Valenzuela v. Esser

1

Osiris Valenzuela, Plaintiff, v. Samantha Esser, Formula Wellness Scottsdale LLC, Kevin Kimball, Defendants.

No. CV 22-01180 PHX CDB

United States District Court, D. Arizona

March 14, 2023

REPORT AND RECOMMENDATION

TO THE HONRABLE STEPHEN M. McNAMEE

Plaintiff has consented to the exercise of magistrate judge jurisdiction over this matter. (ECF No. 6). Service on Defendants Esser and Kimball was returned as executed on October 9, 2022. (ECF Nos. 8 & 9). Defendants' responses to the Complaint were due October 31, 2022. Plaintiff applied for the entry of default against Defendants Esser and Kimball on November 5, 2022 (ECF No. 11). The Clerk of the Court entered Defendants' defaults on November 7 2022. (ECF No. 12, as amended at ECF No. 18 (December 6, 2022)).^[1] Before the Court is Plaintiff's motion for judgment by default against Defendants Esser and Kimball (ECF No. 19). Because some of the parties to this matter have not affirmatively consented to the exercise of Magistrate Judge jurisdiction over the matter, including the entry of final judgment, the undersigned Magistrate Judge makes the following findings of fact, law, and recommendation.

I. Background

Plaintiff through counsel, docketed a complaint on July 14, 2022, alleging a cause of action against Defendants pursuant to the Fair Labor Standards Act and a cause of action pursuant to state law. (ECF No. 1). Plaintiff asserts she was employed “by Defendants since January 29, 2022” as a “health worker collecting COVID-19 swaps [sic] from patients of the Defendant Employer.” (ECF No. 1 at 2). Plaintiff further alleges Defendant Formula Wellness Scottsdale LLC is an outpatient clinical laboratory and testing facility offering an array of on-demand lab testing services “such as COVID-19 testing,” and that Formula Wellness Scottsdale LLC is an employer as that term is defined in 29 U.S.C. § 203(d). (Id.).

Plaintiff also asserts:

Defendant Samantha Esser is the owner and manager of Formula Wellness as well as the sole member of Formula Wellness, LLC. Samantha Esser managed and directed the operations of Formula Wellness and she was at all times a person responsible for determining the rate and method of payment of Plaintiff's wages. Samantha Esser was an “employer” of the Plaintiff as that term is defined in 29 U.S.C. §203(d).

(Id.). Plaintiff further alleges that Defendant Kimball (referred to in the Complaint as John Doe Esser) is Esser's husband, and he is named as a co-defendant pursuant to Arizona Revised Statutes § 25-215(D). (ECF No. 1 at 3).

Plaintiff contends that during her term of employment by Defendants she was a non-exempt employee entitled to be paid minimum wage for all hours worked and overtime pay for all hours worked in excess of 40 hours per week; however Plaintiff does not allege that she actually worked in excess of 40 hours per week. (ECF No. 1 at 3). Plaintiff alleges Defendants terminated her employment on March 5, 2022. (Id.). Plaintiff contends Defendants failed “to pay Plaintiff any wages whatsoever for the three week period from February 14, 2022 until March 3, 2022.” (Id.). Additionally, Plaintiff alleges in the Complaint that Defendant Esser acknowledged Plaintiff's wages were due and that Defendant Esser averred she would pay the wages “‘right away.'” (ECF No. 1 at 4). Plaintiff asserts the unpaid wages total $1950.00, representing 95 hours of work at $20 per hour and one “$50 concierge service fee that was earned by Plaintiff for providing remote services to a patient.” (Id.).

Plaintiff's Complaint, captioned as “F.L.S.A. Minimum Wage Claim and Arizona Unpaid Wage Claim,” asserts causes of action based on the Fair Labor Standards Act (“FLSA”) (Count One) (“Violation of FLSA/Failure to Pay Minimum Wage”); and “Failure to Pay Earned Wages & Arizona Minimum Wage Act Violation” (Count Two), citing the “AMWA” (the Arizona Minimum Wage Act) and Arizona Revised Statutes § 23-363; in Count Two Plaintiff also asserts Defendants “willfully failed to or refused to pay Plaintiff her earned wages pursuant to A.R.S. §23-353(a) and §23-355.” (ECF No. 1 at 5). In her prayer for relief Plaintiff seeks her unpaid wages; an additional amount as liquidated damages, citing 29 U.S.C. § 216(b) and Arizona Revised Statutes §§ 23-353, 23-355, and 23-364; and her “reasonable attorney's fees and costs of this action pursuant to 29 U.S.C. § 216(b).” (ECF No. 1 at 6).

II. Governing Law

Rule 55 of the Federal Rules of Civil Procedure provides that if “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default.” Fed.R.Civ.P. 55(a). After a default has been entered and the defendant fails to appear or move to set aside the default, the Court may, on the plaintiff's motion, enter a default judgment. Fed.R.Civ.P. 55(b)(2). Rule 55(b)(2) requires the application for a judgment by default be accompanied by a declaration that any defaulting defendant is not a minor, incompetent, or a member of the armed services.

Rule 55 does not require the entry of judgment against a defaulting party and the entry of a judgment by default is completely within the Court's discretion. See, e.g., DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 852 (9th Cir. 2007); Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Default judgments are disfavored because public policy favors the resolution of civil cases on their merits. NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016); Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

When exercising its discretion in this regard, the Court may consider a variety of factors, including:

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (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 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, quoted in Newgen, LLC, 840 F.3d at 616.

[A motion for judgment by default] should be a fully-fleshed motion that enables the Court to grant relief. Szabo v. Sw. Endocrinology Assocs. PLLC, 2021 WL 3411084, *1 (D. Ariz. 2021). To prevail on a motion, the moving party must apply the law to the facts of the case. LRCiv 7.2(b) (the moving party must “set[ ] forth the points and authorities relied upon in support of the motion”). A motion for default judgment is a case-dispositive motion which requires the Court to undertake an in-depth analysis.

Norris v. Shenzhen IVPS Tech. Co. Ltd., 2021 WL 4844116, at *1 (D. Ariz. Oct. 18, 2021). See also Long v. Okopny, 2021 WL 3410916, at *1 (D. Ariz. July 27, 2021).

When determining whether judgment by default should be granted, the Court must take as true all factual allegations in the complaint, except for those related to the amount of the plaintiff's damages. NewGen LLC, 840 F.3d at 617; Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977); Twentieth Century Fox Film Corp. v. Streeter, 438 F.Supp.2d 1065, 1070 (D. Ariz. 2006). A defendant's default functions as their admission of the complaint's well-pleaded allegations of fact. DIRECTV, Inc., 503 F.3d 854; Cripps v. Life Ins. Co., 980 F.2d 1261, 1267 (9th Cir. 1992). Facts necessary to establish each element of the cause of action stated in the complaint that are not themselves stated in the complaint, and claims that are legally insufficient, are not established by a defendant's default. See DIRECTV, Inc., 503 F.3d 854; Cripps, 980 F.2d at 1267.

To establish a violation of 29 U.S.C. § 206, the minimum-wage provision of the FLSA, a plaintiff must establish she was an employee of the defendant, she was covered under the FLSA, and the defendant failed to pay her minimum wages for the hours worked. E.g., Smith v. November Bar N Grill LLC, 441 F.Supp.3d 830, 834 (D. Ariz. 2020), cited in Davis v. Shri Hari Hotels LLC, 2022 WL 3139861, at *3 (D. Ariz. Aug. 5, 2022), and Nichol v. On Point Solar Power LLC, 2022 WL 2159051, at *3 (D. Ariz. June 15, 2022).

The Court may exercise supplemental jurisdiction over Plaintiff's state-law based claims.^[2] To state a claim under the Arizona Minimum Wage Act (“AMWA”),^[3] the defendant must be an “employer” under the statute, the plaintiff must be a qualified employee of the defendant, and “the plaintiff must allege that she was not paid the applicable minimum wage for hours worked.” Coe v. Hirsch, 2021 WL 5634798, at *2 (D. Ariz. Dec. 1, 2021), citing Ariz. Rev. Stat. Ann. § 23-363. See also Nichol, 2022 WL 2159051, at *3. The Arizona Wage Act (“AWA”) provides for an award of damages if an “employer” or former “employer” fails to pay wages due any employee within a specified time. See Ariz. Rev. Stat. Ann. § 23-355.^[4]

III. Analysis of Eitel Factors

A. The prejudice to Plaintiff if default judgment is denied

Plaintiff will be prejudiced if default judgment is denied. Defendants have not appeared nor defended this matter. There is no indication in the record that Defendants will make any appearance or defend against the claims stated in the Complaint. Plaintiff will be prejudiced, in the form of accruing additional attorneys' fees, by any further delay in resolving these claims. If Plaintiff's motion for judgment by default is denied, Plaintiff will be prejudiced because she will likely be without other recourse for recovery. See Zekelman Indus. Inc. v. Marker, 2020 WL 1495210, at *3 (D. Ariz. Mar. 27, 2020), citing PepsiCo, Inc. v. California Sec....