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Acosta v. CPS Foods, Ltd.

United States District Court, N.D. Ohio, Eastern Division

November 3, 2017

R. ALEXANDER ACOSTA, 1 Secretary of Labor, United States Department of Labor, Plaintiff,
v.
CPS FOODS, LTD., et al., Defendant.

          MEMORANDUM OF OPINION AND ORDER [RESOLVING ECF NOS. 57, 103]

          Benita Y. Pearson United States District Judge.

         Pending before the Court is Plaintiff's [1]Motion for Partial Summary Judgment. ECF No. 57. Defendant Gillian Harris has responded.[2] ECF No. 61. Plaintiff has filed a reply in support of the motion. ECF No. 63. For the following reasons, the Court grants Plaintiff's motion.

         I. Background

         Plaintiff, the Secretary of Labor, brings this action against Defendant Gillian Harris for violations of the Fair Labor Standards Act of 1938 (“FLSA”). ECF No. 1. Plaintiff seeks the recovery of unpaid minimum wages, unpaid overtime wages, and an injunction enjoining and restraining Gillian Harris from violating the provisions of Sections 6, 11, and 15 of the FLSA.[3]Plaintiff's motion addresses all but three claims in this matter: (1) a minimum wage claim with respect to one employee; (2) an overtime claim with respect to one employee; and (3) a child labor claim. ECF No. 57 at PageID #: 216. For reasons explained below, trial in this matter will be limited to these three claims.

         A. Acquisition of the Brown Derby Roadhouse

         Gillian Harris and her father, Gary Harris, took over operation of the Brown Derby Roadhouse restaurant in Akron, Ohio on January 1, 2013. ECF No. 57-6 at PageID #: 330. The restaurant was owned by CPS Foods, Ltd., and, in turn, CPS Foods, Ltd. was owned in full by The International Gold Standard, LLC. ECF No. 56 at PageID #: 205. Gillian Harris was the sole member of The International Gold Standard. Id.

         Upon starting at the Brown Derby, Gillian Harris performed numerous functions. By way of example, she liaised with the payroll company, and she had the ability to correct time entries. ECF No. 57-6 at PageID #: 319-21. Her interactions with the payroll company included getting the payroll company to end its practice of charging Brown Derby employees five dollars for each paper check the employee received. Id. at PageID #: 353. Additionally, she supervised the kitchen, the servers, the cooks, and the assistant manager, though her father would also supervise the kitchen sometimes. Id. at PageID #: 332. Gillian Harris would review applications and conduct some interviews, but her father would make the hiring decisions. Id. at PageID #: 333. Gillian Harris would also make the decision to end an employee's shift early due to slow work flow; however, she did not decide which employee had to end his or her shift, because that was determined by the time at which each individual was scheduled to begin his or her shift. Id. at PageID #: 340-41. Finally, Gillian Harris informed the staff and made sure that they followed the requirement that no minors could operate the trash compactor, because she had received word that a former owner faced a fine due to a violation of this regulation. Id. at PageID #: 355-56.

         Gary Harris testified that he controlled “all the activities of CPS Foods.” ECF No. 57-7 at PageID #: 417. He also testified that he was the manager of the Brown Derby. Id. at PageID #: 420. Gary Harris claimed that he “managed the back of the house, ” and Gillian Harris “managed the front of the house.” Gillian Harris characterized her role as subordinate to her father. ECF No. 57-6 at PageID #: 334. During a revocation hearing in another matter, however, Gary Harris testified that his daughter had purchased the Brown Derby and he was “helping out” in exchange for the occasional free meal. ECF No. 57-8 at PageID #: 540-41.

         B. The Table Rental Program

         Shortly after taking over the Brown Derby, the employees voted on two possible changes to the compensation system, choosing to implement a table rental system. ECF No. 57-7 at PageID #: 449. Under the table rental system, servers kept all of the tips that they made, but they had to pay a one-dollar-per-table rental fee. Id. The servers working under the table program were treated as independent contractors. ECF No. 57-6 at PageID #: 452. Though the employees in the table rental program still had to clock in and out, Gillian Harris testified that she believed that she would go in and change the times in the time-keeping system to reflect zero hours worked so the payroll company did not generate paycheck for those employees. Id. at PageID #: 347-48.

         Gillian Harris testified that Gary Harris was the driving force behind the table rental program. Id. at PageID #: 349. She also testified that she was against the table rental system on practical grounds Id. at PageID #: 351. Although Gillian Harris was not a proponent of the table rental program, she collected the fees for the program. Id. at PageID #: 347.

         Eventually, an attorney informed Gillian Harris that the table rental program was illegal. Gillian Harris found that some servers started to develop unruly attitudes after implementation of the table rental program, so she reached out to John Myers, a lawyer. Id. at PageID #: 349. Myers told Gillian Harris that a restaurant in Massachusetts had tried a similar venture, but a court had concluded that the servers did not qualify as independent contractors. Id. Once Gillian and Gary Harris learned this, they ended the table rental program. Id. at PageID #: 349-50. Gary Harris testified that once he learned that the program violated the law, the Brown Derby “acquiesced and changed.” ECF No. 57-7 at PageID #: 452.

         C. Zimmerman Declaration

         Plaintiff has offered a declaration from Dale Zimmerman, an investigator for the U.S. Department of Labor, Wage and Hour Division, as an exhibit to the motion for partial summary judgment. ECF No. 57-2.

         Zimmerman investigated CPS Foods and the Brown Derby to determine whether CPS Foods was in compliance with FLSA's minimum wage, overtime, recordkeeping, and child labor provisions. Id. at PageID #: 237. This investigation began in May 2013. Id. at PageID #: 238. Through his investigation, Zimmerman learned that Gillian and Gary Harris became involved in the operation of CPS Foods, and that a table rental program existed at the Brown Derby from late January 2013 to mid-May 2013. Id.

         Zimmerman averred that he was able to determine the time period that the table rental program was in effect from a review of the payroll records that showed very few or no hours reported for employees that worked at the Brown Derby during the late January to mid-May 2013 period, followed by records that showed many of those employees working regular hours at the Brown Derby after mid-May 2013. Id. Additionally, starting February 2013 many of these employees began reporting no tips, despite reporting significant tips in prior pay periods. Id. at PageID #: 239.

         For two employees, Zimmerman was able to calculate back wages from reviewing CPS Foods' payroll records, and therefore, did not need to reconstruct the hours worked. Id.For those two employees, the back wage violations totaled $402.20. Id.

         For the remaining minimum wage violations, which totaled $23, 444.31, Zimmerman had to performed a more elaborate review. Id. There were a few payroll records for servers in the table rental program. Id. These records showed the employees receiving a wage of $3.93 per hour, but Zimmerman disregarded these records because both current employees and Gillian and Gary Harris confirmed that the servers in the table rental program did not receive wages. Id.

         For the majority of the relevant time period, however, the payroll records did not show the number of hours an employee worked. Id. at PageID #: 240. In these instances, Zimmerman would reconstruct the hours worked using employee statements and/or averaging hours worked prior to the table rental program's existence. Id. When Zimmerman used employee statements to reconstruct the hours worked, the statements were generally consistent with hours those employees had worked in prior pay periods. Id. Three former servers offered declarations to support the hours calculations. See ECF Nos. 57-9, 57-10, and 57-11. For all servers under the table rental program, Zimmerman used the full minimum wage of $7.25 per hour, ...


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