Elliott v. Krape Logistics

1

SETH COLE ELLIOTT, CODY PAINTER, And LONNIE JORDAN Plaintiffs, v. KRAPE LOGISTICS, and BRIAN KRAPE, Defendants.

No. 3:23-CV-369-JRG-DCP

United States District Court, E.D. Tennessee

October 22, 2024

REPORT AND RECOMMENDATION

DEBRA C. POPLIN, UNITED STATES MAGISTRATE JUDGE

This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court, and the Order of Referral [Doc 25] by the District Judge.

Now before the Court is Plaintiffs' Motion for Entry of Default Judgment [Doc. 23]. Specifically, Plaintiffs request damages pursuant to the Fair Labor Standards Act (“FLSA”). On July 31, 2024, the Court entered an Order to Show Cause directing Defendants to appear before the undersigned on September 17, 2024, to show cause why Plaintiffs' motion should not be granted [Doc. 26]. On September 17, 2024, Attorney J. Joseph Leatherwood IV (“Attorney Leatherwood”) appeared on behalf of Plaintiffs. Defendants did not appear. Accordingly, the undersigned RECOMMENDS that the District Judge GRANT IN PART AND DENY IN PART Plaintiffs' motion [Doc. 23].

I. BACKGROUND

Plaintiffs filed a Complaint [Doc. 1] on October 13, 2023, and later amended on January 30, 2024 [Doc. 8]. The First Amended Collective Action Complaint (“Amended Complaint”) alleges violations of the FLSA [Id. ¶ 1]. Defendant Krape Logistics, Inc. (“Krape Logistics”) is a logistics company that Defendant Brian Krape (“Krape”) owns, operates, and manages [ Id. ¶¶ 1011]. Defendants employed Plaintiffs as day-rate delivery drivers [Id. ¶¶ 12-14]. “Defendants provided delivery services for Federal Express Ground Delivery” [Id. ¶ 15]. Plaintiffs allege that they “performed delivery services on behalf of Defendants for more than 40 hours per week within weekly pay periods” but that they “were paid on a day-rate basis that did not include compensation for hours over 40 per week within weekly pay periods at the applicable FLSA overtime compensation rates of pay” [Id. ¶ 24]. According to the allegations, Defendants were aware that Plaintiffs were not being paid their overtime hours [Id. ¶ 25].

Based on the above, Plaintiffs allege that Defendants violated the FLSA [Id. ¶¶ 40-47]. They seek “unpaid overtime compensation, an additional equal amount as liquidated damages, as well as interest, reasonable attorneys' fees, costs, and disbursements relating to this action for the three-year statutory period under the FLSA” [Id. ¶ 47 (citation omitted)].

Pursuant to the proof of service, Defendants were personally served on January 9, 2024 [Doc. 7]. They did not respond to the lawsuit, and Plaintiffs moved for entry of default [Docs. 17 and 18]. The Clerk entered defaults against Defendants on June 6, 2024 [Docs. 19 and 20]. Plaintiffs thereafter moved for entry of default judgment [Doc. 23].

The instant motion requests entry of default judgment against Defendants pursuant to Rule 55(b)(1) of the Federal Rules of Civil Procedure.^[1]As mentioned above, Plaintiffs request damages from Defendants' violations of the FLSA and their reasonable attorneys' fees incurred in bringing this lawsuit.

II. ANALYSIS

The undersigned recommends that Defendants be found liable for violating the FLSA and that Plaintiffs be awarded their overtime wages, liquidated damages, reasonable attorneys' fees, and costs.

A. Liability

“When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Following the clerk's entry of default, a party may apply for default judgment, and the Court may conduct a hearing - if needed, to perform an accounting, determine the amount of damages, establish the truth of any allegation by evidence, or investigate any other matter - prior to entering default judgment. Fed.R.Civ.P. 55(b). Furthermore, “[o]nce the Clerk has entered a default against a defendant, the Court must treat all well-pleaded allegations in the Complaint as true.” AF Holdings LLC v. Bossard, 976 F.Supp.2d 927, 929 (W.D. Mich. 2013) (citing Thomas v. Miller, 489 F.3d 293, 299 (6th Cir. 2007) (entry of default judgment “conclusively establishes every factual predicate of a claim for relief”)).

Taking as true the allegations in the Amended Complaint [Doc. 8], the Court INCORPORATES BY REFERENCE the allegations as set forth by Plaintiffs with respect to Defendants' violations of the FLSA. The Court accepts all such allegations, and specifically FINDS, based upon entry of default, that Defendants have violated the FLSA. Specifically, the Court finds that Plaintiffs worked over 40 hours each week and were not paid their overtime wages.

The Court will now turn to the amount of damages requested.

B. Damages

To ascertain a sum of damages, Federal Rule of Civil Procedure 55(b)(2) “allows but does not require the district court to conduct an evidentiary hearing.” Vesligaj v. Peterson, 331 Fed.Appx. 351, 354-55 (6th Cir. 2009) (citing Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989) (“[I]t was not necessary for the District Court to hold a hearing, as long as it ensured that there was a basis for the damages specified in a default judgment.”)). Courts within the Sixth Circuit have explained that an evidentiary hearing is not required if the court can determine the amount of damages by computation from the record before it. HICA Educ. Loan Corp. v. Jones, No. 4:12-CV-962, 2012 WL 3579690, at *1 (N.D. Ohio Aug. 16, 2012).

In the instant matter, the undersigned conducted a show cause hearing, but Defendants did not appear. During the hearing, Plaintiffs requested additional time to provide their evidence of damages, which the undersigned granted. On October 4, 2024, Plaintiffs and their counsel filed the Supplement to Motion for Default Judgment, which included affidavits detailing the amounts they seek [Docs. 29, 29-1 to 29-4]. After review, the Court determined that there were mathematical errors and issues with Plaintiffs' request for attorneys' fees, which prompted the Court to set another hearing. On October 17, 2024, Attorney Leatherwood appeared telephonically before the Court. The Court noted that there appeared to be mathematical errors and issues with Plaintiffs' request for attorneys' fees. To the extent Plaintiffs wanted to address these errors, the Court directed them do so on or before October 21, 2024. On October 21, 2024, Plaintiffs filed their Amended Supplement to Motion for Default Judgment (“Amended Supplement”) [Doc. 30]. Specially, in the Amended Supplement, Plaintiffs seek overtime wages, liquidated damages, attorneys' fees, and costs [See id.].

Turning to overtime compensation, the FLSA requires that every employer pay its employees overtime compensation for hours worked over forty. 29 U.S.C. § 207(a)(1).^[2] In support of their requested damages, each Plaintiff filed an affidavit setting forth the overtime wages that are due. According to Plaintiff Elliott, he was paid a daily rate of $180, he typically worked between 65 to 70 hours six days a week, and Defendants employed him from October 2022 to January 2023 [Doc. 30-2 ¶¶ 3-4, 8]. Given the number of hours he worked and his daily rate of pay, his regular hourly rate was $16.00 [Id. ¶ 7]. He states:

9. My unpaid overtime is calculated as follows:

a. $8.00 (rate divided by half)

b. $8.00 x 27.5 hours over overtime each week = $220.00 of overtime owed per week

c. $220.00 x 17 weeks = $3,740.00 in paid wages

[Id. ¶ 9].

Plaintiff Lonnie Jordan states that he was paid a daily rate of $180, he typically worked 65 to 70 hours six days a week, and Defendants employed him from September 2021 to September 2022 [Doc. 30-3 ¶¶ 3-4, 8]. Given the number of hours he worked and his daily rate of pay, his regular hourly rate was $16.00 [Id. ¶ 7]. He states:

9. My unpaid overtime is calculated as follows:

a. $8.00 (rate divided by half)

b. $8.00 x 27.5 hours of overtime per week = $220.00

c. $220.00 x 52 weeks = $11,440.00 in unpaid overtime wages

[Id. ¶ 9].

Plaintiff Cody Painter states that he was paid a daily rate of $180, he typically worked 55 to 60 hours a week, and Defendants employed him from October 2022 to March 2023 [Doc. 30-4 ¶¶ 3-4, 8]. Given the number of hours he worked and his daily rate of pay, his regular hourly rate was $18.79 [Id. ¶ 7]. He states:

9. My unpaid overtime is calculated as follows:

a. $9.40 (rate divided by half)

b. $9.40 x 17.5 hours of overtime per week = $164.50 of overtime owed per week

c. $164.50 x 24 weeks = $3,948.00 in unpaid overtime wages

[Id. ¶ 9].

Based on the evidence before the Court, which has not been rebutted, the undersigned RECOMMENDS that Defendants be liable for unpaid overtime wages as follows: Plaintiff Elliott for $3,740.00; Plaintiff Jordan for $11,440.00; and Plaintiff Painter for $3,948.00.

Plaintiffs also seek liquidated damages. The FLSA provides as follows:

Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.

29 U.S.C. § 216. “[Liquidated damages are compensatory, not punitive.” Stansbury v. Faulkner, 443 F.Supp.3d 918, 933 (W.D. Tenn. 2020) (citation omitted). Further, “[a]court may exercise its discretion to limit or deny liquidated damages, but only if an employer demonstrates both good faith and reasonable grounds for failing to pay wages.” Id. (citations omitted).

By failing to respond to this lawsuit and failing to appear to the hearing, Defendants have not demonstrated both good faith and reasonable grounds for failing...