United States District Court, S.D. Ohio, Western Division
EUGENE SCALIA, Secretary of Labor,  United States Department of Labor, Plaintiff,
MICA CONTRACTING, LLC, et al., Defendants.
REPORT AND RECOMMENDATION
L. Litkovitz United States Magistrate Judge.
Eugene Scalia, Secretary of Labor
("Secretary"/"plaintiff'), brings 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 J&E, John Wayne House and Sarah
Elaine Thompson's motion for leave to file a third-party
complaint (Doc. 35), the Secretary's response in
opposition (Doc. 36), and defendants' reply memorandum
Standard of Review for Third-Party Complaints
Rule of Civil Procedure 14 provides that a third-party
plaintiff must obtain the Court's leave to file the
third-party complaint more than 14 days after serving its
original answer. Fed.R.Civ.P. 14(a). "The purpose of
Rule 14 is to permit additional parties whose rights may be
affected by the decision in the original action to be jointed
so as to expedite the final determination of the rights and
liabilities of all the interested parties in one suit."
Am. Zurich Ins. Co. v. Cooper Tire & Rubber Co.,
512 F.3d 800, 805 (6th Cir. 2008). Whether to allow an
impleader lies within the sound discretion of the trial
court. Laurent v. Diltz, No. 3:17-cv-343, 2018 WL
5722715, at *5 (S.D. Ohio Nov. 1, 2018) (Report and
Recommendation), adopted, 2018 WL 6046859 (S.D. Ohio
Nov. 19, 2018). In deciding a Rule 14 motion, courts consider
timeliness as an urgent factor, as well as whether the
third-party complaint "would prejudice the plaintiff,
unduly complicate the trial, or would foster an obviously
unmeritorious claim." Id. (internal quotations
omitted). Nevertheless, leave to file a third-party complaint
should be freely granted. Id.
Defendants' Motion for Leave to File a Third-Party
Complaint (Doc. 35)
The Parties' Arguments
J&E Builders, John Wayne House, and Sarah Elaine Thompson
move to file a third-party complaint against Amazing
Interiors, LLC and its principal, Gerardo Padilla. (Doc.
35-1), In support, defendants cite the Secretary's
allegation in the complaint that they violated the FLSA as
related to "purported subcontractor Amazing Interiors,
LLC." (Doc. 35-1 at 2) (citing Complaint, Doc. 1 at 7).
Defendants state that the Secretary seeks to recover alleged
nonpayment of minimum wage and overtime to Amazing's
workers; therefore, Amazing Interiors, LLC and Gerardo
Padilla are real parties in interest to this litigation.
(Id. at 2-3). Defendants state that the
Secretary's failure to include these necessary parties
was raised as an affirmative defense in their answers.
(Id. at 3) (citing Doc. 8 at 7; Doc. 9 at 7; Doc. 30
at 8). The proposed third-party complaint includes Counts for
breach of contract, breach of duty of good faith,
indemnification, and contribution against Amazing Interiors,
LLC and Gerardo Padilla. (Doc. 35-2). The proposed
third-party complaint also names as defendants John Does Nos.
response, the Secretary argues that defendants' motion is
untimely because it was filed a full year after defendants
J&E and House filed their answers and 14 months after the
Secretary's complaint was filed. (Doc. 36 at 5). The
Secretary argues that defendants have failed to offer an
explanation for their delay in filing the motion.
(Id. at 6). Second, the Secretary argues that
allowing defendants to bring additional parties into this
action would encroach on its power to enforce the FLSA.
(Id.) (citing Brennan v. Emerald Renovators
Inc., 410 F.Supp. 1057, 1062 (S.D.N.Y. 1975)). The
Secretary also argues that defendants have no right to
indemnification or contribution for violations of the FLSA,
as the defendants allege in Counts Three and Four of the
proposed third-party complaint. (Id. at 7) (citing
Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (2d
Cir. 1999)). In addition, the Secretary argues that
defendants cannot bring their Counts One and Two claims for
breach of contract and breach of duty of good faith against
the proposed third-parties because these claims effectively
seek indemnification for violations of FLSA. (Id. at
9-10) (collecting cases).
reply, defendants argue that their motion to file a
third-party complaint is timely because the pleadings were
not complete until July 2019 and its motion was filed in
accordance with the Court's Calendar Order providing an
October 21, 2019 deadline for amending pleadings. (Doc. 37 at
4). Defendants argue that the cases cited by the Secretary in
support of its argument that the proposed third-party
complaint encroaches on the Secretary's power to enforce
the FLSA are factually distinguishable. (Id. at
6-10). Defendants argue that their indemnification and
contribution claims against Amazing Interiors, LLC and
Gerardo Padilla are not barred. (Id. at 8) (citing
Daniels v. Bd. of Trustees of the Herington Mun.
Hosp., 841 F.Supp. 363, 369 (D. Kan. 1993)). Defendants
maintain that denying their motion to file a third-party
complaint would "prejudicially deny them the right and
ability to prove that Amazing and Padilla are solely
responsible for violations of the FLSA regarding their
workers and for compensation Plaintiff seeks to wrongly
collect from Defendants." (Id. at 10).
the Sixth Circuit has not decided whether there is a right of
contribution or indemnification for employers under the FLSA,
courts within the Sixth Circuit and several courts around the
country have dismissed third-party claims that seek
contribution or indemnification under the FLSA. Those courts
have reasoned that allowing defendants to shift their
liability to another entity or individual would allow
employers to contract away their obligations under the FLSA-a
result that would be contrary to the purpose of the statute
by weakening an employer's incentive to comply with the
FLSA. See Neilwoldman v. AmeriColor, LLC, No.
3:18-cv-00151, 2018 WL 4384996, at *3 n.l (M.D. Tenn. Sept.
13, 2018) (collecting cases). See also Berryman v.
Newalta Envtl. Servs., Inc., No. CV 18-793, 2018 WL
5631169, at *3 (W.D. Pa. Oct. 31, 2018) (holding that courts
"have uniformly agreed that an employer found liable
under the FLSA has no right to contribution or indemnity from
a third party.").
Herman v. RSR Sec. Servs. Ltd., a case cited by the
Secretary and cited as persuasive authority by many courts,
the Second Circuit Court of Appeals held that there is no
right of contribution or indemnification for employers under
the FLSA. 172 F.3d at 143. The Herman Court applied
the principles and analysis of the United States Supreme
Court's decision in Northwest Airlines, Inc. v.
Transport Workers Union, 451 U.S. 77 (1981), holding
that no action for contribution is allowed under Title VII or
the Equal Pay Act. Id. In a matter of first
impression for the Second Circuit, the Court concluded that
there is no right of contribution or indemnification under
the FLSA because: (1) the text of the statute makes no
provision for contribution or indemnification; (2) employers
are not members of the class for whose benefit the FLSA was
enacted; (3) the FLSA has a comprehensive remedial scheme
that strongly counsels against "judicially engrafting
additional remedies," such as contribution or
indemnification; and (4) the FLSA's legislative history
is silent on a right to contribution or indemnification.
Id. at 144. Applying Herman, the Southern
District of New York explained how a right to indemnification
or contribution would contravene the intent of the FLSA:
Whether or not [the third-party defendant] breached a
contractual obligation, defendants' attempt to recover
damages from [the third-party defendant] for overtime
violations is an attempt to receive indemnification for FLSA
liability. As Herman makes clear, "there is no
right to contribution or indemnification for employers held
liable under the FLSA." 172 F.3d at 144. Even assuming
[the third-party defendant] were found culpable for FLSA
violations as plaintiffs "co-employer," the right
to indemnification is still absent. See Id. at 143
(explaining that "regardless of the status of the party
from whom [the employer] seeks contribution" no right to
indemnification exists for employers under the FLSA).
Furthermore, allowing defendants to obtain indemnification
from [the third-party defendant] contradicts the policies of
the FLSA. As Herman explains, "the [FLSA] was
designed to regulate the conduct of employers for the benefit
of employees. . . ." Id. at 144. Allowing
indemnification in cases such as this would ...