with “operational

control of a corporation’s covered enterprise” an employer under

the FLSA. See Ruffin v. New Destination, 800 F. Supp. 2d 262,

269 (D.D.C. 2011) (citing Donovan v. Agnew, 712 F.2d 1509, 1511

(2nd Cir. 1983)). Further, “[o]ne who is the chief executive

officer of a corporation, has significant ownership interest in

it, controls significant functions of the business, and

determines salaries and makes hiring decisions has operational

control and qualifies as an ‘employer’ for purposes of FLSA.”

Ruffin, 800 F. Supp. 2d at 269 (citing U.S. Dep’t of Labor v.

Cole Enters., Inc., 62 F.3d 775, 778 (6th Cir. 1995)).

     Ms. Wilson’s complaint alleges 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

                                8
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.

Defs.’ 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 at ¶ 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 (D.D.C. 2009).

     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

                                9
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 corporation’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 an inference of willfulness and seek

dismissal of the complaint as to her “third year” claims. Defs.’

Mot., ECF No. 8-3 at 8-9. Ms. Wilson claims that the Defendants’

failure to pay minimum wage for non-exempt work, failure to

provide notice of the use of the tipped-employee exemption, and

failure to allow bartenders to retain their tips in full

demonstrate a “willful violation” of the applicable law, thereby

entitling her to a third year of damages. Compl., ECF No. 1 ¶¶

62, 67.

                               10
     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 out of a

willful violation.” 29 U.S.C. § 255. A violation is willful

where the employer “either knew or showed reckless disregard for

the matter of whether its conduct was prohibited by the

statute.” McLaughlin v. Rickland Shoe Co., 486 U.S. 128, 133

(1988); see also Saint-Jean v. District of Columbia, 846 F.

Supp. 2d 247, 255 (D.D.C. 2012). Courts have found willful

violations in cases where the Defendant knew the FLSA applied,

but made no effort to ascertain whether their payroll practices

complied with the law. See Ayala v. Tito Contractors, -- F.

Supp. 3d --, No. 13-CIV-1603, 2015 WL 968113, at *3 (D.D.C. Mar.

4, 2015).

     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
11
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 12(b)(6) motion so

long as the Plaintiff’s complaint contains an allegation of

willfulness and the facts of the complaint, taken as a whole,

“support more than an ordinary FLSA violation.” Mitchell v. C &

S Wholesale Grocers, Inc., No. 10-CIV-2354, 2010 WL 2735655 at

*12 (D.N.J. July 8, 2010).

     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 nor 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.

                                  12
     The 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 requirement, 3 and she alleges that she was

never paid overtime for work performed in excess of 40 hours per

week. 4 Id. at ¶¶ 16, 60. Discovery on these allegations will

inform the determination of whether or not these violations were

willful. Accordingly, Defendants’ motion to dismiss Plaintiff’s

third-year claims is denied.

     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

3 The FLSA includes a notice requirement for employers intending
to use the “tipped employee” exemption to the minimum wage
requirement. 29 U.S.C. § 203(m).

4 Under the FLSA, all employers are required to pay time and a
half for each hour in excess of forty hours per week that an
employee works. 29 U.S.C. § 207.
                                13
his declaration, Mr. Smith provides that “[e]ach 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 records. 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 marks 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, Rule 56(c) requires that an “affidavit or

declaration used to support or oppose a [summary judgment]

                               14
motion must be made on personal knowledge. . . .” Mr. Smith’s

declaration that Ms. Wilson never worked more than 40 hours per

week is not based on personal knowledge, rather Mr. Smith

acknowledges that his statements are made based on records

provided to him by the bar manager. Defs.’ Mot. 8-4. Mr. Smith

expresses no opinion as to the accuracy of the purported

records, how the records were completed or maintained, or

whether Plaintiff was allowed to report all the time she worked.

Ms. Wilson is entitled to discovery to test the accuracy and

authenticity of Defendant’s exhibits. 5 Accordingly, Defendant’s

Motion for Summary Judgment as to Ms. Wilson’s overtime claims

will be denied without prejudice as premature.

     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

5 Defendants make much of the fact that Plaintiff’s Rule 56(d)
Declaration is silent as to her overtime claims. Defs.’ Rep.,
ECF No. 11 at 15-17. Defendants argue that by failing to address
this point in her declaration, Plaintiff has effectively
conceded her lack of overtime work as undisputed. Id. at 15.
Such a result is unnecessary. “[D]istrict courts should construe
motions that invoke [Rule 56(d)] generously, holding parties to
the rule’s spirit rather than the letter.” Conventino, 648 F.3d
at 99; see also Richie v. Vilsack, 287 F.R.D. 103, 106-07
(D.D.C. 2012)(denying Defendant’s summary judgment motion and
allowing Plaintiff to proceed to discovery on both her
discrimination and retaliation claims, even where Plaintiff’s
Rule 56(d) declaration was silent as to her retaliation claims).
                                15
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 foregoing 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.

Signed:     Emmet G. Sullivan
            United States District Judge
            September 1, 2015

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