Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Scalia v. MICA Contracting, LLC

United States District Court, S.D. Ohio, Western Division

December 10, 2019

EUGENE SCALIA, Secretary of Labor, [1] United States Department of Labor, Plaintiff,
v.
MICA CONTRACTING, LLC, et al., Defendants.

          Dlott, J.

          REPORT AND RECOMMENDATION

          Karen L. Litkovitz United States Magistrate Judge.

         Plaintiff 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 (Doc. 37).

         I. Standard of Review for Third-Party Complaints

         Federal 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.

         II. Defendants' Motion for Leave to File a Third-Party Complaint (Doc. 35)

         A. The Parties' Arguments

         Defendants 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. 1-20. (Id.).

         In 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).

         In 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).

         B. Resolution

         Although 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.").

         In 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 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.