Cabrera v. RPE Painting LLC

          MEMORANDUM REGARDING MOTION FOR DEFAULT JUDGMENT AND DISMISSING AMENDED COMPLAINT WITHOUT PREJUDICE

          GORDON J. QUIST, UNITED STATES DISTRICT JUDGE

         Background

         Plaintiff, Noe Quinonez Cabrera, claims that RP Painting and Robert Petrick violated the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq. and the Workforce Opportunity Wage Act, M.C.L. § 408.411 et seq., by failing to pay Cabrera an overtime rate of 1.5 times Cabrera's regular rate for hours worked in excess of forty hours during a workweek and by failing to pay him for regular hours worked. (ECF No. 1.) Cabrera also alleged that Defendants failed to pay him for “side work” that he had performed. RP and Petrick subsequently appeared through counsel and filed a motion to dismiss, alleging that they were not Cabrera's employer. (ECF Nos. 9 and 10.) Thereafter, the parties agreed to stay the case in order to sort out the matter. Subsequently, on April 5, 2018, Cabrera filed an amended complaint naming the present Defendants, RPE Painting LLC and Robert Paul Emert, and dropping RP and Petrick. (ECF No. 17.)

         Cabrera served RPE by making service on the Corporations Division of the Michigan Corporations, Securities & Commercial Licensing Bureau on June 21, 2018. (ECF No. 42 at PageID.171.) On July 30, 2018, the Clerk entered a default against RPE for failure to plead or otherwise defend within the required time. (ECF No. 33.) Cabrera was unable to serve Emert by the usual methods of service. Accordingly, the Court ordered that Cabrera substitute service on Emert by publication. (ECF No. 34.) On November 8, 2018, the Clerk entered a default against Emert for failure to plead or otherwise defend. (ECF No. 37.)

         Cabrera moves for entry of a default judgment against Defendants, in which he requests a total of $9, 412.00 for unpaid wages for overtime hours based on the difference between his regular hourly rate and the premium overtime rate of time and one-half; unpaid wages at his regular rate; and unpaid wages for side jobs. (ECF No. 42 at PageID.172.) In particular, he requests $2, 430.00 for 243 hours of overtime differential at his hourly rate of $20.00; $572.00 for 52 hours of overtime differential at his hourly rate of $22.00; $935.00 in unpaid wages for 42.5 hours of straight time at his hourly rate of $22.00; and $5, 475.00 for ten side jobs. (Id.) In addition, Cabrera requests $9, 412.00 in liquidated damages pursuant to 29 U.S.C. § 216(b). Finally, Cabrera requests an award of attorney's fees in the amount of $4, 112.50, also pursuant to 29 U.S.C. § 216(b).

         Standard

         It is well established that once a default is entered against a defendant, that party is deemed to have admitted all of the well-pleaded allegations in the complaint pertaining to liability.^[1] Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110-11 (6th Cir. 1995); Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993). However, the amount of damages must still be proved, either by testimony of the plaintiff at a hearing or through an affidavit from the plaintiff. Antoine, 66 F.3d at 110-11.

         Even when a default is entered pursuant to the Federal Rules of Civil Procedure, a plaintiff is not automatically entitled to a default judgment. See DIRECTV, Inc. v. Huynh, 318 F.Supp.2d 1122, 1127 (M.D. Ala. 2004) (stating that before granting a default judgment, “the court must consider whether the allegations in the amended complaint-and the reasonable inferences derived therefrom-state a claim for relief”). More specifically, a court may not enter default judgment upon a legally insufficient claim. Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). See also Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“[A] defendant's default does not in itself warrant the court in entering a default judgment. There must be a sufficient basis in the pleadings for the judgment entered.”).

         Analysis

         Pursuant to the FLSA, an employer who is “engaged in interstate commerce” is required to pay its employees overtime compensation of one and one-half times his or her regular rate of pay for hours worked in excess of forty hours per week. 29 U.S.C. § 207(a). In addition, “[t]he FLSA requires . . . employers to pay employees engaged in commerce a wage consistent with the minimum wage.” Keller v. Miri Microsystems LLC, 781 F.3d 799, 806 (6th Cir. 2015). An employee is eligible for these benefits only if he can show that he is covered under the FLSA, either through “enterprise coverage” or “individual coverage.” Jones v. Safeway Muffler Serv. Ctr., Inc., No. 18-CV-10208, 2019 WL 670073, at *2 (E.D. Mich. Feb. 19, 2019.)

         To establish that an employer is an “enterprise engaged in interstate commerce, ” 29 U.S.C. § 207(a)(1), an employee must show that the employer “has employees engaged in commerce or in the production of goods for commerce, or that [it] has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce” and “whose annual gross volume of sales made or business done is not less than $500, 000.” 29 U.S.C. § 203(s)(1). “‘Commerce' means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” 29 U.S.C. § 203(b).

         Cabrera's allegations regarding enterprise coverage are insufficient to withstand a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). To comply with Rule 8(a)(2)'s “short and plain statement of the claim” requirement, a plaintiff need not allege extensive details, but “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103 (1957)). The complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. at 1974.

         Although Cabrera alleges that “Defendant RPE Painting is an enterprise engaged in commerce or in the production of goods for commerce, as defined by FLSA, ” (ECF No. 17 at PageID.52), his allegations are insufficient under Twombly for two reasons. First, the only facts that Cabrera alleges about RPE's business is that it was a painting company that employed Cabrera as a painter. These bare facts provide no explanation of why or how RPE engaged in commerce or produced goods for commerce. See Topp v. Lone Tree Athletic Club, No. 13-cv-01645-WYD-KLM, 2014 WL 3509201, at *6-7 (D. Colo. July 15, 2014) (adopting magistrate judge's recommendation that the plaintiff's motion for entry of default judgment be denied, in part, because the plaintiff's allegations were “mere labels and conclusions, ” particularly because the complaint failed to allege why or how the defendant's athletic club engaged in commerce). The necessity of some factual content relating to how RPE Painting engaged in commerce is particularly important in the instant case because, in general, courts have held that painting businesses that perform work wholly within a state do not qualify as an enterprise for purposes of the FLSA. For example, Morales v. M & M Painting & Cleaning Corp., No. 07-23089-CIV, 2008 WL 4372891 (S.D. Fla. Sept. 24, 2008), concluded that a painting company was not subject to enterprise coverage where the plaintiffs painted buildings solely within the state and there was no evidence that the company bought paint manufactured outside the state for resale or that the company was not the end-user or ultimate consumer of the paint. Id. at *4. Similarly, Carroll v. Pro Tech Paint & Body, Inc., No. 6:09-cv-1522-Orl-31DAB, 2009 WL 3762879, at *1 (M.D. Fla. Nov. 9, 2009), concluded that the plaintiff, a painter who did all of his work in a particular county, failed to show that the defendant was a covered enterprise. See also Gil v. Frantzis, No. 17-CV-1520-ARR-SJB, 2018 WL 4522094, at *6 (E.D.N.Y. Aug. 17, 2018) (concluding that “painting and gardening” did not entail engaging in commerce for purposes of individual coverage or entity coverage under the FLSA). In short, because all we know about RPE Painting's business is that it offered some type of painting services, Cabrera fails to meet Twombly's plausibility requirement. Second, Cabrera completely omits any allegation that Defendants had annual gross sales of at least $500, 000. Thus, Cabrera fails to allege a key element of enterprise coverage.

         In order to allege individual coverage, a plaintiff must allege that “he is ‘(1) engaged in commerce or (2) engaged in the production of goods for commerce.'” Jones, 2019 WL 670073, at *2 (quoting Thorne v. All Restoration Serv., Inc., 448 F.3d 1264, 1266 (11th Cir. 2006) and citing Kowalski v. Kowalski Heat Treating, Co., 920 F.Supp. 799, 803 (N.D. Ohio 1996)). Here, Cabrera alleges that he engaged in commerce and engaged in the production of goods for commerce. (ECF No. 17 at PageID.53.) Like his allegations regarding enterprise coverage, Cabrera provides nothing more than labels and conclusions regarding individual coverage. Painting-presumably of houses or other structures, as Cabrera does not tell us what it is that he paints-is not inherently an activity that is in, or part of, commerce. Hence, there is no basis to infer that painting is an activity in commerce. And Cabrera does not allege what good he produces for commerce or how his painting can be a good in commerce. As with enterprise coverage, courts have routinely found that painting done within a state does not qualify for individual coverage. In Pino v. Painted to Perfection Corp., 563 Fed.Appx. 764 (11th Cir. 2014) (per curiam), the Eleventh Circuit concluded that the plaintiff's work painting yachts did not qualify for individual coverage. Although the plaintiff argued that he was engaged in commerce because the boats he worked on had foreign registries, he spoke with captains of boats with foreign registries, and the owner of the company traveled out of state to work on boats, the court noted that the plaintiff never traveled out of state, and it said that the fact that the boats moved in interstate commerce at some point did not show that the plaintiff directly participated in the actual movement of goods in interstate commerce. Id. at 767. The court further observed that “the act of painting boats is purely intrastate activity.” Id. Here, Cabrera does not even allege that whatever he paints moves in interstate commerce, which, as Pino establishes, would not be sufficient to establish individual coverage. See Jones, 2019 WL 670073, at *3 (concluding that the plaintiff's activities of servicing cars which traveled in interstate commerce, ordering parts from outside the state, and using parts that previously traveled in ...