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April 22, 2002


The opinion of the court was delivered by: Boyle, United States Magistrate Judge.


The Secretary of Labor (hereinafter "Plaintiff" or "Secretary") commenced this action on May 1, 1998, pursuant to Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("the Act"), after an investigation of the labor practices of the defendants. This court held a bench trial on April 23, 2001 to May 1, 2001, and the parties gave summations on October 18, 2001. At the conclusion of the trial, all back wage claims against Inventive Technology Systems, Inc. ("Inventive") were dismissed. This court granted judgment in favor of the Secretary on March 29, 2002.

On April 9, 2002, the secretary moved, pursuant to Rule 59(e) to amend this court's judgment dated March 29, 2002. In particular, the Secretary moved: (1) to remove the award of pre-judgment interest; (2) to include violations of 29 U.S.C. § 215(a)(1) in the judgment; and (3) to rescind the award of $11,000 in civil money penalties for child labor violations. Defendants do not oppose the Secretary's motion. The Secretary's motion is granted. This Amended Memorandum Opinion, Order and Judgment reflects the requested modifications of the Memorandum Opinion, Order and Judgment, dated March 29, 2002.

The complaint, which was amended on July 20, 2000, alleges that from the period of May 1, 1995 to approximately June 10, 1997, the corporate defendants Vidtape, Inc. ("Vidtape") and Inventive and the individual defendants Mohinder Singh Anand ("Mohinder"), Satinder Singh Anand ("Satinder") and Arjan Singh Anand ("Arjan") willfully violated various provisions of the Act. These violations include: (1) failing to pay employees proper minimum wage; (2) failing to pay employees adequate overtime wages; (3) employing a child in violation of the child labor provision; (4) violating the "hot goods" provision of the Act by putting in the stream of commerce goods manufactured in violation of these laws; and (5) violating the Act's record-keeping provisions. The Secretary seeks an injunction to prevent defendants from future violations of the Act, and a judgment ordering defendants to pay: (1) minimum wage compensation in the amount of $50,649.25; (2) overtime wages in the amount of $70,716.30; (3) liquidated damages in the amount of $121,365.55; and (4) costs. (See Amended Complaint; Plaintiffs Revised Exh. 21a and 22a.) This memorandum opinion and order constitutes the findings of fact and conclusions of law pursuant to Rule 52, Fed.R.Civ.P.


A. Introduction

Defendant Vidtape is a New York corporation incorporated in January, 1988. Defendant Inventive is a Delaware corporation incorporated on June 18, 1997. Prior to April, 1998, Vidtape manufactured and duplicated videocassette tapes, On February 26, 1998, Vidtape sold its manufacturing operation to Inventive. (Defendants' Exh. L.) Currently, Inventive manufactures and duplicates videocassettes, while Vidtape markets and sells Inventive's product. Vidtape and Inventive were located at the same property in West Babylon, New York and are currently located at the same property in Farmingdale New York. (T. 732-733, 752.)

Defendant Mohinder Singh Anand is the president, sole officer, and sole shareholder of Vidtape. (T. 565, 723, 765.) Satinder Singh Anand, Mohinder's brother, was formerly employed at Vidtape, and is currently the president of Inventive. Arjan Singh Anand, the father of Mohinder and Satinder, was never employed by Vidtape, but currently works as Inventive's general manager. (T. 713-716.) The Nihang Nivas trust is the sole shareholder of Inventive's stock. Arjan is the trustee of the Nihang Nivas trust, and the beneficiaries of the trust are Mohinder's wife, children, and mother. Satinder is also a beneficiary of the trust. (T. 599.)

B. Employer Status of the Individual Defendants

1. Mohinder Singh Anand

Mohinder, the president of Vidtape, controls and manages the operations at his company. He hired employees, terminated employees, set wage rates, set Vidtape's pay system, and signed Vidtape pay checks. He also supervised employees. (T. 567, 568, 606, 725, 774, 569, 572, 776, 572.)

2. Satinder Singh Anand

Employees testified that Satinder gave them work assignments and supervisory directions. Satinder hired some of the Vidtape employees. (T. 348-349, 726; Plaintiff's Exh. 13, Kumar dep. at 13-14, 27-28.) Employees reported to Satinder in the absence of Mohinder. (T. 62.) Satinder directed some employees to report to work on Sundays and he directed employees not to report to work after the Department of Labor commenced its investigation. (T. 315, 117.) Satinder also had the authority to sign checks for Vidtape and did so when Mohinder was unavailable. (T. 763, 758, Defendants' Exh. A.) The court credits this testimony.

Satinder testified that he was not an employer of Vidtape and that he only worked there on commission as its salesman. He stated he never fired employees, never set work hours or work schedules, never directed or supervised employees, and never dealt with payroll issues. (T. 721-726.) The court does not credit this testimony by Satinder. It is undisputed that Satinder is the current president and employer of Inventive, the portion of the enterprise that manufactures the videotapes and employs the majority of the minimum wage employees.

3. Arjan Singh Anand

Arjan, the father of Mohinder and Satinder, has never been a shareholder, corporate officer, or employee of Vidtape. (T. 713, 715.) He testified that he never gave orders, hired, fired, or set policies for employees. (T. 713-714, 717.) Arjan did visit his sons at work during the midday and discussed financial matters with them at lunch. (T. 713, 719.) Hardeep Anand testified that Arjan brought lunch for his sons a few days a week and that during the time he was at the office, he read a religious book. (T. 652.) The court credits this testimony.

Vidtape employees testified that they viewed Arjan as a "boss." (T. 270, 149, 288, 309, 333, 398, 477.) This testimony is credited. Occasionally, Arjan directed employees as to their jobs and gave them videotapes to be duplicated. (T. 50, 309, 333, 404, 437, 454-455.) This testimony is not credited.

Arjan is currently employed part-time as Inventive's general manager, where he maintains Inventive's inventory and procures spare parts. (T. 716.)

B. Enterprise

Vidtape manufactured videotapes at its factory in West Babylon. Inventive was formed on June 18, 1997, days after the Department of Labor commenced its formal investigation of Vidtape. Inventive began manufacturing videotapes on April 30, 1998, one day before the Department of Labor filed its complaint in this action. (Defendants' Exh. G.)

Vidtape sold its manufacturing operations to Inventive for $175,000. (T. 729, Defendants' Exh. L.) The book value of the assets was $120,000. (T. 785.) To pay for this, Inventive assumed Vidtape's $175,000 Keybank corporate bank loan. (T. 782786, 878, Defendants' Exh. L, P-T.) Mohinder and Vidtape are guarantors of this loan. (T. 756, Defendants' Exh. P-T.) The asset sale agreement did not include warranties of merchantability or fitness. (T. 752, Defendants' Exh. L.)

Vidtape is Inventive's primary customer, with approximately 90% of Inventive's product marketed by Vidtape under Vidtape's label. (T. 613, Defendants' Exh. M.) Vidtape sales are over $500,000 annually and Vidtape and Inventive ship their product in interstate commerce. (See Letter of Jerold Wolin dated Oct. 29, 2001; T. 571572, 615; Plaintiffs Exh. 12.)

When Inventive began its manufacturing operations, Vidtape employees resigned and were hired as Inventive employees. They signed a waiver stating:

I [name], of [address] hereby acknowledge that I am resigning as an employee of Vidtape, Inc. as of April 30, 1998. I further acknowledge that during the course of my employment with Vidtape, Inc. I have had no claims for past due wages, or anything else. My period of employment with Vidtape, Inc. has been satisfactory.
This acknowledgment is being signed by me voluntarily and of my own free will. There has been no pressure exerted upon me by anyone to sign this document. The contents of this document have been translated for me in [language], which is my native language.

(Defendants' Exh. G.) Employees observed no change between employment at Vidtape and employment at Inventive, other than a different corporate name on their pay check. (T. 367-368, 397.) The court credits this testimony.

D. Knowledge of Fair Labor Standards Act

Since the early 1990s, Mohinder had knowledge of minimum wage and overtime laws. (T. 590, 609-610.) Specifically, he knew that employers must pay employees one and a half times their hourly rate when they worked over forty hours per week, that the minimum wage was $5.15 at the time of his deposition, and that the law required employers to keep time cards. (T. 589 590, 609-610.) Vidtape posted a Department of Labor poster in the lunchroom. (T. 587.) The court credits this testimony.

Employees testified that after the Department of Labor commenced its investigation, Mohinder held a meeting where he instructed Vidtape employees to tell investigators that their work schedule was 8:30 a.m. — 5:00 p.m., Monday — Friday. He also instructed employees to tell investigators that they were paid the proper minimum wage of $4.25 per hour and that they received overtime wages at a rate of one and one-half their regular rate. (T. 358-359, 406.) The court credits this testimony of employees and does not credit the conflicting testimony of Mohinder.

E. Vidtape's Record-Keeping Practices

Prior to June 10, 1997, Vidtape did not maintain proper records as required by the F.L.S.A. Employees recorded their hours using time cards when they arrived in the morning and when they left at the end of the day. Hardeep Anand, Vidtape's bookkeeper, testified that Vidtape maintained these time cards for approximately two weeks after it issued employee paychecks. If no corrections to employee wages were necessary, she discarded the time cards. (T. 574.) The latter testimony is not credited. Mohinder directed her to discard the time cards. (T. 780-781.) After June 10, 1997, the date the Department of Labor began its formal investigation, Vidtape began preserving its time cards. (T. 781-782.)

Vidtape's payroll records for 1995, 1996, and part of 1997 show that Vidtape employees received two pay checks per month. (See Plaintiffs Exh. 2, 3, 4.) Vidtape's two pay periods during this time were the first to fifteenth day of the month, and the sixteenth to last day of the month. (See id.; T. 586, 796-797.) Vidtape's payroll records for this period did not contain the employees' hourly rates, number of hours worked per day, the number of hours worked per week, or the number of hours worked for each bimonthly pay period. (See Plaintiffs Exh. 2, 3, 4, T. 880-881.) No other records containing this information were maintained or preserved by Vidtape. (T. 573.) Vidtape paid most employees by check. On pay day, employees received a pay check, but no pay stub or other information that indicated the hourly rate, hours worked, gross pay, or amount of deductions taken.*fn1 (T. 20-21, 46, 81-82, 144, 210, 240, 286, 307, 408, 575-576, 689.)

F. Testimony of Plaintiff's Witnesses

At trial, twenty-one former Vidtape employees testified for the Secretary as to the hours they worked and the pay they received. These employees testified in English, Spanish, and Punjabi.

1. Work Schedule

The employees testified that they typically worked from 8:30 a.m. to 7:00 p.m., Monday through Saturday. (T. 21, 47, 62-63, 79, 109-110, 145-146, 210-211, 237-239, 249-251, 265, 283, 306-307, 318-319, 330-331, 347-348, 352, 400, 431, 452, 472.) They took thirty minute lunch breaks and had one or two short breaks as well. (T. 63, 145, 210-211, 238, 266, 352, 400.) Some employees also worked on Sundays. (T. 110, 147, 211, 282, 308, 330, 335, 353, 401, 431, 452, 473.) This consistent testimony indicates that employees worked an average of sixty hours per week and the court credits this testimony offered by the Secretary.

Many of the employees traveled together to and from work on the Long Island Railroad. Vidtape transported its employees to and from the train station in a company van. (T. 331-332, 347-349, 401, 772-773.) The court credits this testimony.

2. Hourly Wage and Overtime

The employees testified that their wage was $4.00 per hour, and $3.50 per hour after taxes. (T. 19-20, 78, 98, 433.) Some employees testified that Vidtape never told them what wage the company paid its employees. (T. 143, 217, 245, 264.) Beginning about June 10, 1997, immediately following the commencement of the Department of Labor investigation by a visit to the defendants' premises, employees received wages of $4.75 per hour, which was the statutory minimum wage at that time. The employees also testified that they did not receive overtime pay prior to June 10, 1997. (T. 65, 67, 79, 99.)*fn2 The court credits this testimony.

3. Reconstruction of the Employees' Back Wages

John Bialt Jr. analyzed Vidtape's payroll records and testified about the back wage computations he performed for each employee. Because no records of hours worked, hourly wage or overtime compensation existed, Bialt reconstructed estimates of this information based on the gross pay, as stated in Vidtape's payroll records. (T. 490.)

Bialt divided the gross pay by the $4.00 per hour wage figure to calculate an estimated number of hours worked per fifteen day pay period. Then he recalculated the number of weeks worked*fn3 and the average number of hours worked per week. Once Bialt calculated the average number of hours worked per week, he calculated the minimum wage deficiency and overtime deficiency owed to each employee. (T. 494-503.) (See Plaintiff's Exh. 21a.)

On cross examination, Bialt admitted that in some circumstances, his average hours calculations were higher than the witnesses' testimony of working sixty hours per week. Bialt also stated that although time cards were available after June 10, 1997, he did not examine them in preparing his wage calculations. (T. 545, 547, 552.)

Because Plaintiff's Exhibit 21a, which was prepared prior to commencement of the trial, did not conform to the evidence adduced by the Secretary at trial, the Secretary submitted revised wage calculations prior to the close of trial but following the general admission of evidence. (See Plaintiffs Revised Exh. 21a.) This exhibit reflects the testimony of the Secretary's witnesses at trial. The revised calculations exclude additional wages for Sunday, since the testimony at trial revealed that Sunday hours were included in the bi-monthly paychecks. These calculations also reflect the stipulation that Vidtape began paying its employees minimum wage beginning with the June 16 — June 30 pay period. The Secretary also submitted a revised summary chart. (See Revised Exh. 22a.) The court has not relied on any summary chart submitted by the Secretary prior to summations.

5. Child Labor

Wilber Amaya testified that he was fourteen years old when Vidtape hired him to pack videos and move boxes using a "hand truck." (T. 77, 809-810.) At his interview, he presented his INS work permit to Mohinder and Hardeep Anand, which indicated that Amaya was born on September 2, 1982. (T. 88-89, 76, 101-102, Plaintiff's Exh. 23.) Amaya worked ten hour days, six days a week, during the months when school was in session. (T. 79-80, 90, Plaintiffs Exh. 4.) ...

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