Pineda v. Skinner Servs., Inc.

22 F.4th 47

Jose PINEDA, Jose Montenegro, Marco Lopez, and Jose Hernandez, on behalf of themselves and all others similarly situated, Plaintiffs, Appellees,

v.SKINNER SERVICES, INC., d/b/a Skinner Demolition, Thomas Skinner, David Skinner, Elber Diniz, and Sandro Santos, Defendants, Appellants.

Nos. 20-1097

20-1141

United States Court of Appeals, First Circuit.

December 30, 2021

Michael B. Cole, with whom Gregory J. Aceto and Aceto, Bonner & Cole, P.C. were on brief, for appellants.

Jasper Groner, with whom Nathan P. Goldstein, Paige W. McKissock, and Segal Roitman, LLP were on brief, for appellees.

Before Lynch, Thompson, and Kayatta, Circuit Judges.

LYNCH, Circuit Judge.

The district court entered a preliminary injunction against Skinner Services, Inc., d/b/a Skinner Demolition, Thomas Skinner, David Skinner, Elber Diniz, and Sandro Santos (collectively, "Skinner"), finding Skinner likely had violated state and federal wage laws as to its laborers and was trying to transfer assets from the laborers' reach. Skinner had created four separate entities after the laborers filed this lawsuit, all of which the workers allege were used to dissipate or hide assets. This injunction comes after the court had held Skinner in contempt for retaliating against one of its laborers who participated in this suit. Skinner appeals the preliminary injunction.

Skinner's primary appellate argument, which is mistaken, is based on an incorrect reading of the Supreme Court's holding in Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 119 S.Ct. 1961, 144 L.Ed.2d 319 (1999). The Court held in Grupo Mexicano that federal courts lack equitable jurisdiction under Federal Rule of Civil Procedure 65 to enter preliminary injunctions that prevent the transfer of assets pending the adjudication of a claim for money damages. Id. at 333, 119 S.Ct. 1961. Grupo Mexicano does not constrain the district court's authority to grant analogous relief under Rule 64 when authorized by the law of the forum state, as is the case here. The district court's entry of a preliminary injunction is affirmed.

I. Background

Skinner Demolition is a company that performs demolition work on construction sites throughout New England and other nearby states. It is owned and managed by the individual defendants named in this case. Jose Pineda, Jose Montenegro, Marco Lopez, and Jose Hernandez (collectively, "Pineda") are former low-wage employees of Skinner Demolition. They have sued Skinner on behalf of themselves and other similarly situated workers for unpaid wages.

Pineda alleges two categories of violations: Skinner unlawfully excluded from the workers' pay the time spent reporting to and from Skinner Demolition's headquarters (the "Yard"), despite apparently requiring the workers to so report daily ("Reporting Policy")¹ ; and Skinner improperly deducted from each worker approximately an hour of pay per week to pay for a uniform laundering service ("Uniform Policy"). The workers' expert has opined that these violations have resulted in between approximately $400,000 and $650,000 in unpaid wages.

Pineda alleges that between August 2013 and January 2016, Skinner required the workers to report to the Yard each morning to receive job assignments and collect tools and equipment. The workers were not told their assigned construction site before arriving at the Yard. The workers also were required to report to the Yard at the end of each workday to return the tools and equipment. The Reporting Policy violations alleged under both state and federal law are that, although the construction jobsites could be anywhere between forty-five minutes and three hours' drive from the Yard, the workers were not permitted to "punch in" to begin paid work until they arrived at their first jobsite for the day. These workers were also required to "punch out" when they left their final construction site, before returning to the Yard. Subject to rare exceptions, the workers were not paid for travel time between the Yard and the construction sites.²

As to the Uniform Policy, the violations alleged are that, from August 5, 2013 through the present, Skinner would deduct approximately an hour of wages per week from certain employees' paychecks for "uniform washing," regardless of how much the service actually cost or whether the worker actually utilized the service. Pineda states that Skinner "rarely washed Class Plaintiffs' uniforms or performed any other services in exchange for the ‘uniform washing’ fee."

A. Department of Labor Investigation

Between 2013 and 2015, the Wage and Hour Division of the U.S. Department of Labor investigated the wage practices of Skinner. Following that investigation, the primary investigator prepared and submitted a ten-page report, concluding that Skinner violated Sections 7 and 11 of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"). The report stated that

the employees would show up at the [Yard], participate in "pre-tour" activities such as loading the truck with tools and other equipment and being assigned work, and then ride to the job site on the company vehicle, all at the instruction of the employer. All of this work was unpaid for the purposes of hours worked as defined under 29 CFR 785.38 (Travel that is all in the day's work).... Thus, employees are not punching in at the [Yard] as they should be, but rather, they are punching in some 2 hours later upon arrival at the job site, which is long after they've arrived at work and performed pre-tour activities.

The investigator estimated that Skinner owed a total of more than $800,000 in back wages to over 100 employees. The Assistant District Director thereafter ended the Department of Labor's investigation due to the present litigation and a separate complaint pending before the Equal Employment Opportunity Commission.

B. Procedural History

Pineda filed this action in 2016, alleging collective claims under the FLSA, and class claims under the Massachusetts Overtime Law, Mass. Gen. Laws ch. 151, §§ 1A & 1B, the Massachusetts Fair Minimum Wage Act, Mass. Gen. Laws ch. 151, § 1, et seq. , the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148, and the Massachusetts Fair Wage Act, Mass. Gen. Laws. Ch. 151, § 19(5).

On September 6, 2017, the district court conditionally certified the FLSA collective. The court thereafter entered a protective order to prohibit Skinner from retaliating against any workers who participate or assist in this litigation. Skinner, having terminated one of its workers in August 2018 for opting into the collective action and testifying favorably to the workers in a deposition, was held in contempt of court in December 2018 for violating the protective order.

On August 8, 2019, the district court certified two classes under Federal Rule of Civil Procedure 23 as to Pineda's state law claims. The court observed as to the Reporting Policy class, inter alia, that "[i]f, as plaintiffs allege, Skinner required its laborers during the class period to report to the Yard to load equipment and receive jobsite assignments without compensation, that would likely be a clear violation of Massachusetts wage laws." Pineda v. Skinner Servs., Inc. ("Pineda III"), No. 16-cv-12217, 2019 WL 3754015, at *6, *11–12 (D. Mass. Aug. 8, 2019). The court added for the Uniform Policy class that "plaintiffs have proffered evidence that their enrollment in the [uniform washing] program was involuntary," and thus unlawful. Id. at *11 (emphasis in original).

As these proceedings were taking place, the four individual defendants created four new entities: Skinner Disposal (organized on January 3, 2017); Skinner Consulting (organized on March 16, 2017); Skinner Staffing (organized on April 21, 2017); and 155 Shakedown Street (organized on December 11, 2017). The workers have alleged that Skinner created these entities in order to "transfer corporate assets and prevent [p]laintiffs from recovering damages should they prevail on their claims." The record discloses the following about these entities.

Skinner Disposal was created to provide "roll-off dumpster services," a service also provided by Skinner Demolition. Skinner Disposal primarily served one client: Skinner Demolition. Its only employees were defendants Thomas Skinner and Sandro Santos and those "borrowed" from Skinner Demolition. All employees were paid through Skinner Demolition's payroll, and Skinner Demolition covered additional expenses for Skinner Disposal. In February 2019, Skinner Disposal was sold for several million dollars.³ Pineda contends the company "was created by Defendants for the purpose of transferring and sheltering their assets."

Skinner states that Skinner Consulting provided "construction consulting for estimating projects and project management." Skinner Demolition was a client of Skinner Consulting, and Skinner Consulting's sole owner, officer, director, and employee was David Skinner, who was paid $10,000 each month by Skinner Demolition. Pineda alleges the company "operated as merely a vehicle through which Skinner Demolition funneled money to David." The company was dissolved by August 2019.

There is no evidence the remaining two entities, Skinner Staffing and 155 Shakedown Street, ever became operational.

In September 2019, Skinner filed three summary judgment motions. Pineda filed a memorandum in opposition in October 2019, together with a motion for preliminary injunction, prejudgment attachment, attachment by trustee process, or discovery in the alternative. In the motion for injunctive relief, the workers argued that they had "reasonable concern that [d]efendants will accelerate any efforts to insulate their individual and corporate assets to avoid a meaningful recovery for [p]laintiffs." The district court held a hearing on the pending motions in December 2019. The motion for a preliminary injunction was allowed on December 23, 2019, Pineda v. Skinner Services, Inc. ("Pineda IV"), No. 16-cv-12217, 2019...