Perez v. Tlc Residential Inc et al

MOTION for Partial Summary Judgment

N.D. Cal.September 15, 2016

SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JANET M. HEROLD Regional Solicitor SUSAN SELETSKY (CSBN 176106) Counsel for FLSA CHERYL L. ADAMS (CSBN 208244) Senior Trial Attorney ANDREW SCHULTZ (CSBN 237231) Senior Trial Attorney DONNA F. BOND (WSBA 36177) Trial Attorney United States Department of Labor Office of the Solicitor 90 7th Street, Suite 3-700 San Francisco, CA 94103 Direct: (415) 625-7759 Facsimile: (415) 625-7772 Email: bond.donna@dol.gov Attorneys for Plaintiff, Thomas E. Perez Secretary, U.S. Department of Labor UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA THOMAS E. PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. TLC RESIDENTIAL, INC., a corporation, and FRANCISCO MONTERO, an individual. Defendants. Case No.: 15-cv-02776-WHA SECRETARY’S NOTICE OF MOTION AND MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES Date: October 20, 2016 Time: 8:00 a.m. Ctrm: 8-19th Floor Judge: Hon. William H. Alsup Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 1 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS NOTICE OF MOTION .................................................................................................................. iii STATEMENT OF ISSUES TO BE DECIDED ............................................................................ iii MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1 I. INTRODUCTION ............................................................................................................... 1 II. SUMMARY OF KEY DISPUTED FACTS ........................................................................ 2 A. Defendants Operate a For-Profit Enterprise Providing Sober-Support Services ............. 2 B. Defendants Admit They Assign House Managers to Perform the Core Services Provided by Defendants’ Business .......................................................................................... 3 C. Defendants Admit Issuing Zero Paychecks, Zero Wage Payments, and Failing to Maintain Any Contemporaneous Records of Hours Worked for Defendants’ House Managers ................................................................................................................................. 7 III. ARGUMENT ................................................................................................................... 8 A. Summary Judgment Is Appropriate Here As No Genuine Material Facts Are In Dispute. 8 B. The Act Applies to Defendants’ Business........................................................................ 9 C. House Managers are Employees under the Act ............................................................. 11 D. House Managers are Employees under the Economic Realities .................................... 14 E. Defendants Are Employers under the Act...................................................................... 20 F. Defendants Violated Section 211(c) of the FLSA By Failing to Make, Keep, and Preserve Accurate and Complete Records Regarding Hours Worked and Wages Paid........ 21 IV. CONCLUSION .............................................................................................................. 23 Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 2 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION TO ALL PARTIES AND THEIR COUNSEL OF RECORD: Notice is hereby given that on October 20, 2016 at 8:00 a.m. or as soon thereafter as counsel may be heard, in Courtroom 8, 19th Floor of the United States District Court for the Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California, the Honorable William H. Alsup presiding, the Secretary will and hereby does move the Court for summary adjudication on the ground that there is no genuine issue as to any material fact and that the Secretary is entitled to judgment as a matter of law on the issues described with more particularity in the Statement of Issues to be Decided, below. This motion is based on this Notice of Motion, the following Memorandum of Points and Authorities, and the declarations filed in support of this Motion, the pleadings and papers filed herein and upon such other matters as may be presented to the Court at the time of the hearing. STATEMENT OF ISSUES TO BE DECIDED 1. Whether the Act applies to Defendants’ business. 2. Whether House Managers and Assistant House Managers are Defendants’ employees under the Act. 3. Whether Defendant Francisco Montero is personally liable as an employer for violations under the Act. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 3 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA iv 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. Whether Defendants violated the Act when they failed completely to make or maintain records of the wages, hours, and conditions of the House Managers’ employment. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 4 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION The Secretary hereby moves for summary adjudication, as the record is plain that Defendants cannot dispute liability for the violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., (the “FLSA” or the “Act”). According to the facts admitted by Defendants, Defendants are covered entities under the FLSA and were thereby required to both pay their house managers the minimum wage and to maintain accurate and complete records for all hours worked. Defendants admit that they did not pay the house managers any wages and they admit that they made or maintained no records at all of hours worked. The legal issues here are as clear and ripe for adjudication as the factual record. The plain and unmistakable terms of the FLSA and longstanding precedent dictate that Defendants are covered employers required to pay the minimum wage and keep accurate records of all hours. Defendants did not comply with these clear requirements of federal law, requiring summary adjudication in favor of the Secretary. The Secretary asks this Court to grant the injunctive relief sought by the Secretary to ensure that these violations do not continue to occur and to set a trial to determine the precise back wages and liquidated damages due from Defendants, since Defendants’ failure to maintain records requires the Secretary to present a reasonable estimate and reconstruction of the back wages due. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 5 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. SUMMARY OF KEY DISPUTED FACTS A. Defendants Operate a For-Profit Enterprise Providing Sober-Support Services Defendants claim to be the leading provider of sober living homes in the Bay Area. Declaration of Donna F. Bond (“Bond Decl.”), Exhibit G, Administrative Deposition of Francisco Montero, p. 49. According to Defendants, their business is to provide monitored, drug- and alcohol-free residences to persons in recovery from drug addiction or alcoholism in exchange for a fee. Bond Decl., Exhibit D, Deposition of Francisco Montero, 24:22-26:20. Defendants market these homes directly to prospective residents and to Courts, drug-treatment facilities, Employee Assistance Programs (EAP), and families and friends of recovering addicts. Bond Decl., Exhibit D, 38:10-39:5; 59:3-14; 97:1-98:16; Exhibit E, Deposition of Julie Bento, 8:24-9:23;50:7-25; 51:1-53-18; Exhibit L, Emails Produced by Defendants, pp. 1,4. TLC Residential, Inc. (“TLC”) is a for-profit business incorporated in the State of California. Dkt. 52, p.2 ¶6. Defendant Francisco Montero is the sole shareholder of Defendant TLC and is also the Chief Executive Officer, Chairman of the Board, President and Secretary. Id.; Bond Decl., Exhibit D, 8:3-15. In recent years, Defendant Montero has taken a salary of $182,000 from the business annually. Bond Decl., Exhibit D, 103:23-105:2; Declaration of Andrew K. Blanco (“Blanco Decl.”), p.2 ¶6. Defendants admit that their gross volume of sales made or business done exceeded $500,000 in each of the years 2010-2015. Bond Decl., Exhibit I, Admission 15. Defendant TLC is a member of California Consortium of Addiction Programs and Professionals (CCAPP), which is a member of the National Association of Recovery Residences (NARR). Its residences are classified as “Level II – Monitored” homes, which means that part of Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 6 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the services provided by these homes is the management and maintenance of a structured environment. Bond Decl., Exhibit B, Deposition of Dave Sheridan, 12:17-13:1; Exhibit C, Deposition of Dr. Douglas Polcin, 22:8-23:15; Exhibit D, 34:19-37:21. Defendants charge residents between $600 and $1400 per month to reside in a shared room of these sober-support residences. Bond Decl., Exhibit D, 25:25-26:4. Defendants claim they do not provide therapy, formal counseling or treatment, but Defendants admit that their house managers perform the wide range of sober support services, which Defendants market to be part of the sober support residences provided. Bond Decl., Exhibit B, 37:10-24. Some sober living homes similar to those operated by Defendants pay House Managers an hourly wage and recognize that they are employees. Exhibit B, 32:13-18; 36:10-37:13; 39:2-19: 63:1-3. Defendants’ competitors include a company run by a former TLC house manager who now operates his own sober living homes. The business operated by this former TLC house manager pays wages to the house managers for hours worked along with free rent. Bond Decl., Exhibit A1, p. 2 ¶9; B. Defendants Admit They Assign House Managers to Perform the Core Services Provided by Defendants’ Business According to Defendants’ 64-page “Policy and Procedure Manual” one of Defendants “Organizational Philosophies” is to “Deliver the Service you market.” Bond Decl. Exhibit G, 23:4-8; Exhibit H, pp. 7-9 (page numbers reference bates number). Defendants market their monitored sober living homes by advertising a rules-based system for encouraging accountability which Defendants refer to as “TLC Standards.” Id. These standards include, among other things, remaining alcohol and drug free, adhering to a nightly curfew, attending house meetings and accepting direction from the House Manager. Id.; Bond Decl., Exhibit H, pp. 15-17. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 7 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 House Managers are TLC’s front line for enforcing its standards and act as a spokesperson for Defendants. Bond Decl., Exhibit H, p. 9. Defendants admit that in hiring House Managers, they are looking for preexisting “managerial skills and demonstrated recovery.” Bond Decl., A.1, p.1; Blanco Decl., Attachment A, p. 3, ¶3. Principal among the duties assigned to House Managers by Defendants is the responsibility for enforcing the sobriety of the houses’ residents. Bond Decl., Exhibit H, pp. 10,15; A.1, ¶5d; A.2, ¶6d; A.3, ¶6d; A.4, ¶7d; A.5, ¶4. To verify the sobriety of the house residents, House Managers must remain on duty every day: House Managers cannot be away from their house for even one night without having someone cover for them. Bond Decl., Exhibit A.1, ¶6; A.2, ¶8; A.3, ¶7; A.4, ¶8; A.5, ¶7; Exhibit L, p. 5; Exhibit M. As admitted by TLC’s vice president, Julie Bento, House Managers cannot be absent from the residence because “clients fending for themselves [would] end up a disaster.” Bond Decl., Exhibit L, p. 5; Exhibit E, 39:8-42:11. In addition to requiring House Managers to enforce the TLC Standards identified above there is no genuine dispute that TLC assigns and requires House Managers to perform the following job duties: Marketing, Admission, and Discharge  Conduct tours of the facilities  Orient new residents to the facilities  Ensure new residents fill out intake paperwork  Discharge residents at the end of their stay  Initiate resident departures for relapse (and collect relapse fees of $250 for readmission) Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 8 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28  Pack, label, and store residents’ belongings who are evicted and do not return  Clean rooms and ensure they are ready for new residents Monitor Residents’ Sobriety and Administer Discipline  Lead household meetings between two and five times per week  Enforce various curfews  Ensure that residents are attending the recovery program they have selected by collecting meeting attendance slips (and verifying the veracity of the signatures)  Search rooms for prohibited substances  Administer random and suspicion-based urinalysis and breathalyzer tests  Conduct “pill counts” and monitor residents’ usage of certain medications  Discipline residents by assigning “strikes” when residents fail to adhere to the TLC Standards Communications on Behalf of Defendants  Create and transmit house reports to the Defendants’ office on a daily basis  Perform conflict resolution between residents, deal with crises as they arise  Field calls from residents’ family-members regarding their recovery or relapse  Communicate daily with the Defendants’ business office and District Managers regarding household and client issues  Manage relationships with neighbors and deal with conflicts Manage Household  Shop for cleaning supplies and paper products  Change key codes on door  Assign cleaning duties and yard-work and ensure its completion Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 9 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28  Coordinate with maintenance providers to the facility  Collect resident fees and remind residents when their fees are late  Deposit fees into Defendants’ bank account (hereinafter “Duties”). Dkt. 52, p.2 ¶6; Bond Decl., Exhibit H, pp. 9-11; Bond Decl., Exhibits A.1-A.5.1 Defendants admit that they direct the House Managers in the performance of their duties. Bond Decl., Exhibit H, pp. 9-13; Exhibit I, Admission 34. Defendants terminate House Managers who are unable to perform these duties. Bond Decl., Exhibits A.2, p.4 ¶7 and A.4, p.2 ¶4. In addition, Defendants do not, and cannot, dispute the reports from House Managers of being required to work additional hours dealing with resident relapses, responding to other emergencies in the middle of the night, and being available and expected to respond to Defendants’ calls even while at their other places of employment. Bond Decl., A.2, p.4 ¶6(o); A.4, p.5¶7(o); A.5, p.2 ¶5, p.4¶¶6(o),(k). Defendants admit that they assign and move House Managers between different homes depending on Defendants’ business coverage needs. A.1, p.4 ¶7. Defendants admit that if the House Managers were not performing these Duties, Defendants would be required to assign paid staff members to perform those duties. Id. See also Defendants’ Motion for Summary Judgment at 15-16, Dkt. 71; Bond Decl., Exhibit D, 91:10-92:17 (Defendants admit that if they didn’t have 1 In an attempt to make these duties appear as if they are disputed, since they cannot actually dispute them, Defendants have somewhat vaguely asserted that the Policy and Procedure manual was only used in the “distant past.” Dkt. 52. However, Vice President Julie Bento could think of very little that had actually been changed about House Managers’ duties when pressed about it during her deposition in June of 2016. Bond Decl., Exhibit E, 18:1-25:25. None of the evidence cited to by Defendants is unequivocal and none of it raises a genuine dispute. Although they quibble over minutiae, Defendants cannot truthfully dispute that they required House Managers to perform the Duties basically as outlined by the Secretary here using their own manual. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 10 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 house managers, they would have to have paid staff or a contractor take over some of their duties). C. Defendants Admit Issuing Zero Paychecks, Zero Wage Payments, and Failing to Maintain Any Contemporaneous Records of Hours Worked for Defendants’ House Managers Defendants admit that they issued no paychecks and that they made no payments to the House Managers for hours worked or performance of the Duties specified above. Dkt. 52, ¶9; Bond. Decl., I Admissions 6-8. Defendants admit that they waived 50% of the rent for Assistant House Managers and 100% of the rent for House Managers. Id. In response to this litigation, Defendants contend that they were not required to pay their House Managers because, as they advised their House Managers repeatedly, they were “volunteers.” Dkt. 52, ¶¶20-24. It is undisputed that Defendants did not waive House Managers’ rent for the initial 30 to 60 day training period. Bond Decl., Exhibit H, p. 12; Exhibits A.2, p.2 ¶3 and A.3, p.2 ¶3. Defendants also admit that they provided no formal training to House Managers. Bond Decl., Exhibit G, 102:15-23. Defendants admit that they kept no contemporaneous records of the hours that House Managers worked completing the Duties or records of the actual costs of the housing provided to House Managers. Bond Decl., Exhibit D, 103:9-21; 39:15-21; Exhibit E, 16:12-15; 26:8-11. Defendants admit that they made no effort to determine if failing to pay any wages and maintain any record of all hours worked was lawful under the FLSA. Bond Decl., Exhibit D 107:7- 109:23. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 11 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. ARGUMENT A. Summary Judgment Is Appropriate Here As No Genuine Material Facts Are In Dispute. A motion for summary judgment should be granted if there is no genuine dispute as to any material fact. Fed. R. Civ.P. 56(a). A fact is material if it “might affect the outcome of the suit under the governing law” while a factual dispute is genuine if there is sufficient evidence for a reasonable fact finder to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When the party moving for summary judgment would bear the burden of proof at trial, “the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000). Once the moving party satisfies this burden, summary judgment should be granted unless the opposing party produces specific facts showing there is a genuine dispute for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The opposing party may not rest on mere allegations or denials from the pleadings, but instead must demonstrate by affidavits or other materials in the record that there is a genuine dispute for trial. See Fed. R. Civ. P. 56(c)(1); Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1048 (9th Cir. 1995). Although the court must draw “all reasonable inferences supported by the evidence” in favor of the non-moving party, Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002), the opposition “must do more than simply show that there is some metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co., 475 U.S. at 588. A mere “scintilla of evidence” in support of the nonmoving party’s position—or evidence that is “merely colorable” or “not significantly probative”— is insufficient to defeat summary judgment. Anderson, 477 U.S. at Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 12 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 249-50, 252; Rogan v. City of Boston, 267 F.3d 24, 27 (1st Cir. 2001) (“conclusory allegations, empty rhetoric, unsupported speculation, or evidence which, in the aggregate, is less than significantly probative” is insufficient to defeat summary judgment). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party” on a particular issue, there is no genuine dispute for trial. Matsushita, 475 U.S. at 587. Here, than can be no dispute that Defendants failed to properly classify House Managers as employees and pay them for all the hours that they worked according to the Act’s mandate. Defendants admit that they did not keep records of any of the hours that the House Managers and Assistant House Managers worked. Defendants also admit that they did not issue paychecks. Instead, Defendants’ position in this litigation rises and falls entirely on its unsupportable legal assertion that Defendants were exempt from the FLSA’s requirements because Defendants’ House Managers were “volunteers.” Defendants’ legal position is meritless, requiring summary adjudication in favor of the Secretary. B. The Act Applies to Defendants’ Business The FLSA’s provisions apply to any business that “(i) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and (ii) is an enterprise whose annual gross volume of sales made or business done [ADV] is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated). 29 U.S.C. § 203(s)(1)(emphasis added).2 2 Jurisdiction and venue have not been contested here and are established pursuant to 28 U.S.C. § 1331. See Defendants’ Amended Answer, Dkt. 52, p. 2, ¶¶3-5. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 13 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants flatly deny that the Act applies to them and baldly assert that they are not engaged in commerce or the production of goods for commerce. Dkt. 52, p.2, ¶8. However, the facts admitted by Defendants, and those which they cannot refute, establish that Defendants are indeed covered employers as a matter of law. Defendants admit that their business makes use of “materials that have been moved in…commerce.” Id. At Defendants’ direction or instruction, House Managers purchase cleaning supplies, food, toiletries, paper products, and other goods for use in the residences they manage. Dkt. 52, p.9, ¶41. See also A.1-A.5. House Managers collect and deposit fees received from residents into Defendants’ bank account using a debit card issued to them by Defendants’ bank. See A.1-A.5. In the course of their work, House Managers also use urinalysis kits and breathalyzers and make use of the mail to send tests to outside laboratories. Id. House Managers (as well as office staff) use internet-enabled computers, automobiles, email, cell phones, and wired telephones in the performance of the Duties for Defendants. Id. See also Dkt. 52, p.9, ¶42-43. Likewise, the Company engages in recruiting outside the State of California3 and advertises its services on the internet. Dkt. 52, p. 9, ¶42. The Company also processes credit card payments. Bond Decl., Exhibit E, 9:24-10:2. Defendants cannot dispute that all or some components of this complement of equipment- -such as computers, automobiles, telephones, ATM machines, credit card machines, breathalyzers, urine analysis kits4, food, utensils, supplies and paper products --were produced outside of California. Nor can Defendants dispute that all of these items are normally “moved in or produced for commerce.” Id. Thus, Defendants meet the first prong of the definition of a 3 A few of the localities TLC recruits clients from are New York, Arizona, Florida and China. Exhibit L, Emails Produced by Defendants, pp. 1,4. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 14 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 business engaged in commerce, as their employees use goods which move in commerce. See 29 U.S.C. § 203(s)(1)(A)(i). There is no dispute that Defendant TLC also meets the second prong of the definition. Defendants admit that their gross volume of sales made or business done exceeded $500,000 in each of the years 2010-2015. Bond Decl., Exhibit I, Admission 15. See 29 § 203(c)(1)(A)(ii). The undisputable facts show, therefore, that the company meets the Act’s definition of a business engaged in commerce and the Act applies. C. House Managers are Employees under the Act The FLSA was passed to protect vulnerable workers and level the playing field in situations just like the one before this Court. Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706- 707 (1945). The Act recognizes the inherent power imbalance between workers and employers and the damage caused by unfair competition. Id. at 708. The FLSA defines “employ” as including “to suffer or permit to work,” 29 U.S.C. 203(g), and the Supreme Court has explained that the FLSA’s definition of employment is “‘the broadest definition that has ever been included in any one act.’” U.S. v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945) (quoting 81 Cong. Rec. 7657 (statement of Senator Black)); see also id. at 362 (“A broader or more comprehensive coverage of employees . . . would be difficult to frame.”); Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (“employ” is defined with “striking breadth”). Apart from volunteer work performed for a public agency, the Act does not recognize or include any exemption for volunteers. The only language in the Act referring to volunteers makes plain that any exemption only applies to “any individual who volunteers to perform Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 15 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 services for a public agency which is a State, a political subdivision of a State, or an interstate governmental agency…” 29 U.S.C. §203(e)(4)(A)(emphasis added).5 Thus, Congress has considered the FLSA’s application to volunteers, and it has carved out from the FLSA’s definition of “employee” only individuals who volunteer services to state and local government agencies under certain circumstances. See 29 U.S.C. 203(e)(4).6 Likewise, the regulations promulgated pursuant to the Act define “volunteer” as “an individual who performs hours of service for a public agency.” See also 29 C.F.R § 553.101. Simply put, there is nothing in the Act granting any type of “volunteer” exemption to non-governmental, for-profit businesses like Defendants’. Patel v. Quality Inn South, 846 F.2d 5 The Act has always applied to private employers who were directly engaged in commerce. It made no mention of volunteers at all until The Fair Labor Standards Amendments of 1985 specifically excluded volunteers for public agencies from the definition of employee. Pub. L. 99-150. Following amendments to the Act in 1966 and 1974, courts heard a number of challenges to the amendments culminating with Garcia v. San Antonio Metropolitan Transit Autority, 469 U.S. 528 (1985) which definitively settled the question of whether the FLSA was fully applicable to state and local governments. After the Garcia decision was issued, members of Congress became concerned about the implications it would have on state and local government budgets and the amendment was part of their response, just a few months later. See U.S. Senate, Committee on Labor and Human Resources. Fair Labor Standards Public Employee Overtime Compensation Act of 1985 (S. Rpt. 99- 159) (October 17, 1985). The plain language of the amendment itself and the context of its passage make clear that Congress did not intend to include for-profit companies in this exception. Reading for-profit, private employers engaged in commerce into it would be absurd and would render the term “public agency” meaningless. 6 There is no blanket exemption from the FLSA’s definition of employee for those who volunteer for non-profits either. In the case of a non-profit organization, it is a question of coverage. Courts have recognized that non-profit organizations that operate without a business purpose are not covered by the FLSA. See, e.g., Malloy v. Ass’n of State & Territorial Solid Waste Mgmt. Officials, 955 F. Supp.2d 50, 55-56 (D.D.C. 2013) (citing Jacobs v. New York Foundling Hosp., 577 F.3d 93, 97 (2d Cir. 2009)); cf. Tony & Susan Alamo Found. v. Secretary of Labor 471 U.S. at 296 (the FLSA “contains no express or implied exception for commercial activities conducted by religious or other nonprofit organizations”). Indeed, even non-profit charitable organizations may be considered “covered enterprises” under the FLSA if they engage in ordinary commercial activities. Likewise, employees working for non-profits may be covered individually. U.S. Department of Labor, Wage and Hour Division, Fact Sheet #14: Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act (FLSA), https://www.dol.gov/whd/regs/compliance/whdfs14a.pdf (last accessed August 24, 2016). Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 16 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 700 (11th Cir. 1988)(“[A] broad general definition followed by several specific exceptions – strongly suggests that Congress intended an all-encompassing definition of the term ‘employee’ that would include all workers not specifically excepted.”). To the extent Defendants are attempting to create a new exemption, or to expand the exemption applicable to individuals volunteering for state or federal agencies, an unbroken line of Supreme Court precedent finds that such expansions may not be contemplated. As the Supreme Court held more than fifty years ago, when considering any exception to the FLSA’s minimum and overtime wage requirements, exemptions are to be narrowly construed against the employers seeking to assert them. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960). The Ninth Circuit has, likewise, refused to apply FLSA exemptions except when it is “plainly and unmistakably within the [exemption’s] terms and spirit.” Klem v. County of Santa Clara, 208 F. 3d 1085, 1089 (9th Cir. 2000). Here, the question is not even a close one as Defendants have no colorable claim that they are within any of the FLSA’s narrow exemptions. Defendants admit that they operate a business which is designed to generate a profit. Defendants are obviously not a governmental entity. Defendants admit that they benefit from the work they require House Managers to perform. Dkt. 71, p. 15. It is “plainly and unmistakably” outside of the Act’s public-agency volunteer exception to apply that exception to a for-profit business like Defendants’. Under the FLSA, House Managers cannot volunteer for Defendants’ for-profit enterprise doing work that provides Defendants with an economic benefit. As there are no facts in dispute on this issue, the Secretary is entitled to a summary judgment that House Managers and Assistant House Managers are not volunteers as a matter of law. 7 7 See United States Department of Labor, Wage and Hour Division, Employment Status of Students Bagging Groceries for Tips, FLSA2002-9 (Students bagging customers’ groceries for Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 17 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 D. House Managers are Employees under the Economic Realities Given the sweeping breadth of FLSA’s definitions, the test of employment under the Act is one of economic reality. See Alamo, 471 U.S. at 301. The economic realities of the worker’s relationship with the employer rather than the technical concepts of that relationship are the test of employment. See Goldberg v. Whitaker House Co-op, Inc., 366 U.S. 28, 33 (1961). Courts must look beyond any label that the employer places on the relationship and examine the economic realities of the working relationship to determine whether the worker, like most workers, “follows the usual path of an employee.” Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947). In considering the economic reality of a particular workplace relationship, courts base this decision on the totality of the circumstances, but have identified a few central areas of inquiry, including: 1. The nature and degree of the alleged employer’s control as to how the work is performed; 2. The alleged employee’s opportunity for profit or loss depending on his managerial skill; 3. The alleged employee’s investment in equipment; 4. Whether the service rendered requires special skills; 5. The degree of permanency and duration of the working relationship; and tips and donations intended for local school were considered employees of the supermarket because their services were being provided directly to a commercial for-profit business enterprise that derived an economic benefit from their services.) http://www.dol.gov/whd/opinion/flsa.htm (last accessed August 24, 2016). Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 18 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6. The extent to which the service rendered is an integral part of the alleged employer’s business; 7. Whether the purported employer received any “immediate advantage” from the work done; and 9. Whether there was an express or implied compensation agreement. Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748 (2nd Cir. 1993); Alamo, 471 US 290 at 301. A faithful analysis of the undisputed facts of this case in light of these factors routinely considered by courts makes clear that the House Managers are employees. Defendants Control House Managers’ Work Defendants exert extensive control over the House Managers’ work. House Managers are tasked with managing the residences and monitoring the residents’ sobriety, but they aren’t left to their own devices in executing that charge. Instead, Defendants define, in exacting detail, how House Managers are to perform every element of their work in a 64-page Policies and Procedures Manual. Additionally, Defendants specifically select and then supervise the House Managers in order to ensure that they are adequately performing the Duties. Defendants are in constant contact with House Managers communicating management’s wishes and directing the House Managers’ work. And finally, Defendants remove an individual from a House Manager position for failure or inability to adequately perform the House Manager Duties. The application of the facts in this matter to this factor weighs heavily in favor of a determination that these House Managers are Defendants’ employees. House Managers Do Not Stand To Profit House managers cannot, through any of their own actions, increase their ability to profit under their arrangement with Defendants. Nor do they suffer the risk of financial loss that Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 19 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 someone working for himself might. Defendants stand to make all the profit in this situation and risk any loss from bad investment or bad management. It is undisputed that House Managers are free to work for other employers while working for Defendants. It is also undisputed that they can’t parlay this work into simultaneous House Manager jobs with other sober living homes because they are required to live in the residences that Defendant provides and, in fact, have to ask for permission to be absent. The undisputed facts, analyzed in light of this factor, show the true nature of the economic realities here and supports the obvious conclusion that House Managers are employees. House Managers Require No Special Equipment or Skills Defendants provide the equipment, facilities, and even the clients necessary for House Managers to do their jobs. House Managers make no significant financial investment in equipment in order to complete the Duties. Likewise, House Managers are not required to hold any certifications, particular training, or specialized skills (other than advanced sobriety and managerial skills) in order to do the job. This factor would tend to show that the House Managers’ relationship with Defendants is that of employee and employer. House Managers Positions are Not Restricted as to Time or Permanence There is no limitation, at the outset, of the amount of time a House Manager may work for Defendants, nor is there ever any indication that the job is not a permanent one. Some House Managers have worked for TLC for as long as 16 years while some are more transient. In addition, House Managers perform work for Defendants every day of the week, throughout the day and night. This long-term engagement further supports the conclusion that the economic reality of the House Manager position is one of employment. House Managers Perform Work Which is Integral to Defendants’ Business Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 20 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The House Managers perform the bulk of the services that Defendants promise to provide to residents and all of those which set Defendants’ business apart from that of a mere landlord or boarding house. Defendants provide a specific service, “We help people get their lives back through structure, purpose, self-discipline, accountability, responsibility and a 12-step foundation.” Bond Decl., Exhibit H, p. 7. Defendants market these residences by advertising a rules-based system for encouraging accountability which Defendants refer to as “TLC Standards.” Blanco Decl., Exhibit A, p. 2. Residents pay hefty fees, not just for the use of a bed, but for a bed in a home which is marketed as being a clean, organized, safe, well-managed drug and alcohol free residence. Id. House Managers ensure that those services are provided as marketed. Id.; Bond Decl., A.1 pp. 2-4, ¶5; A.2. pp. 2-4 ¶6; A.3 pp.2-4,¶6; A.4 pp. 2-5 ¶7 In fact, the services performed by defendants’ House Managers are the core functions of the Defendants’ business – ensuring that the sober living homes are free from alcohol and drugs and monitoring the sobriety of the residents. This factor weighs extremely heavily toward a determination that the House Managers are employees. Defendants Receive Immediate Advantage from the Work House Managers Perform Defendants receive an immediate advantage for the work house managers perform, because that work allows Defendants to continue operating as a sober living provider. Defendants even admit that they “undoubtedly benefitted” from House Managers’ work. Dkt. 71, p. 15. It is undisputed that Defendants operate a for-profit business designed to generate revenue which is payable to the sole shareholder, Defendant Montero. According to Defendants’ own expert, certain House Manager Duties such as administering urinalysis tests, collecting fees, and discharging residents are operational functions which should, in his view, Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 21 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 normally be conducted by a paid staff member, such as a District Manager. Bond Decl., Exhibit C, 38:25-39:13. Defendants admit that they benefit from the work of the House Managers and that undisputed fact supports a determination that they are employees under the Act. Defendants Operate a For-Profit Entity, Rendering Any Inquiry into Promises of Compensation Irrelevant to the Question of Employee Status In this case, court precedent exploring the existence of an explicit promise of compensation has no application since Defendants are operating a for-profit entity. Courts have primarily relied on this factor to highlight whether someone really intended to work for free in the context of an employer who could legally accept those services for free. 8 As discussed previously, Defendants, as a for-profit entity, cannot “suffer or permit” House Managers to work for them without paying them the full federal minimum wage. The law does not allow it. The undisputed facts support a determination that House Managers are Defendants’ employees. In light of Defendants’ emphasis on this factor in its affirmative motion for summary judgment, however, the Secretary notes that it is undisputed that Defendants did not issue House Managers a single paycheck for performing many hours of work for Defendants’ business. It is also undisputed that, from the outset, Defendants promised to waive House Managers’ rent in exchange for executing those Duties. House Managers have testified they wouldn’t have taken on the job without that waiver. 8 Additionally, the courts’ consideration of this factor is puzzling. In the context of a law of broad and remedial purposes, designed to combat exploitation of vulnerable segments of the population, Congress defined the term “employ” as “includes to suffer or permit to work.” 29 U.S.C. § 203(g). This definition alone should make clear that there could well be situations in which an individual is truly an employee of another without an implied or explicit compensation agreement. The definition is not “to require work” or “agree in advance to pay for work” or “imply a quid pro quo.” Likewise, any economic realities analysis is a balancing of factors, not a strict test. Courts have repeatedly set forth non-exhaustive lists of factors to consider and have repeatedly stressed that the absence or presence of any of the factors is not dispositive. Donovan v. Sureway Cleaners, 656 F. 2d 1368 (9th Cir. 1981). Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 22 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 As a matter of fact and law, the Secretary disputes that Defendants can classify, post hoc, that the alleged “rent waiver” can be considered compensation or wages for purposes of 29 U.S.C. § 203(m). Defendants’ contention has factual and legal vulnerabilities since any type of “lodging credit” permitted by the FLSA can only be asserted if an employer satisfies strictly a number of rigorous requirements. See Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 473–74 (11th Cir.1982). Since Defendants deny that they are an employer – albeit without, as detailed above, any legal basis – the Secretary doubts that Defendants can meet any of the requirements for any sort of “credit.” Indeed, two of the several requirements for a lodging credit are that the provision of lodging must be subject to a voluntary agreement between the employer and the employee and the lodging must be furnished for the benefit of the worker, not the employer. Here, as a matter of law, the Secretary asserts that an agreement to provide lodging cannot be voluntary when the Defendants misrepresented the fundamental nature of the relationship. Defendants denied repeatedly to its House Managers that they were employees. Without a shared understanding that the relationship was an employment relationship, any agreement reached regarding any alleged compensation could not be “voluntary.” Similarly, on the record here, it is clear that the House Managers resided at the sober residences for the benefit of Defendants. The Secretary does not seek summary adjudication of this question – which, at end, simply goes to the question of the amount in back wages and liquidated damages due – because although the record appears ripe for adjudication as a matter of law, the Secretary would not oppose the Court’s resolution of the issues of voluntariness through a brief hearing on disputed factual issues, if any, regarding Defendants’ claim assertions regarding credits against back wages and liquidated damages due. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 23 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 E. Defendants Are Employers under the Act Under 29 U.S.C. § 203(d), an "employer" is defined as "any person acting directly or indirectly in the interest of an employer in relation to an employee[.]" The determination of whether Defendants are “employers” under the Act is a question of law. Bonnette v. California Health and Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983). The Ninth Circuit has noted that "[t]he 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." Boucher v. Shaw, 572 F.3d 1087, 1094 (internal quotation marks omitted); see also Solis v. Velocity Exp., Inc., No. 03:09-cv-00864- MO, 2010 WL 2990293, at * 2 (D. Or. July 26, 2010) (noting that an "individual may be personally liable for FLSA violations if he or she exercises control over the nature and structure of the employment relationship or economic control over the relationship," and that a "corporate officer may qualify as an employer if he or she had a significant ownership interest in the corporation with operational control of significant aspects of the corporation's day-to-day functions; the power to hire and fire employees; the power to determine salaries; or the responsibility to maintain employment records.") (internal quotation marks and brackets omitted). Here, Defendant Montero is clearly a covered employer as it is undisputed that he was the sole shareholder, the Chief Executive Officer, held all of the positions on the board of directors, had the power to hire and fire employees and set their compensation, and exerted significant control over the daily functions of the business. Bond Decl., Exhibit D, 8:12-15; 11:16-17; 12:10-14-3; 14:15-25; Exhibit L, p. 3-5. See also, Dkt. 52, p. 3, ¶7. Therefore, the Secretary asks for summary adjudication on this issue. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 24 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F. Defendants Violated Section 211(c) of the FLSA By Failing to Make, Keep, and Preserve Accurate and Complete Records Regarding Hours Worked and Wages Paid Under the Act, employers must “make, keep, and preserve such records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him.” 29 U.S.C. §211(c). Failure to “make, keep, and preserve” such records is a violation of the FLSA. 29 U.S.C. § 215(a)(5). The Secretary’s enabling regulations require employers to keep the following records for all covered employees: (1) the full name and employee identifying numbers, (2) home address, (3) date of birth (if the employee is under 19), (4) sex and occupation, (5) start time for the workweek, (6) regular rate of pay, the basis for that rate (e.g. payment on an hourly, piece or commission basis), (7) hours worked each workday, total hours worked each workweek, (8) total daily or weekly straight time earnings, (9) total premium pay for overtime, (10) deductions from or credits to wages, (11) total wages paid for each pay period, and (12) the date of payment and period covered by the payment. 29 C.F.R. §516.2. Recordkeeping is “fundamental” to the Act’s remedial objective because “[f]ailure to keep accurate records can obscure a multitude of minimum wage and overtime violations.” Wirtz v. Mississippi Publishers Corp., 364 F.2d 603, 607 (5th Cir. 1966) (quoted in Amaya v. Superior Tile and Granite Corp., 2012 WL 130425, *6 (S.D.N.Y. 2012) (unreported) (recordkeeping requirements are “not mere technicalities, but substantive obligations”). Without timecards and itemized pay stubs to review, workers have no clear way of ensuring that they are being compensated for all of the hours they worked or that they received all of the pay they are due. Without this information, workers cannot even begin a conversation with their employers over the accuracy and completeness of their wage payments. Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 25 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Further, as a practical matter, without accurate records, determining the precise hours worked and wages paid at a later date is difficult. Accordingly, the Supreme Court established an inference crediting workers’ recollection of the hours worked and pay received when an employer has kept inaccurate or incomplete records. Where the employer’s records are inaccurate or inadequate … we hold that an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate. Mt. Clemens, 328 U.S. at 687, see Brock v. Seto, 790 F.2d 1446, 1448-49 (9th Cir. 1986) (applying Mt. Clemens to a suit brought by the Secretary); Mumbower v. Callicott, 526 F.2d 1183, 1186 (8th Cir.1975); Brennan v. General Motors Acceptance Corp., 482 F.2d 825 (5th Cir.1973); Hodgson v. Humphries, 454 F.2d 1279 (10th Cir.1972). For these reasons, the FLSA unequivocally places the responsibility for ensuring complete and accurate records regarding all workers on the employer. Here, Defendants are employers who kept no records regarding time worked or payments made to their employees. There is no dispute that this is true. Defendant admitted it. Dkt. 52, ¶9; Bond. Decl., I Admissions 6-8. See, e.g., Moon v. Kwon, 248 F. Supp. 2d 201, 219 (S.D.N.Y. 2002) (finding defendants violated the record keeping provisions of the FLSA where they kept no records regarding time worked or payments made to their employee). Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 26 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 There can be no dispute that Defendants violated Section 11 of the FLSA by failing to keep accurate records of Employees’ employment, where Defendants admit they did not. Accordingly, the Court should order injunctive relief against Defendants requiring compliance with Section 11 of the FLSA. 29 U.S.C. § 211. IV. CONCLUSION There is no genuine dispute about the nature of the Duties that Defendants’ required House Managers to perform in order to keep the title of House Manager and receive a rent waiver. Likewise, Defendants cannot deny that they supervised and controlled House Managers work. Defendants admit they did not keep any records of the conditions of House Managers’ employment nor their hours. The Secretary asks that the Court find that the Act applies to Defendants, that, as a matter of law, that House Managers are Defendants’ employees, and that they failed to keep and maintain records under the Act. Signed this 15th day of September, 2016. M. PATRICIA SMITH Solicitor of Labor JANET M. HEROLD Regional Solicitor SUSAN SELETSKY Counsel for FLSA CHERYL L. ADAMS Senior Trial Attorney ANDREW SCHULTZ Senior Trial Attorney /s/Donna F. Bond x Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 27 of 28 SECRETARY’S NOTICE OF MOTION, MOTION FOR SUMMARY ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES No. 15-cv-02776-WHA 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DONNA F. BOND Trial Attorney Attorneys for the Plaintiff U.S. Department of Labor Case 3:15-cv-02776-WHA Document 89 Filed 09/15/16 Page 28 of 28