United States District Court, S.D. Ohio, Western Division
R. ALEXANDER ACOSTA, Secretary of Labor, United States Department of Labor, Plaintiff,
MICA CONTRACTING, LLC, et al., Defendants.
REPORT AND RECOMMENDATION
L. Litkovitz O United States Magistrate Judge.
R. Alexander Acosta, Secretary of Labor
this action to enjoin and restrain defendants MICA
Contracting LLC ("MICA"), J&E Builders LLC
("J&E"), Sarah Elaine Thompson, Timothy
Thompson, and John Wayne House from violating Sections 6, 7,
11, and 15 of the Fair Labor Standards Act of 1938
("FLSA"), 29 U.S.C. § 201 et. seq.,
pursuant to Section 17 of the FLSA, and to recover unpaid
minimum wage and overtime compensation owed pursuant to
Section 16(c) of the FLSA. (Doc. 1). This matter is before
the Court on defendant Sarah Elaine Thompson's motion to
dismiss (Doc. 18) and plaintiffs response in opposition (Doc.
19). Defendant Thompson did not file a reply brief in support
of her motion to dismiss.
Secretary filed its complaint against defendants on August
21, 2018. (Doc. 1). Plaintiff alleges, in relevant part, the
following facts: defendant Sarah Elaine
Thompson was an employer within the meaning of
Section 3(d) of the FLSA, 29 U.S.C. § 203(d), with
respect to both MICA and J&E. (Doc. 1 at 3). Ms. Thompson
was the sole owner of MICA at all relevant times.
(Id.). Plaintiff alleges that Ms. Thompson
"actively supervised the day-to-day operations and
management of both MICA and J&E in relation to their
respective employees, including but not limited to
determining employees' compensation."
(Id.). Plaintiff alleges that Ms. Thompson violated
the FLSA between January 4, 2016 and February 27, 2017 in her
role with MICA and between November 28, 2016 and
approximately November 4, 2017 in her role with J&E.
(Id. at 7-8). Plaintiff further alleges that Ms.
Thompson, in her role as an employer, failed to pay minimum
wage and overtime payments to employees, as well as properly
keep records. (Id. at 7-9).
acknowledges in the complaint that Ms. Thompson filed for
personal bankruptcy on April 20, 2017 in the U.S. Bankruptcy
Court for the Southern District of Ohio, No. 17-11433. (Doc.
1 at 3 n.1). Plaintiff alleges that the "Secretary's
efforts to enforce any monetary portion of any judgment
obtained against Defendants will be consistent with the
Bankruptcy Code." (Id.). As relief, plaintiff
seeks (1) an injunction as to Ms. Thompson and the other
defendants to prospectively comply with the FLSA
("compliance injunction"); (2) monetary judgment
for back wages and liquidated damages ("monetary
judgment"), or (3) in the event liquidated damages are
not awarded, an injunction prohibiting Ms. Thompson and the
other defendants from withholding payment of back wages and
prejudgment interest ("monetary injunction"); (4)
costs of this action; (5) such other and further relief as
may be necessary and appropriate. (Id. at 9-10).
Defendant Thompson's Motion to Dismiss (Doc. 18)
Sarah Elaine Thompson moves to dismiss plaintiffs claims
against her on the basis that she received a discharge in her
Chapter 7 bankruptcy action, and plaintiff was included in
the bankruptcy petition as a creditor. (Doc. 18 at 1). Ms.
Thompson argues that the U.S. Department of Labor, Wage, and
Hour Division was "scheduled as a creditor in the
petition and acknowledged notice of the filing."
(Id. at 2). Ms. Thompson alleges that she received a
bankruptcy discharge order on August 15, 2017.
(Id.). Ms. Thompson argues that plaintiffs actions
"violate the provisions of [her] discharge and she is in
the process of seeking damages and fees in the bankruptcy
court for their willful violation of Federal Bankruptcy
response, plaintiff contends that it seeks a compliance
injunction based on plaintiffs actions as a § 3(d)
employer under the FLSA, which is not a claim subject to
discharge under the Bankruptcy Code. (Doc. 19 at 3-4).
Plaintiff further argues that its complaint also seeks a
monetary judgment and injunction against Ms. Thompson for her
role as an employer from April 20, 2017 through November 4,
2017, a period after the bankruptcy filing, and these claims
for relief are therefore not discharged by the bankruptcy
petition. (Id. at 5-6).
case, plaintiffs request for a compliance injunction under
the FLSA is not a claim discharged by defendant
Thompson's bankruptcy petition. A Chapter 7 Bankruptcy
"discharges every prepetition debt, without regard to
whether a proof of claim has been filed, unless that debt is
specifically excepted from discharge. . . ." In re
Madaj, 149 F.3d 467, 469 (6th Cir. 1998) (citing 11
U.S.C. § 727). The United States Bankruptcy Code defines
"debt" as a "liability on a claim." 11
U.S.C. § 101(12). A "claim" is (1) a right to
payment, or (2) a right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment.
11 U.S.C. § 101(5)(A)-(B). The Sixth Circuit has held
that "equitable relief constitutes a claim only if it is
an alternative to a right to payment or if compliance with
the equitable order will itself require the payment of
money." Kennedy v. Medicap Pharmacies, Inc.,
267 F.3d 493, 497 (6th Cir. 2001) (holding an injunction to
comply with non-compete in the future was not dischargeable
by bankruptcy). See also United States v. Whizco,
Inc., 841 F.2d 147, 151 (6th Cir. 1988) ("To the
extent that the defendant can comply with the Secretary's
orders without spending money, his bankruptcy did not
discharge his obligation to comply with the orders.").
As plaintiff suggests, and Ms. Thompson does not contest, the
injunctive relief that the Secretary seeks in this action
only requires compliance with the law- that Ms. Thompson
"prospectively abide by the FLSA." (Doc. 19 at 4).
Indeed, the Secretary's complaint seeks as one form of
relief "an Order pursuant to Section 17 of the Act,
permanently enjoining and restraining Defendants [including
Ms. Thompson] ... from prospectively violating the Act."
(Doc. 1 at 10). As plaintiff suggests, this injunctive relief
neither requires an expenditure of money by Ms. Thompson nor
requires an alternative right to payment by the Secretary in
lieu of compliance. (Doc. 19 at 4). Therefore, plaintiffs
request for a compliance injunction is not a claim discharged
in Ms. Thompson's bankruptcy.
extent plaintiff also seeks a monetary judgment and
injunction against Ms. Thompson for the period after her
bankruptcy filing, such relief is likewise not discharged by
Ms. Thompson's bankruptcy petition. Under Chapter §
727 of the United States Bankruptcy Code, a debtor is
discharged "from all debts that arose before
the date of the order for relief." 11 U.S.C. §
727(b) (emphasis added). "The commencement of a
voluntary case under a chapter of [the Bankruptcy Code]
constitutes an order for relief. ..." 11 U.S.C. §
301(b). Ms. Thompson commenced her voluntary Chapter 7
bankruptcy petition on April 20, 2017. (Doc. 18 at 2).
Consistent with the above, Ms. Thompson's bankruptcy
filing on that date does not discharge any claims-either for
a potential monetary judgment or an injunction-originating
after April 20, 2017. Therefore, as plaintiff asserts, the
discharge that Ms. Thompson obtained in her bankruptcy
proceeding did not discharge her from any potential monetary
judgment and injunction for back wages and liquidated damages
or prejudgment interest that the Secretary's complaint
seeks against Ms. Thompson from April 20, 2017 through
November 4, 2017. (See Doc 19 at 4; 11 U.S.C. §
727(b)). Therefore, plaintiffs claims for a potential
monetary judgment or monetary injunction are not claims
discharged in Ms. Thompson's bankruptcy.
with the foregoing, it is RECOMMENDED that
defendant Sarah Elaine Thompson's motion ...