United States District Court, W.D. Michigan, Southern Division
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 ...