Chilin Morales v. Humphrey , 309 F.R.D. 44 ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
WILLIAM ERNESTO CHILIN
MORALES, et al.,
Plaintiffs,
v. Civil Action No. 14-1363 (JEB)
MELVIN HUMPHREY,
Defendant.
MEMORANDUM OPINION
Plaintiffs William Ernesto Chilin Morales, Jorge Eduardo Rico Turrubiartes, and Carlos
R. Orellana-Murga brought this lawsuit against former employer Melvin Humphrey, seeking
unpaid wages from 2012 through 2014. Plaintiffs claim violations of the federal Fair Labor
Standards Act, the D.C. Minimum Wage Revision Act, and the D.C. Wage Payment and
Collection Law. Defendant now moves for partial summary judgment on the FLSA claim,
contending that he does not meet that statute’s income requirements. As Plaintiffs correctly
point out that the Motion is premature without further discovery, the Court will deny it without
prejudice.
I. Background
The Court begins with certain background facts that are not in dispute for purposes of this
Motion. Humphrey is the owner of low-income apartment units and houses in Washington, D.C.
See Mot., Exh. 3 (Declaration of Melvin Humphrey), ¶ 3. As maintenance workers employed by
Defendant, Plaintiffs were each paid a flat rate for 8 hours of work per day, 40 hours per week,
even though they worked 60 hours per week during 2012-2013, their first year of employment.
1
See Am. Compl., ¶¶ 9-11, 13. Plaintiffs’ hours in 2013-2014 averaged 45 per week for
Turrubiartes and Orellano-Murga and 60 per week for Morales. Id. Orellana-Murga repeatedly
asked for overtime pay and was ultimately fired as a result. Id., ¶ 12. Plaintiffs were never paid
for the excess hours worked. Id., ¶ 13.
They filed suit in this court seeking compensatory and statutory damages under both
federal and local law. Id., ¶¶ 21, 24, 28. Specifically, they set out the following counts:
Count I: Failure and refusal to comply with the D.C. Minimum Wage Revision Act by
not paying Plaintiffs overtime wages as required by the Act. Id., ¶¶ 19, 21.
Count II: Willful violation of Sections 206 and 207 of the FLSA by failing to compensate
Plaintiffs at a rate of one and a half times the minimum hourly wage for all hours worked in
excess of 40 per week. Id., ¶¶ 23-24.
Count III: Violation of the D.C. Wage Payment and Collection Law by willfully failing
and refusing to properly compensate Plaintiffs for regular and overtime wages. Id., ¶¶ 27-30.
Defendant has now moved for partial summary judgment on the FLSA count.
II. Legal Standard
Summary judgment is appropriate when the pleadings and the evidence demonstrate that
“there is no genuine dispute as to any material fact and that the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). “A fact is ‘material’ if a
dispute over it might affect the outcome of a suit under governing law; factual disputes that are
‘irrelevant or unnecessary’ do not affect the summary judgment determination.” Holcomb, 433
F.3d at 895 (quoting Liberty Lobby, 477 U.S. at 248). An issue is “genuine” if the evidence is
2
such that a reasonable jury could return a verdict for the nonmoving party. See Scott v. Harris,
550 U.S. 372, 380 (2007); Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895.
The party seeking summary judgment bears the initial responsibility of demonstrating the
absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). The moving party may successfully support its motion by identifying those portions of
“the record, including depositions, documents, electronically stored information, affidavits or
declarations, stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials,” that it believes demonstrate the absence of a genuine
issue of material fact. See Fed. R. Civ. P. 56(c)(1)(A); see Celotex, 477 U.S. at 323.
When a motion for summary judgment is under consideration, “the evidence of the non-
movant[s] is to be believed, and all justifiable inferences are to be drawn in [their] favor.”
Liberty Lobby, 477 U.S. at 255; see also Mastro v. Potomac Electric Power Co., 447 F.3d 843,
849-50 (D.C. Cir. 2006); Aka v. Washington Hospital Center, 156 F.3d 1284, 1288 (D.C. Cir.
1998) (en banc); Washington Post Co. v. U.S. Dep’t of Health and Human Services, 865 F.2d
320, 325 (D.C. Cir. 1989). On a motion for summary judgment, the Court must “eschew making
credibility determinations or weighing the evidence.” Czekalski v. Peters, 475 F.3d 360, 363
(D.C. Cir. 2007).
The non-moving parties’ opposition must consist of more than mere unsupported
allegations or denials and must be supported by affidavits, declarations or other competent
evidence, setting forth specific facts showing that there is a genuine issue for trial. See Fed. R.
Civ. P. 56(c); Celotex, 477 U.S. at 324. They are required to provide evidence that would permit
a reasonable jury to find in their favor. See Laningham v. United States Navy, 813 F.2d 1236,
1242 (D.C. Cir. 1987). If the non-movants’ evidence is “merely colorable” or “not significantly
3
probative,” summary judgment may be granted. Liberty Lobby, 477 U.S. at 249-50; see Scott v.
Harris, 550 U.S. at 380 (“Where the record taken as a whole could not lead a rational trier of fact
to find for the non-moving party, there is ‘no genuine issue for trial.’”) (quoting Matsushita
Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
III. Analysis
In moving for partial summary judgment on the FLSA count, Humphrey makes one
fundamental argument: his income during fiscal years 2012-2014 was insufficient to trigger the
statute’s protections for his employees. To analyze this contention, the Court first sets forth the
requirements under the Act. After agreeing that Defendant does not preliminarily appear to
satisfy the definition for a covered employer, the Court next addresses whether additional
discovery is appropriate under Federal Rule of Civil Procedure 56(d).
A. Fair Labor Standards Act
Congress enacted the Fair Labor Standards Act of 1938 to eliminate conditions
“detrimental to the maintenance of the minimum standard of living necessary for health,
efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). At the same time, however,
it wanted to avoid “substantial[] curtail[ment of] employment or earning power.” Id. § 202(b).
Section 206 sets the guidelines for establishing the minimum wage an employee must be paid,
and Section 207 requires overtime payment at one and one-half the regular rate for any
additional hours over 40 worked in a single week. Relying on these provisions, Plaintiffs allege
that Humphrey’s conduct constituted a willful violation of this Act. See Am. Compl., ¶¶ 23-24.
There is a problem with Plaintiffs’ logic, however; not all employers are subject to the
FLSA. In fact, for the aforementioned sections to apply, the parties agree that an employer like
Humphrey – who is subject to “enterprise coverage” liability under the FLSA – must (1) be
4
engaged in interstate commerce and (2) have “annual gross volume of sales made or business
done not less than $500,000.” 29 U.S.C. § 203(s)(1)(A)(i)-(ii). In his Motion, Humphrey
contends that there is no factual dispute that his business falls short of this income threshold.
As evidence, he submits a declaration averring that he is an owner of low-income
apartment units and homes in the District, and that his income from the rent collected in these
units did not exceed $500,000 in 2012, 2013, or 2014. See Humphrey Decl., ¶¶ 3-4. He also
offers his bank statements, which he claims demonstrate that his annual gross volume of business
done during 2012-2014 ranged from $384,437.42 to $441,033.87. See Mot., Exh. A (2012 Bank
Statements of Melvin Humphrey); Exh. B (2013 Bank Statements of Melvin Humphrey); Exh. C
(2014 Bank Statements of Melvin Humphrey). In addition, he further explains that his bank
statements are the only records extant that show the rent collected, that he does not engage in any
other business activities besides managing these properties, and that the rent collected is his sole
income. See Reply, Exh. 1 (Supplemental Declaration of Melvin Humphrey), ¶¶ 3, 5.
Defendant did not file tax returns for 2012, 2013, or 2014, and he has no other documentation
reflecting income earned in those calendar years besides the bank statements. Id., ¶¶ 4, 6. While
these statements were redacted to conceal personal information and spending, they purportedly
show all income from Humphrey’s properties, including that derived through court proceedings
and security deposits. Id., ¶ 7.
As Plaintiffs adduce no facts to contradict Humphrey’s showing, the Court agrees with
Defendant that, on the record submitted, there is no factual dispute that his income did not meet
the annual $500,000 threshold required by the FLSA.
5
B. Additional Discovery
Plaintiffs, however, are not yet ready to throw in the towel. Instead, they request
additional discovery under Fed. R. Civ. P. 56(d). See Opp. at 7. This Rule provides:
If a nonmovant shows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify its opposition, the
Court may: (1) defer considering the motion or deny it; (2) allow
time to obtain affidavits or declarations or to take discovery; or (3)
issue any other appropriate order.
Such an affidavit “must satisfy three criteria. First, it must outline the particular facts
[nonmovants] intend[] to discover and describe why those facts are necessary to the litigation.
Second, it must explain why [nonmovants] could not produce [the facts] in opposition to the
motion [for summary judgment]. Third, it must show the information is in fact discoverable.”
Convertino v. U.S. Dep’t of Justice, 684 F.3d 93, 99-100 (D.C. Cir. 2012) (internal citations
omitted).
There can be no dispute that Plaintiffs satisfy the second prong, as they have no
independent access to Humphrey’s business records and no discovery has yet taken place in the
case. See Minute Order of March 13, 2015 (staying discovery at initial scheduling conference).
Defendant nonetheless argues that they fall short on the first and third. With respect to the first,
the affidavit must be “stat[ed] with sufficient particularity” to justify the discovery request. See
Ikossi v. Dep’t. of Navy, 516 F.3d 1037, 1045 (D.C. Cir. 2008) (internal quotation marks
omitted); see also Strang v. United States Arms Control & Disarmament Agency, 864 F.2d 859,
861 (D.C. Cir. 1989) (plaintiff must “state with sufficient particularity . . . why discovery [is]
necessary,” and court may deny [Rule 56(d) motion] if no adequate explanation of facts is
given).
6
Under the third prong, the requesting party must show that there is “a reasonable basis to
suggest” that the information is discoverable. See Bancoult v. McNamara, 217 F.R.D. 280, 283
(D.D.C. 2003) (ciing Carpenter v. Fed Nat’l Mortgage Ass’n, 174 F.3d 231, 237 (D.C. Cir.
1999)). In this regard, the party seeking relief under Rule 56(d) must do more than offer
“conclusory allegation[s] without any supporting facts to justify the proposition that the
discovery sought will produce the evidence required.” U.S. ex rel. Folliard v. Gov’t
Acquisitions, Inc., 880 F. Supp. 2d 36, 41 (D.D.C. 2012) (internal citations omitted), aff’d, 764
F.3d 19 (D.C. Cir. 2014). Rule 56(d), moreover, may not be used to defeat a motion for
summary judgment when there is “mere speculation” of evidence not yet discovered. See 11
Moore’s Federal Practice, ¶ 56.102 (Matthew Bender 3d Ed.); see also Graham v. Mukasey, 608
F. Supp. 2d 50, 54 (D.D.C. 2009) (plaintiff’s hope that additional discovery will create questions
of fact is improper use of Rule 56(d)).
Plaintiffs’ attorney in this case submitted an affidavit explaining that “Plaintiffs have not
had the opportunity to conduct discovery and to procure sufficient discovery materials to present
facts essential for purposes of defending against Defendant’s Motion.” Opp., Exh. 1
(Declaration of Mary Craine Lombardo), ¶ 4. Aside from then saying that the materials “are
within Defendant’s exclusive control,” id., ¶ 5, Lombardo provides no explanation in the
affidavit itself of what records she would actually seek in discovery or why she believes they
exist. Instead, in a somewhat unorthodox move, she refers to Plaintiffs’ Opposition as detailing
the specific “defects with the banks statements Defendant attaches to his Declaration . . . and
[the] numerous concerns that should be addressed in discovery.” Id., ¶ 3. Although this appears
to be a case of the cart pulling the horse – viz, citing a brief to support a declaration as opposed
to the other way around – the Court will nonetheless consider points raised in the Opposition.
7
In that pleading, Plaintiffs argue that they are entitled to additional discovery because, for
example, “[d]iscoverable evidence relating to establishing Defendant’s annual gross volume of
sales made or business done is not limited to his personal business records.” Opp. at 2. Records
could include “documents relating to contracts under which Defendant derives [annual gross
volume of revenue or business done], tax benefits, security deposits, court proceedings through
which unpaid rent was recovered, and investment income.” Id. at 6. Indeed, federal regulations
governing “[m]ethods of computing annual volume of sales or business” specify that the relevant
amount is “[t]he total of the gross receipts from all [the employer’s] sales or business.” 29
C.F.R. § 779.266(b).
This is sufficient, in the Court’s opinion, to preclude summary judgment at this juncture.
It would be unfair for Plaintiffs to be cabined by the bank statements alone. If, for example,
Humphrey had gross receipts over $500,000, but chose not to deposit them all in the bank, he
should not escape liability under the FLSA. It does little to inspire confidence in his testimony,
moreover, that he has not filed tax returns in the relevant years. Finally, as the Court stayed
discovery at the initial scheduling conference before it had begun, see Minute Order of March
13, 2015, the current ruling does not prejudice Defendant by requiring a second discovery
period.
The Court, consequently, believes that foreclosing discovery here would be too restrictive
a procedure and that Defendant may have another bite at the summary-judgment apple after he
has satisfied Plaintiffs’ future requests.
8
IV. Conclusion
For the foregoing reasons, the Court will issue an order denying Defendant’s Motion for
Summary Judgment without prejudice.
/s/ James E. Boasberg______
JAMES E. BOASBERG
United States District Judge
Date: May 29, 2015
9