Opinion
Case No. 6:10-cv-72-Orl-18KRS.
May 5, 2010
REPORT AND RECOMMENDATION
TO THE UNITED STATES DISTRICT COURT
This cause came on for consideration without oral argument on the following motion filed herein: MOTION: MOTION FOR ENTRY OF DEFAULT FINAL JUDGMENT (Doc. No. 11) FILED: April 13, 2010 THEREON RECOMMENDED DENIED
___________________________________________________ it is that the motion be .I. PROCEDURAL HISTORY.
On January 18, 2010, Plaintiffs John Fioretti and James Butts ("Plaintiffs") filed an amended complaint against Defendants New South Industries, Inc. ("New South"), and Nancy Fleischer. Doc. No. 4. Plaintiffs alleged that Defendants failed to pay overtime compensation due under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq. Doc. No. 4. They also sought liquidated damages, attorneys' fees, and costs. Id.The complaint was served on Defendants on February 6, 2010. Doc. Nos. 7, 8. Defendants failed to respond as required by law. The Clerk of Court entered a default against Defendants on March 16, 2010. Doc. No. 10.
Pursuant to the entry of default, Plaintiffs filed the instant Motion for Entry of Default Final Judgment. Doc. No. 11. Plaintiffs filed affidavits of damages in support of the motion, as well as a cost statement in support of their request for costs. Doc. Nos. 11-3 through 11-5. Defendants have not responded to the motion as of the time of writing this report, and the time for doing so has passed.
II. ALLEGATIONS OF THE COMPLAINT and EVIDENCE OF DAMAGES.
Plaintiffs' complaint alleges that Defendants hired Fioretti to work as an hourly paid field project manager in August of 2007. Doc. No. 4 ¶ 16. Defendants hired Butts to work as an hourly paid installer in September of 2004. Id. ¶ 17. Defendants were employers within the meaning of the FLSA, and New South was an enterprise engaged in commerce or in the production of goods for commerce as defined by the FLSA. Id. ¶¶ 5, 7-12. Fleischer owned and operated New South and regularly exercised authority to hire and fire employees, determine work schedules and control the finances and operations of New South. Id. ¶ 6. Defendants failed to compensate Plaintiffs at one and one-half times their regular rate of pay for all hours they worked in excess of forty hours per week. Id. ¶¶ 19-20.
Fioretti avers that he worked as an hourly employee from August of 2007 until November of 2009. Doc. No. 11-3 ¶ 4. He regularly worked an average of 52 hours per week. Id. ¶ 5. In 2007 and the first half of 2008, his regular hourly wage was $13.50 per hour. Id. ¶ 6. For the second half of 2008 through November of 2009, his regular hourly wage was $17.00 per hour. Id. He avers he is owed $3,394.60 for 460.50 hours of overtime worked between August 1, 2007 and November 30, 2009. Id. ¶¶ 9-11. He also attests that he is entitled to liquidated damages in the amount of $3,394.60 as well, for a total of $6,789.20 in damages. Id. ¶¶ 12-13.
Butts avers that he worked as an hourly employee from September of 2004 until August of 2009. Doc. No. 11-4 ¶ 4. He regularly worked an average of 56 hours per week. Id. ¶ 5. His regular hourly rate was $25.00 per hour. Id. ¶ 6. He avers he is owed $27,800.00 for 2,224 hours overtime he worked between January of 2007 through August of 2009. Id. ¶ 8-11. Butts also attests that he is entitled to $27,800.00 in liquidated damages for a total damages claim of $55,600.00. Id. ¶ 12-13.
III. STANDARD OF REVIEW.
A court may enter a default judgment only if the factual allegations of the complaint, which are assumed to be true, provide a sufficient legal basis for entry of a default judgment. Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) ("The defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law."). Therefore, in considering a motion for default judgment, a court must examine the sufficiency of the allegations in the complaint to determine whether the plaintiff is entitled to a default judgment. Fid. Deposit Co. v. Williams, 699 F. Supp. 897, 899 (N.D. Ga. 1988).
The United States Supreme Court recently clarified the difference between well-pleaded facts and conclusory allegations. In Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court addressed what factual allegations are necessary to survive a motion to dismiss. It explained that a complaint need not contain detailed factual allegations, "but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. . . . A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. at 1949 (internal citations omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not 'show[n]' — 'that the plaintiff is entitled to relief.'" Id. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)).
Courts have concluded that this analysis is equally applicable to a motion for default judgment. See, e.g., Bogopa Serv. Corp. v. Shulga, No. 3:08cv365, 2009 U.S. Dist. LEXIS 48469, at *2-4 (W.D.N.C. June 10, 2009); United States v. Scotia Pharm. Ltd., No. 03-00658, 2009 Ct. Intl. Trade LEXIS 54 (Ct. Int'l Trade May 20, 2009). If the well-pleaded facts of the complaint are insufficient to survive a motion to dismiss, liability has not necessarily been established.
"Although a defaulted defendant admits well-pleaded allegations of liability, allegations relating to the amount of damages are not admitted by virtue of default. Rather, the Court determines the amount and character of damages to be awarded." Miller v. Paradise of Port Richey, Inc., 75 F. Supp. 2d 1342, 1346 (M.D. Fla. 1999). If a default judgment is warranted, the Court may hold a hearing for purposes of assessing damages. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (citing Fed.R.Civ.P. 55(b)(2)). However, a hearing is not necessary if sufficient evidence is submitted to support the request for damages. Id.
The plaintiff has the burden of proving the amount of damages to be awarded. When the employer has violated its duty to keep adequate records, the employee satisfies this burden by producing "sufficient evidence to prove that he 'performed work for which he was improperly compensated' and 'sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.'" McLaughlin v. Stineco, Inc., 697 F. Supp. 436, 450 (M.D. Fla. 1988) (quoting Anderson v. Mt. Clemens Potter Co., 328 U.S. 680, 687 (1946)). If the employer does not come forward with evidence of the precise amount of work performed or other evidence to negate the plaintiff's prima facie case, the "court may award approximate damages based on the employee's evidence." Id.; see also Etienne v. Inter-County Sec. Corp., 173 F.3d 1372, 1375 (11th Cir. 1999).
IV. ANALYSIS.
To establish a claim for payment of overtime compensation and minimum wages under the FLSA, Plaintiffs must establish the following:
First, that they were employed by Defendants during the time period involved;
Second, that they were engaged in commerce or production of goods for commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce; and
Third, that the Defendants failed to pay the overtime compensation and minimum wage required by law.See Eleventh Circuit Pattern Jury Instructions-Civil 1.7.1 (2005).
By defaulting, Defendants admit that they employed Plaintiffs during the relevant time periods. They also admit they failed to pay Plaintiffs overtime compensation and minimum wage as required by the FLSA.
The allegations regarding the second element of the FLSA claim are, however, too conclusory to satisfy Iqbal. Plaintiffs allege as follows:
5. At all times material hereto, "NEWSOUTH" was a Florida Profit Corporation. Further, at all times material hereto, "NEWSOUTH" was engaged in business in Florida, with a principle [sic] place of business in Volusia County, Florida.
7. At all times material hereto, Plaintiffs were "engaged in commerce" within the meaning of § 6 and § 7 of the FLSA.
8. At all times material hereto, Plaintiffs were "employees" of Defendants within the meaning of FLSA.
9. At all times material hereto, Defendants were the "employer" within the meaning of FLSA.
10. At all times material hereto, Defendants were, and continue to be, an "enterprise engaged in commerce" within the meaning of FLSA.
11. At all times material hereto, Defendants were, and continue to be, an enterprise engaged in the "production of goods for commerce" within the meaning of the FLSA.
12. Based upon information and belief, the annual gross revenue of Defendants were [sic] in excess of $500,000.00 per annum during the relevant time periods.
13. At all times hereto, Plaintiffs were "engaged in commerce" and subject to individual coverage of the FLSA.
14. At all times hereto, Plaintiffs were engaged in the "production of goods for commerce" and subject to the individual coverage of the FLSA.
16. In approximately August of 2007, Defendants hired "FIORETTI" to work as an hourly paid field project manager.
17. In approximately September of 2004, Defendants hired "BUTTS" to work as an hourly paid installer.
Doc. No. 4. The only facts offered about Plaintiffs' work is that Defendant New South is a Florida corporation that has its principal place of business in Volusia County, Florida, and that Plaintiffs performed work for New South as a field project manager and an hourly paid installer. Id. at 2; Doc. No. 4 ¶¶ 16-17. Plaintiffs' conclusory allegations regarding their employer in Volusia County, Florida, are insufficient, standing alone, to establish that they are engaged in commerce or in the production of goods for commerce. See, e.g., DeLotta v. Dezenzo's Italian Restaurant, Inc., No. 6:08-cv-2033-Orl-22KRS, 2009 WL 4349806 (M.D. Fla. Nov. 24, 2009); Scott v. K.W. Max Inv., Inc.,
No. 6:05-cv-683-Orl-18JGG, 2007 WL 423080, at *2-3 (M.D. Fla. Feb. 6, 2007); Lamonica v. Safe Hurricane Shutters, Inc., 578 F. Supp. 2d 1363, 1368 (S.D. Fla. 2008).
With respect to whether New South is a covered enterprise, the well-pleaded facts must establish both that New South had employees "'handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce . . .'" and "had gross sales or business of at least $500,000." Id. (quoting 29 U.S.C. § 203(s)(1)(A)). Plaintiffs do not allege facts to support either of these elements. See Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1268 (11th Cir. 2009) (finding that allegations "based on information and belief" failed to provide any factual content that allows the Court to draw the reasonable inferences permitted in Iqbal). But see Lussi v. Design-Build Eng'g, Inc., No. 09-23446-CIV, 2010 WL 1571158 (S.D. Fla. April 20, 2010) (finding that allegation of gross sales or business volume of at least $500,000 on information or belief sufficient to survive motion to dismiss FLSA complaint, but finding general allegations regarding interstate commerce too conclusory and lacking factual support). Therefore, the well-pleaded allegations of the complaint are insufficient to establish that New South is liable for violation of the FLSA overtime provisions. See, e.g., Milliken v. Kranz Tree Serv., Inc., No. 6:08-cv-822-Orl-28DAB, 2008 WL 4469882, at *2 (M.D. Fla. Oct. 2, 2008) (denying motion for default judgment where allegations were insufficient to establish enterprise coverage).
In the past, the Court has accepted the bald allegation that a defendant was an enterprise engaged in commerce and that a plaintiff was engaged in interstate commerce without supportive facts. Reevaluation of those cases in light of the clarification in Iqbal regarding the necessity to plead facts, not merely conclusions, requires that the Court evaluate the facts alleged in a complaint to determine whether liability has been established.
Under the FLSA, an employer includes "any person acting directly or indirectly in the interest of an employer in relation to an employee. . . ." 29 U.S.C. § 203(d). "The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Patel v. Wargo, 803 F.2d 632, 637-38 (11th Cir. 1986). Because the well-pleaded allegations of the complaint are insufficient to establish that New South is a covered enterprise, there can be no joint and several liability as to Fleischer.
The FLSA mandates that in any action brought by an employee to enforce §§ 206 or 207 of the Act, the Court "shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorneys' fee to be paid by the defendant, and costs of the action." 29 U.S.C. § 216(b). Because Plaintiffs' allegations are insufficient to establish liability against Defendants, Plaintiffs are not prevailing parties entitled to an award of costs. Therefore, an award of attorney's fees and costs is not appropriate.
V. RECOMMENDATION.
Based upon the foregoing, I respectfully recommend that Plaintiffs' Motion for Entry of Default Final Judgment, Doc. No. 11, be DENIED. I further recommend that the Court issue an order to show cause why the complaint should not be dismissed or permit Plaintiffs to file and serve an amended complaint within the time established by the Court.
Failure to file written objections to the proposed findings and recommendations contained in this report within fourteen (14) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.
Recommended in Orlando, Florida.