Walsh v. Medina, Inc.

621 F.Supp.3d 951

Martin J. WALSH, Secretary of Labor, U.S. Department of Labor, Petitioner, v. MEDINA, INC., a Minnesota Corporation, Respondent.

Case No. 21-mc-74 (JRT/ECW)

United States District Court, D. Minnesota

Signed August 12, 2022

Kevin Koll, Nicholas Flores, United States Department of Labor Office of the Solicitor, Region V, Chicago, IL, for Petitioner.

ORDER

ELIZABETH COWAN WRIGHT, United States Magistrate Judge

This case is before the Court on Petitioner Martin J. Walsh, Secretary of Labor, U.S. Department of Labor's ("Petitioner" or "Secretary") Petition to Enforce Administrative Subpoena Duces Tecum and supporting documents (Dkts. 1 & 1-1 to 1-12, 3, 5) ("Petition"); as well as Petitioner's Motion for Adjudication of Civil Contempt Against Respondent Medina, Inc. (Dkt. 11) ("Motion").

I. FACTUAL AND PROCEDURAL BACKGROUND

On May 25, 2021, the Wage and Hour Division ("WHD"), United States Department of Labor ("DOL") opened an investigation to determine Respondent Medina, Inc.'s ("Medina") compliance with the Fair Labor Standards Act ("FLSA"), including, but not limited to, compliance with the FLSA's minimum wage, overtime, and record-keeping provisions. (Dkt. 1-7 ¶ 2; Dkt. 5-1 ¶ 2.) Medina's registered agent is David Wordlaw ("Wordlaw") (Dkt. 1-7 ¶ 3; Dkt. 1-6 at 2; Dkt. 5-1 ¶ 3.) On May 25, 2021, Wage and Hour Investigator Jennifer Hernandez ("WHI Hernandez") called and spoke with an individual identified as Wordlaw. (Dkt. 1-7 ¶ 3.) During this phone call, Wordlaw provided his email address to WHI Hernandez and scheduled an initial conference for June 2, 2021. (Id.) That same day, WHI Hernandez emailed Wordlaw an Appointment Letter for Compliance Review, which directed Wordlaw to make available various documents related to Medina's compliance with the FLSA at an initial conference on June 2, 2021, including the following information, for the last two years:

1. Names, addresses, email addresses, and telephone numbers of all business owners and company officers (e.g., President, Treasurer, Secretary, Board of Directors and other Corporate Officers) along with a company organizational chart if [Medina had] one.

2. Legal name of the company and all other names used by the company (e.g., "Doing Business As" names).

3. Records demonstrating [Medina's] gross annual dollar volume of sales. Please provide these records for the past three years (instead of two) years.

4. A list of all employees with their address, phone numbers, hourly rate or salary, descriptive job title, shift, and whether [Medina] considers that employee exempt from overtime for all current and former employees; [sic]

5. Payroll records for the past two years, including a copy of the most recently completed payroll. Payroll records should have at least the following information: employees' name, pay period ending date, hours worked, overtime paid, rate paid, gross wages, any deductions taken, and net wages; [sic]

6. Time records for the past two years. Time records should have employees' name, pay period ending date, daily clock in & out, total daily hours worked, & total weekly hours worked; [sic]

7. Birth dates for all employees under age 18 who worked during the past 24 months.

8. 1099 Forms and contract documents for any independent contractors, subcontractors or day laborers at this establishment.

9. Federal Employer Identification Number (FEIN).

(Dkt. 1-7 ¶ 4; Dkt. 1-8.)

On June 2, 2021, WHI Hernandez contacted Wordlaw by telephone for the initial conference, Wordlaw answered, however, he indicated he was busy and requested postponement of the initial conference for one hour so he could drop off materials at a worksite. (Dkt. 1-7 ¶ 5.) Wordlaw subsequently called WHI Hernandez, but she was unable to answer the phone. (Id.) WHI Hernandez called Wordlaw back several times, but he failed to answer or return her calls and voicemail message. (Id.)

On June 3, 2021, WHI Hernandez emailed Wordlaw to reschedule the initial conference. (Dkt. 1-7 ¶ 6; Dkt. 1-9.) Wordlaw did not respond to this email. (Dkt. 1-7 ¶ 7.)

On June 8, 2021, Assistant District Director Jenna L. Carte ("ADD Carte") sent a letter to Medina, which stated all documents must be made available to WHI Hernandez within 72 hours on June 14, 2021 at 4:30 p.m. or face a possible subpoena. (Dkt. 1-3; Dkt. 5-1 ¶ 4.) On June 16, 2021, Wordlaw emailed WHI Hernandez stating, "we are compiling the documents requested and will have them to you today." (Dkt. 1-7 ¶ 7; Dkt. 1-10.) Wordlaw failed to provide any documents on June 16, 2021. (Dkt. 1-7 ¶ 7.) On June 21, 2021, WHI Hernandez emailed Wordlaw to advise him she had not received any records. (Dkt. 1-7 ¶ 8; Dkt. 1-10.) WHI Hernandez requested that Wordlaw provide the documents by close of business June 21, 2021 or the WHD would proceed with unidentified "next steps." (Id.) Neither Wordlaw nor Medina responded. (Dkt. 1-7 ¶ 8; Dkt. 1-10.)

WHD Regional Administrator Michael Lazzeri issued a Subpoena Duces Tecum on June 30, 2021.¹ (Dkt. 1-4; Dkt. 1-7 ¶ 9; Dkt. 5-1 ¶ 5; Dkt. 16-1). The Subpoena required Medina to produce the following category of documents:

1. Documents reflecting the names, addresses, and telephone numbers of each owner, corporate officer, and manager of Medina.

2. Documents reflecting the ownership interest (percentage of ownership) of each owner of Medina.

3. Documents identifying all branches and establishments, controlled by, or operating with Medina.

4. Medina's company organizational chart.

5. Documents relating to the business structure of Medina, including articles of incorporation, partnership records, membership records, and corporate filings with the Secretary of State.

6. All federal and state income tax forms submitted and signed by or on behalf of Medina, including all schedules, attachments, and worksheets.

7. Documents - including monthly, quarterly, and annual records - stating the annual gross dollar volume of sales made or business done, or total volume of goods purchased or received, by Medina.

8. Documents reflecting the full name, last known addresses, and telephone numbers of each worker performing work for Medina.

9. Documents reflecting the dates of birth of each worker who was under the age of 18 during the time period described in Section A, Paragraph 8 of [the] Attachment [to the Subpoena].

10. All documents stating the job descriptions, duties, and occupations of Medina's workers.

11. Documents relating to workers treated as exempt from the minimum wage or overtime wage requirements under the Fair Labor Standards Act of 1938, as Amended, 29 U.S.C. § 201 et seq.

12. All contracts and agreements between Medina and workers who Medina considers to be independent contractors or subcontractors.

13. All W-2 Forms and/or 1099 Forms distributed by Medina to workers.

14. All documents reflecting the rate of pay per worker, per pay period and any changes made to the rate of pay and applicable date(s) of the rate of pay by indicating the monetary amount paid on a per hour, per day, per week, per piece, commission on sales, or other basis for each worker.

15. All documents reflecting the total gross wages paid per pay period for each worker, including payroll records, payroll ledgers, payroll journals, pay stubs, and check stubs.

16. All documents relating to cash payments to workers.

17. All documents reflecting schedules of work for workers.

18. Documents reflecting each worker's starting and ending time and day for each workweek. If the worker was part of a workforce or employed in or by an establishment whose workers have a workweek beginning at the same time on the same day, a single document noting the time of day and beginning day of the workweek for the whole workforce or establishment will suffice.

19. All documents reflecting the hours worked each workday and total hours worked by workers each workweek, including timesheets, time cards, logs, journals, and diaries.

20. All documents reflecting the total daily or weekly regular earnings or wages due for hours worked during each workday or workweek for each worker.

21. All documents reflecting additions to, or deductions from, wages paid each pay period to each worker.

22. All of Medina's employment policies and procedures related to compensation paid to workers and hours worked (or pieces completed) by workers, including supervisory procedures, recordkeeping procedures, compensation policies, disciplinary policies, and employee handbooks.

(Dkt. 1-4; Dkt. 5-1 ¶ 5; Dkt. 16-1.)

The Subpoena required the production of documents by July 16, 2021 at 10:00 a.m. (Dkt. 1-4; Dkt. 1-7 ¶ 9; Dkt. 16-1.) ADD Carte represents that she served the Subpoena on Medina via certified mail. (Dkt. 5-1 ¶ 6.) The USPS tracking information filed as proof of service indicates that the Subpoena was sent to an address in Champlin, Minnesota with a 55316 zip code, but does not include a street address. (Dkt. 1-5 at 2.)

On July 8, 2021, an individual identifying herself as Veronica Pacheco ("Pacheco") called WHI Hernandez. (Dkt. 1-7 ¶ 10; Dkt. 1-11.) Pacheco stated that she was the owner of Medina, but that Wordlaw ran the business. (Id.). According to WHI Hernandez, Pacheco acknowledged service of the subpoena. (Dkt. 1-7 ¶ 10.) WHI Hernandez stated that no records had been received and that the Subpoena had a deadline of July 16, 2021. (Dkt. 1-7 ¶ 10; Dkt. 1-11.) Pacheco stated she would "work on" turning over the required documents by the Subpoena's deadline. (Dkt. 1-7 ¶ 10; Dkt. 1-11.)

As of the date of the November 8, 2021 Petition initiating this case, Medina had not produced any documents nor attempted to comply with the Subpoena. (Dkt. 1-7 ¶ 11). On November 29, 2021, the Court ordered the U.S. Marshals Service to effect service of the Petition to Enforce Administrative Subpoena Duces Tecum and supporting documents, along with a copy of the Order, on Medina within fourteen (14) days of the date of the Order; and required Respondent within fourteen (14) days of the service of that Order to either...