Acosta v. MICA Contracting, LLC

ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT, RULING ON MOTIONS TO STRIKE, AND GIVING NOTICE OF INTENT TO DISMISS WITHOUT PREJUDICE DEFENDANT TIMOTHY THOMPSON

Susan J. Dlott Judge United States District Court.

This is a Fair Labor Standards Act (“FLSA”) enforcement action brought by the Secretary of Labor of the United States Department of Labor (the “Secretary”). The Secretary alleges that Defendants MICA Contracting, LLC (“MICA”); J&E Builders, LLC (“J&E”); John Wayne House; Sarah Elaine Merrick; and Timothy Thompson violated the FLSA by failing to pay minimum wage and overtime and failing to keep required records. The Secretary seeks to impose employer liability on the individual defendants and successor-in-interest liability on J&E.

This matter is before the Court on the very contentious Motion for Summary Judgment (Doc. 74) filed by Defendants J&E, House, and Merrick.^[1] In addition to over eighty pages of disputes of fact, the parties also dispute what evidence may be considered at this stage in the litigation. To that end, Defendants have filed two Motions to Strike evidence relating to nine declarations and referenced exhibits which were filed in support of Defendants' Response in Opposition to Summary Judgment. Specifically, Defendants filed a Motion to Strike the Declarations of Employee No. 1, Employee No. 2, and Employee No. 3 and Exhibit Thereto (Doc. 90) and a Motion to Strike the Declarations and Exhibits of Wage and Hour Division

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Investigator Nikolai Bogomolov, Todd Haidet, Wayne McMillian, Mike Olding, Chris Kroger, and Gerardo Padilla (Doc. 91).

For the reasons that follow, Defendants' Motion for Summary Judgment (Doc. 74) will be DENIED. The Motion to Strike the Declarations of Employee No. 1, Employee No. 2, and Employee No. 3 and Exhibit Thereto (Doc. 90) will be DENIED AS MOOT.^[2] The Motion to Strike the Declarations and Exhibits of Wage and Hour Division Investigator Nikolai Bogomolov, Todd Haidet, Wayne McMillian, Mike Olding, Chris Kroger, and Gerardo Padilla (Doc. 91) will be GRANTED IN PART AND DENIED IN PART.^[3]

I. BACKGROUND

A. Procedural History

On August 21, 2018, R. Alexander Acosta, ^[4] then the Secretary of Labor of the United States Department of Labor, filed this FLSA enforcement action against Defendants MICA, J&E, Sarah Elaine Thompson a/k/a Elaine Merrick^[5] (“Merrick”); Timothy Thompson^[6]

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(“Thompson”); and John Wayne House (“House”). (Doc. 1.) The Secretary alleges that Defendants were employers under the FLSA, 29 U.S.C. § 203(d), and that J&E is a successor-in-interest to MICA. (Id. at PageID 3, 6.) The Secretary alleges Defendants violated Sections 6 and 15(a)(2) of the FLSA by failing to pay minimum wage to workers who were paid through a purported subcontractor, Amazing Interiors, LLC (“Amazing Interiors”), owned by non-party Gerardo Padilla. (Id. at PageID 7.) In addition, the Secretary alleges Defendants violated Sections 7 and 15(a)(2) of the FLSA by employing workers for more than forty hours per week without paying overtime. (Id. at PageID 8.) Finally, the Secretary alleges Defendants violated Sections 11(c) and 15(a)(5) of the FLSA by failing to make, keep, and preserve adequate and accurate records of their employees as required by 29 C.F.R. § 516. (Id. at PageID 9.) The Secretary seeks injunctive relief, unpaid minimum wage and overtime compensation, liquidated damages, pre-judgment interest, costs, and any other relief. (Id. at PageID 10.)

On December 31, 2018, the Clerk of Court entered an Entry of Default against MICA pursuant to Federal Rule of Civil Procedure 55(a). (Doc. 92.) The Secretary then filed a Motion for Default Judgment against MICA. The Court determined that the proper action was to keep the entry of default against MICA in place, but to delay judgment until the claims against Defendant J&E and other Defendants were resolved. (Doc. 39, 44.) The Motion was denied without prejudice to refiling. (Doc. 44.)

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On March 31, 2021, Defendants filed their Motion for Summary Judgment.^[7] (Doc. 84.) The Secretary responded in opposition, and Defendants replied. (Docs. 85, 94.) On June 18, 2021, Defendants filed two Motions to Strike. (Docs. 90, 91.) The Secretary responded in opposition, and Defendants replied. (Docs. 95, 97, 98, 99.) All Motions are ripe and ready for adjudication.

B. Facts^[8]

This is a very contentious case. The numerous disputes of fact, only some of which are highlighted herein, render summary judgment inappropriate.^[9] Most significantly, there are material disputes of fact over whether Padilla and workers paid by Amazing Interiors were employees of J&E and whether Merrick exercised control over J&E so as to be an employer.

MICA was a general contracting business that operated from 2012 to March 2017 whose services included drywall and framing. Merrick was the owner and Chief Financial Officer of MICA. She determined employee wages, hired subcontractors, and took draws from the company at her discretion. (Merrick Admin. Dep., Doc. 77 at PageID 3980-82.) MICA used subcontractors to supplement its workforce. (Id.)

J&E began operating around the time MICA ceased operating in March 2017 and was owned by House. J&E performed general contracting, including drywall, framing, painting, Gyp-Crete, general trades labor, insulation, carpentry and siding. (House Admin. Dep., Doc. 72 at PageID 3601.)

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J&E relied upon employees and subcontractors for framing, drywall, hanging, finishing, and insulation. (Id. at PageID 3602-03.)

The parties dispute what, if any, overlap existed between J&E and MICA, as well as Merrick's role in running J&E. During the time of J&E's operation-March 2017 until November 2017-Merrick was in a relationship with and lived with House. After MICA ceased operations, Merrick was employed at J&E as an office manager and then project manager. She denies having ownership interest in J&E. (Merrick Admin. Dep., Doc. 77 at PageID 4028-29.) House, though the owner of J&E, had a full-time day job unrelated to J&E and split his time “50/50” between his full-time job and J&E. (House Admin. Dep., Doc. 76 at PageID 3935-36.) Many of the same employees worked for J&E as did for MICA, including “Flaco, ” a foreman for J&E and a chief foreman for MICA, and “Manuel, ” a foreman for J&E and chief foreman for MICA. (Id. at PageID 3868; Merrick Admin. Dep., Doc. 77 at PageID 4089; 3977-80.)

Gerardo Padilla attested that he worked for “Elaine” and used his company name, Amazing Interiors, LLC^[10] (“Amazing Interiors”), to pay subcontractors he brought to J&E job sites who also worked for “Elaine's workforce.” (Padilla Dec., Doc. 81-5 at PageID 4957-59.) He attested that he called Merrick about working for her and she asked if he knew “any other guys” like “drywall hangers and finishers.” (Id. at PageID 4957.) “I said that I needed to make a few phone calls. I did and that is how I got a few of us to work for Elaine.” (Id.) According to him, Amazing Interiors “was a business name I used at times for many years” but he was not using the name at the time he “got the workers to work for Elaine.” (Id.) He claims that “[o]nce

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I started working for Elaine, I used the Amazing Interiors name to pay the workers I brought to join Elaine's workforce.” (Id.)

He attested that Merrick directed J&E employees and subcontractors where and when to work and controlled payroll for employees and subcontractors. (Id.) Text message exchanges between Padilla and Merrick show the two discussing multiple topics including when Padilla would get paid, requests for Padilla's hours, Padilla's hours worked, Padilla's pace of work, whether he needed more tools, payment for work, and disputes over the number of hours worked. (Text Messages, Doc. 71-4).

Padilla attested that “Flaco kept a record of all our work hours, including my work hours and the work hours of the workers I brought to work for Elaine. The workers I brought to J&E reported their hours to me, and I invoiced Elaine every week. In those instances in which Elaine did not pay me for all hours worked by those workers, she told me the hours that I reported did not match the hours that Flaco had kept for them.” (Padilla Dec., Doc. 81-5 at PageID 4959.) Merrick made Padilla “redo” his hours and only paid him and other workers based on the number of hours Flaco reported. (Id.) Merrick was “always the one who gave me the check or deposited money” and did not pay him for any work done on the Empower Media project. (Id.)

Padilla attested that he and the workers he provided “performed the same drywall work tasks as Elaine's other workers.” (Id. at PageID 4958.) According to him, the workers had the same skills, were supervised by Merrick's foremen, and had to follow J&E foremen's orders. (Id.) “They [the J&E foremen] told us when to start and when to go home. They told us what job tasks to do and we did as we were instructed, hang, finish, etc. We did not have the discretion to come and leave as we pleased. The J&E foremen told us what to do on a daily

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basis.” (Id.) He also attested that he did not have to pay for materials or equipment. (Id.) The only items workers provided were their own hand tools. (Id.)

On the other hand, two J&E foremen attested that they did not direct the subcontractors. Manuel Lemus attested that he previously worked for MICA and began working on February 22, 2017 as a foreman for J&E. (Doc. 73-2 at PageID 3695.) As a foreman for J&E, he worked on-site on J&E projects and recalls subcontractors working on the J&E job sites where he was the foreman to hang and finish drywall. (Id.) However, he did not give any instruction to subcontractors because they...