Lemus v. Nathan & Morgan, Inc.

JOSE GEOVANNI LEMUS, et al., Plaintiffs,

v.NATHAN AND MORGAN, INC., dba Korea Town Plaza Food Court, Defendant.

Case No. 2:12-cv-00681-MMD-GWF

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

Dated: September 27, 2012

ORDER

(Plf.'s Motion for Default Judgment

- dkt. no. 8)

I. SUMMARY

Before the Court is Plaintiffs' Motion for Default Judgment. (Dkt. no. 8.) Defendant Nathan and Morgan, Inc. has not responded.

II. BACKGROUND

On April 24, 2012, Plaintiffs, former employees at Defendant's restaurant, filed this lawsuit seeking unpaid minimum wages and overtime compensation, liquidated damages, attorneys' fees, and costs in accordance with 29 U.S.C. § 206(a)(1)(C) (federal minimum wage requirement), 29 U.S.C. § 207(a)(1) (federal overtime wage requirement), and 29 U.S.C. § 216(b) (penalties). Plaintiffs seek $81,203.14¹ indamages: $39,875.26 in favor of Jose Geovanni Lemus; $20,663.94 in favor of Jose P. Sibrian; and $20,663.94 in favor of Jose Hector Orellana. Furthermore, Plaintiffs' request $5,030.75 for attorneys' fees and costs. (Dkt. no. 8 at 1, 8-9.)

On April 25, 2012, Plaintiffs served Defendant with the Summons and Complaint. (Dkt. no. 5 at 2.) Accordingly, Federal Rule of Civil Procedure 12(a) required Defendant to file an answer or responsive pleading on or before May 16, 2012. On May 14, 2012, Plaintiffs mailed Defendant a Three Day Notice of Intent to Default, informing Defendant of Plaintiffs' intent to move for default judgment if Defendant did not file an answer or responsive pleading by May 21, 2012. (Dkt. no. 6.) Plaintiffs allege that defense counsel requested an extension to file an answer, which Plaintiffs' counsel allegedly granted via e-mail on May 18, 2012. (Dkt. nos. 8 at 9 and 8-2 at 2.) The extension gave Defendant until May 28, 2012, at 5:00pm to answer. (Dkt. no. 8-2 at 2.) On May 29, 2012, Plaintiff moved for Entry of Clerk's Default (dkt. no. 7), which was entered on May 30, 2012, (dkt. no. 9), and filed its Motion for Default Judgment (dkt. no. 8). Defendant has not filed any documents in this case.

A. Jose Geovanni Lemus

From September 10, 2010, to February 8, 2012 (73.71 weeks), Mr. Lemus worked 12 hours a day, 6 days a week, for a total of 72 hours. (Dkt. no. 8-1 at 2.) During that time, Defendant paid Mr. Lemus $750.00 every two weeks (dkt. no. 8-1 at 3), or $5.21 per hour, for a total of $27,641.25. From February 9, 2012 to April 17, 2012 (9.71 weeks), Mr. Lemus worked for Defendant 11 hours a day, 5 days a week, for a total of 55 hours per week. (Dkt. no. 8-1 at 3.) During that time, Defendant paid Mr. Lemus $969.25 every two weeks, or $8.81 per hour, for a total of $4,705.71. (Dkt. no. 8-1 at 3.) In total, Mr. Lemus received $32,346.96² for the time he worked for Defendant.

Pursuant to 29 U.S.C. § 206(a)(1)(C) and § 207(a)(1), Mr. Lemus was entitled to receive at least $7.25 per hour (minimum wage) up to forty hours per week and at least $10.875 per hour (1.5 times his regular rate) for every hour worked in excess of forty hours per week. Accordingly, Mr. Lemus was entitled to $46,984.93³ for the time he worked from September 10, 2010, to February 8, 2012, and $5,299.66⁴ for the time he worked from February 9, 2012 to April 17, 2012. Therefore, Defendant was required to pay Mr. Lemus $52,284.59 instead of $32,346.96, a difference of $19,937.63.

B. Jose P. Sibrian and Jose Hector Orellana

From April 25, 2010, to January 27, 2011 (39.51 weeks), Mr. Sibrian and Mr. Orellana worked 12 hours a day, 6 days a week, for a total of 72 hours. (Dkt. no. 8-1 at 5, 8.) During that time, Defendant paid Mr. Sibrian and Mr. Orellana $750.00 every two weeks, or $5.21 per hour, for a total of $14,816.25. (Dkt. no. 8-1 at 6, 9.) Pursuant to U.S.C. § 206(a)(1)(C) and § 207(a)(1), Defendant was required to pay Mr. Sibrian andMr. Orellana $25,148.22⁵ instead of $14,816.25, a difference of $10,331.97.

III. DISCUSSION

A. Legal Standard

Obtaining a default judgment is a two-step process governed by the Federal Rules of Civil Procedure. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). First, "[w]hen 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). Second, after the clerk enters default, a party must seek entry of default judgment under Rule 55(b).

Upon entry of default, the court takes the factual allegations in the non-defaulting party's complaint as true. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (citation omitted). Nonetheless, although entry of default by the clerk is a prerequisite to an entry of default judgment, "a plaintiff who obtains an entry of default is not entitled to default judgment as a matter of right." Warner Bros. Entm't Inc. v. Caridi, 346 F. Supp. 2d 1068, 1071 (C.D. Cal. 2004) (citation omitted). Instead, whether a court will grant a default judgment is in the court's discretion. Id.

The Ninth Circuit has identified the following factors as relevant to the exercise of the court's discretion in determining whether to grant default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to the excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1471-72.

A. Prejudice

The first Eitel factor considers whether the plaintiff will suffer prejudice if default judgment is not entered. See PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). Here, Plaintiffs served Defendant with the Summons and Complaint on April 25, 2012 (dkt. no. 5), which set the due date for Defendant's answer on May 16, 2012. On May 14, 2012, Plaintiffs mailed Defendant a Three Day Notice of Intent to Take Default. (Dkt. no. 6). On May 28, 2012, Plaintiffs responded to defense counsel's alleged request for an extension (dkt. no. 8 at 9) by extending the deadline to file an answer or responsive pleading to May 28, 2012 at 5:00pm. (Dkt. no. 8-2 at 2.) However, Defendant has not answered, made an appearance, or otherwise responded to the Complaint. Due to Defendant's refusal to appear in this action, and the likelihood that Defendant will continue to refuse to compensate Plaintiffs, the possibility of prejudice to Plaintiffs in the absence of a default judgment is great. Thus, this Eitel factor weighs in favor of entering default judgment.

B. Substantive Merits and Sufficiency of the Complaint

The second and third Eitel factors favor a default judgment where the complaint sufficiently states a claim for relief under the "liberal pleading standards embodied in Rule 8" of the Federal Rules of Civil Procedure. Danning v. Lavine, 572 F.2d 1386, 1389 (9th Cir. 1978); see Fed. R. Civ. P. 8. In the instant action, Plaintiffs assert the following claims: (1) unpaid minimum wages in violation of 29 U.S.C. § 206(a)(1)(C); and (2) unpaid overtime compensation in violation of 29 U.S.C. § 207(a)(1). (Dkt. no. 1 at 1.) Plaintiffs allege that they are employees subject to the Fair Labor Standard Act's ("FLSA") minimum wage (29 U.S.C. § 206(a)(1)(c)) and overtime (29 U.S.C. § 207(a)(1)) requirements because Defendant is engaged in interstate commerce and accepts credit card payments.⁶ (Dkt. no. 1 at 1-2.)

Pursuant to 29 U.S.C. § 206(a)(1)(C), every employer is required to pay "each of his employees who in any workweek is . . . employed in an enterprise engaged in commerce . . . $7.25 an hour." Here, Defendant paid Mr. Lemus $5.21 per hour from September 10, 2010, to February 8, 2012, and Mr. Sibrian and Mr. Orellana $5.21 per hour from April 25, 2010, to January 27, 2011. Accordingly, Defendant did not pay Plaintiffs in accordance with the federal minimum wage requirement.

Pursuant to 29 U.S.C. § 207(a)(1), every employee "who in any workweek is . . . employed in an enterprise engage in commerce . . . for a workweek longer than forty hours" must receive "compensation for his employment in excess of [forty hours] at a rate not less than one and one-half times the regular rate at which he is employed" (emphasis added). In other words, employers are required to compensate their employees at a minimum of $10.875⁷ per hour for every hour worked in excess of forty hours per week. From September 10, 2010, to February 8, 2012, Mr. Lemus worked 32 additional hours per week at his regular $5.21 rate of pay. From February 9, 2012, to April 17, 2012, Mr. Lemus worked 55 additional hours per week at his regular $8.81 rate of pay. From April 25, 2010, to January 27, 2011, Mr. Sibrian and Mr. Orellana worked 32 additional hours per week at their regular $5.21 rate of pay. Therefore, Defendant did not pay Plaintiffs in accordance with the federal overtime wage requirement.

In light of the lenient pleading standards under Fed. R. Civ. P. 8(a), the Complaint sufficiently gives fair notice to Defendant of Plaintiffs' claims under the Fair Labor Standard Act (FLSA). (Dkt. no. 1 at 1-6.) See Takacs v. A.G. Edwards and Sons, Inc., 444 F. Supp. 2d 1100, 1107 (S.D. Cal. 2006). The Complaint cites to 29 U.S.C. § 206(a)(1)(C) and § 207(a)(1), and sets forth specific facts, including employment dates, the number of hours worked each week, biweekly earnings, and total earnings, to support Plaintiffs' claim that Defendant did not pay them wages and overtime in accordance with federal law. (Dkt. no. 1 at 1-6.) Furthermore, because the allegations in the Complaint indicate a strong likelihood that Plaintiffs will succeed on the merits, the second and third Eitel factors favor entering a default judgment.

C. Sum of Money at Stake

Under the fourth Eitel factor, the court considers "the amount of money at stake...