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Solis v. SCA Rest. Corp.

United States District Court, E.D. New York

April 5, 2013


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For Plaintiff: Daniel M. Hennefeld and Elena S. Goldstein, U.S. Department of Labor, Office of the Solicitor, New York, N.Y.

For Defendant: Raymond Nardo, Mineola, N.Y.

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JOSEPH F. BIANCO, United States District Judge.

Plaintiff Hilda L. Solis, Secretary of Labor, United States Department of Labor (" the Secretary" ) brings this action against SCA Restaurant Corporation, d/b/a Luigi Q Italian Restaurant (" SCA Restaurant Corp." ) and Luigi Quarta (" Quarta" ) (collectively, " defendants" ), asserting claims under the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § § 201, et seq . Specifically, the Secretary alleges that defendants violated the following provisions of the FLSA: (1) Sections 6, 7, and 15(a)(2), by failing to pay minimum wage and overtime compensation to the employees of SCA Restaurant Corp.; (2) Sections 11(c) and 15(a)(5), by failing to keep full and accurate records concerning their employees' wages, hours, and conditions of employment; and (3) Section 15(a)(3), by threatening to fire employees who testified against them in this action. 29 U.S.C. § § 206, 207, 211(c), 215(a)(2), 215(a)(3) 215(a)(5). The Secretary seeks an injunction, pursuant to Section 17 of the FLSA, permanently restraining defendants from violating Sections 7, 11(c), 15(a)(2), 15(a)(3) and 15(a)(5) of the FLSA, and an order, pursuant to Section 16(c) of the FLSA, finding defendant liable for unpaid overtime compensation and an equal amount of liquidated damages. The Secretary also requests compensatory and punitive damages for violations of the anti-retaliation provisions of the FLSA.

A bench trial was held on April 9 and April 10, 2012, as well as on October 4, 2012, to determine defendants' liability, if any. Having held a bench trial, the Court

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now issues its findings of fact and conclusions of law, as required by Rule 52(a) of the Federal Rules of Civil Procedure, and concludes, after carefully considering the evidence introduced at trial, the arguments of counsel, and the controlling law on the issues presented, that the Secretary has met her burden of proof on all of her claims. The Court finds that the Secretary has proven that she is entitled to the following relief: (1) $137,867.12 in unpaid wages for violations of the minimum wage and overtime provisions of the FLSA; (2) $137,867.12 in liquidated damages for willful violations of the Act; (3) $2,000 in compensatory damages ($1,000 for Mr. Acosta and $1,000 for Mr. Cantos-Chavez) for emotional distress from the violations of the anti-retaliation provisions; and (4) a prospective injunction restraining the defendants from future violations of the Act.

I. Background

On May 26, 2009, the Secretary filed her complaint alleging violations of the FLSA. Defendants answered on October 15, 2009. The parties undertook discovery for much of 2010.

On April 6, 2012, the Court issued a temporary restraining order preventing defendants from discharging or taking discriminatory action against two employees who the defendants threatened to fire due to their involvement in this lawsuit. ( See Temporary Restraining Order, Apr. 6, 2012, ECF No. 61.) The Court issued a preliminary injunction on April 19, 2012 barring defendants from firing or discriminating against any employees in violation of Section 15(a)(3) of the FLSA until the Court adjudicated this matter. ( See Preliminary Injunction, Apr. 19, 2012, ECF No. 67.)

The Court held a bench trial on April 9 and April 10, 2012.[1] Employees Alvin Alexander Torres, Santos Alfaro Pastor, Jose Anibal Acosta, and Juan Carlos Cantos-Chavez testified for the Secretary in her case-in-chief as a representative sample of employees. Department of Labor (" DOL" ) investigator Zorayda Vasquez also testified for the Secretary. Richard Gluszak testified for the defense. Both sides submitted exhibits to be considered by the Court and the Secretary made a post-trial legal submission.

After the initial trial, the Secretary amended her complaint on April 13, 2012 to add the retaliation claim, and the defendants filed an answer on April 27, 2012. The parties undertook additional discovery regarding the retaliation claim. The Court held a bench trial on October 4, 2012 so that defendants could present any additional evidence with respect to the retaliation claim.[2] Defendant Luigi Quarta was the only witness for defendants on the remaining retaliation claim.

The Court has fully considered all of the evidence presented by the parties, as well as their written submissions. Below are the Court's Findings of Fact and Conclusions of Law.

II. Findings of Fact

The following section constitutes the Court's Findings of Fact[3] pursuant to

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Federal Rule of Civil Procedure 52(a)(1). These Findings of Fact are drawn from witness testimony at trial and the parties' trial exhibits, including the undisputed facts submitted by the parties in the PTO.

Defendant Luigi Quarta is the sole owner of SCA Restaurant Corp. d/b/a Luigi Q Italian Restaurant in Hicksville, NY (" the restaurant" ) (PTO, Stip. Facts ¶ ¶ 5-7.) The annual dollar volume of sales by the corporation for each of the years 2006, 2007, and 2008 exceeded $500,000. ( Id. ¶ ¶ 1-3.) Luigi Quarta is in active control and management of SCA Restaurant Corp. ( Id. ¶ 8.) Defendants' employees are engaged in commerce, including handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce. ( Id. ¶ 13.)

Quarta has the authority to hire and terminate employees of SCA Restaurant Corp. ( Id. ¶ ¶ 9-10.) Quarta has the authority to determine the rates of compensation of such employees, as well as to direct the work activities of the employees. ( Id. ¶ ¶ 11-12.) For the defendants' restaurant, Quarta does the following: (1) decides the menu ( id. at ¶ 16); (2) decides the prices of the menu offerings ( id. at ¶ 17); (3) selects the suppliers ( id. at ¶ 18); and (4) negotiates prices with the suppliers ( id. at ¶ 19).

A. Hours and Wages of Employees

During the trial, the Secretary offered the testimony of Alexander Torres, Santos Alfaro Pastor, Jose Anibal Acosta, and Juan Carlos Cantos-Chavez. All four individuals were employed by defendants for a period of time during the relevant time period of May 25, 2006 through the trial. The Secretary also submitted excerpts from the deposition of employee Melvin Isidro Banegas. The Secretary offered this testimony as a representative sample for the twelve employees for which violations of the FLSA were alleged. Based upon the evidence at trial -- including the credible testimony of the employees, which was corroborated by the credible testimony of DOL investigator Vasquez -- the Court makes the following findings regarding the hours of operation for the restaurant, as well as the employees' hours.

The restaurant was open for lunch and dinner Monday through Friday, and for dinner on Saturday, with the exception of certain holidays and other periodic closings. ( Id. ¶ 14.) Employees worked all six days of the week that the restaurant was open. ( See e.g., Apr. Tr. 35, 81, 125, 184.[4]) The employees always began work at 10:30 a.m. Monday through Friday, and at 3:00 p.m. on Saturday. ( See e.g., id. 35-36, 81-82, 125-126, 184.) On Monday through Friday, the employees had a scheduled break from 3:00 p.m. until 4:30 p.m.[5] ( See, e.g., id. 36, 82-83, 126-28, 184-85.)

The only variation in the employees' schedules related to the time they finished work in the evening. Mr. Torres, a dishwasher, credibly testified that he often left work at 9:00 p.m. on Mondays through Wednesdays, though occasionally he finished work later than 10:00 p.m. ( See id. 37.)

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On Thursdays he usually left work after 10:30 or 11:00 p.m., and on Fridays and Saturdays he ended work between 11:00 and 11:30 p.m., though he occasionally could leave earlier if the restaurant did not have many customers. ( See id. 38-39.) Mr. Acosta, also a dishwasher, credibly testified that he usually ended work at 9:20 or 9:30 p.m. on Mondays through Thursdays, although sometimes he stayed until 10:00 p.m. ( See id. 128.) On Fridays and Saturdays, Mr. Acosta left work after 10:20 p.m., and sometimes he stayed until 10:30 p.m. or 11:30 p.m. ( See id. 128-29.) Mr. Banegas, a dishwasher who did not testify at the trial but whose deposition was submitted to the Court, credibly testified that he left work between 10:00 and 11:00 p.m. Monday through Friday, but that he worked until between 11:00 and 11:30 p.m. on Saturdays. ( See Pl.'s Ex. 13, Dep. of Melvin Banegas (" Banegas Dep." ), at 15-16, 23-24.)

Mr. Pastor Alfaro, who was employed by defendants as a cook, credibly testified that he frequently left work at exactly 9:00 p.m. on Monday through Thursday, but that he finished working between 10:00 and 10:30 p.m. on Fridays and Saturdays. ( See Apr. Tr. 84-85.)

Mr. Cantos-Chavez, who prepared the salads, credibly testified that he usually finished work at 9:00 p.m. Monday through Thursday, though he left later than that one or two days per week. ( See id. 186.) He finished work at 10:00 p.m. on Fridays and Saturdays, although he stayed at work later than that approximately once per week. ( See id. 186-87.)

DOL investigator Zorayda Vasquez observed the employees on at least five days and confirmed some of their representations. ( See id. 221.) Ms. Vasquez credibly testified that, during the week, the employees arrived at 10:30 a.m., and that they never left the restaurant for their afternoon break for longer than an hour and a half. ( See id. 222-23.) Ms. Vazquez did not testify regarding the time employees left in the evening, nor did she observe the restaurant on a Saturday. ( See id. 274.)

Richard Gluszak, defendants' former attorney and advisor, was the sole witness offered by defendants to rebut the aforementioned testimony regarding the hours of employees. Mr. Gluszak testified that he was at Luigi Q Italian Restaurant almost every day from 2001 until some point in 2007. ( See id. 234.) He observed that employees would usually not arrive until 11:00 or 11:15 a.m., and that the last employee would arrive around 11:30 or 11:40 a.m. ( See id. 235.) He testified that, on Monday through Friday, employees would begin leaving work at 9:00 p.m., and that all employees would end work by 10:00 p.m. ( See id. 236.) He also testified that, on Saturdays, some employees finished work at 9:45 p.m., and that no employees worked later than 10:30 p.m. ( See id .) However, Mr. Gluszak admitted that not only had he not been to the restaurant since 2007, but that he would not have been able to observe the back door from where he sat in the restaurant, and therefore could not have seen if employees were leaving through the back door. ( See id. 242-44.)

As noted above, the Court finds the testimony of all of the Secretary's witnesses to be fully credible.[6] Therefore, based on the hours that the employees testified that they worked, the Court finds that all of the employees worked more than forty hours per week. Thus, during the relevant time period, defendants' employees regularly worked between 51 and

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62 hours per week at the restaurant. ( See, e.g., id. 35-39, 81-85, 125-29, 184-87.)

Despite working more than forty hours per week, all of the employees credibly testified that they were paid a flat weekly wage which did not vary based on the number of hours they worked. ( See, e.g., id. 42, 89-90, 129-130, 187-90.) The employees also testified that they had never been told about overtime. ( See, e.g., id. 43, 78-79, 125, 182.) Defendant Quarta admitted during his deposition that he always paid the employees of SCA Restaurant Corp. a " fixed weekly rate." (Pl.'s Ex. 12, Dep. of Luigi Quarta (" Quarta Dep." ) at 36-37.) Therefore, the Court finds that defendants did not compensate their employees for the hours worked in excess of forty per week.

B. Records of Employees' Hours and Wages

Defendants stipulated that they did not maintain written records of the hours worked by their employees from June 5, 2006 through at least May 21, 2009. (PTO, Stip. Facts ¶ 15.) In addition, Quarta acknowledged in June 2008 to the DOL that SCA Restaurant Corp. did not keep daily time records or schedules. ( See Pl.'s Ex. 1, Request for Business Data, at 2.) Although defendants only stipulated that they did not maintain records until May 21, 2009, defendants did not submit any time-keeping records to the Court for the period from May 21, 2009 until the trial on April 9, 2012. In addition, during the relevant time period, defendants paid some of their employees partly by check and partly in cash (Pl.'s Ex. 12, Quarta Dep., at 65; Apr Tr. 88-89, 187), and paid some of their employees in cash only ( see Pl.'s Ex. 12, Quarta Dep., at 108, 128-29; Apr. Tr. 41-42, 129). Defendants failed to make, keep, and preserve any records of wages paid to their employees in cash. ( See Pl.'s Ex. 12, Quarta Dep., at 46-47, 67-68, 108, 121, 129.) Moreover, although defendants made records of payments by check to their employees, those records are inaccurate and incomplete because they do not reflect the additional cash payments that were made to the employees. ( Id. at 67-68; Apr. Tr. 260-61.) Therefore, based upon the evidence at trial, the Court finds that defendants failed to make, keep, and preserve accurate records of the wages paid to and hours worked by their employees, including the number of hours worked each day, the total number of hours worked each work week, the regular rate of pay, the basis upon which wages were paid, the total straight-time earnings for each work week, and the total overtime compensation paid for each work week.

The Secretary also introduced credible evidence that defendants submitted false time-keeping records to the DOL. The Secretary submitted exhibits of " Daily Time Records" from January 12, 2008 through November 8, 2008, and employee time sheets for August and September 2008 which had been given to the DOL by SCA Restaurant Corp. ( See Pl.'s Ex. 5; Pl.'s Ex. 6.) The " Daily Time Records" state that employees worked exactly forty hours per week ( see Pl.'s Ex. 5), while the timesheets show that employees worked forty-four hours per week ( see Pl.'s Ex. 6). These two records directly contradict each other for employees Jeffrey Chavez and Juan Carlos Cantos-Chavez for August and September 2008. ( See Pl.'s Ex. 5, at 40-47; Pl.'s Ex. 6, at 1-2.) The timesheets also state that defendants compensated employees for hours worked in excess of forty per week ( see Pl.'s Ex. 6, at 1-2), while Quarta admitted during his deposition that he paid his employees a fixed weekly salary (Pl.'s Ex. 12, Quarta Dep., at 36-37). The pages of the " Daily Time Records" were actually photocopies of the first page, with some of the information on the subsequent pages being added in pencil. ( See Apr. Tr. 250-256.)

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Defendants also prepared a fake schedule that was hung in Quarta's office. This schedule falsely claimed that employees worked fewer hours and days than those employees, in fact, worked. (Pl.'s Ex. 7; Apr. Tr. 101-06.) In addition, during DOL's investigation of the defendants, Quarta told employees to tell the DOL investigator that they only worked five days per week and did not start work until 2:00 p.m., even though that information was false. (Apr. Tr. 106-07.)

Not only do the records contradict the testimony of defendants' employees whom the Court find credible, they contradict each other. In addition, these records are supposedly from 2008, although defendants stipulated that in 2008 they " did not keep written records of the hours worked by their employees." (PTO, Stip. Facts ¶ 15.)

In sum, based upon the evidence at trial, the Court finds that defendants clearly created false records in an attempt to convince the DOL that they complied with the FLSA.

C. Retaliation Against Employees

The Secretary presented credible testimony at trial from Mr. Acosta and Mr. Cantos-Chavez that Quarta attempted to intimate employees from testifying.

Mr. Acosta testified that, on Thursday, April 5, 2012 (just days before the trial was set to commence on April 9, 2012), Quarta asked Mr. Acosta whether he intended to testify in court. (Apr. Tr. 142-43.) When Mr. Acosta answered in the affirmative, Quarta told him that, if he testified, " then there's no more work for you." ( Id. 142.) Mr. Acosta also stated that an employee of the restaurant told him that Quarta said if Mr. Acosta appeared in court that " he would look for other workers." ( Id. 145.) After being told that he would lose his job if he testified, Mr. Acosta felt afraid. ( Id. 147.)

Mr. Cantos-Chavez also testified that, several days prior to the commencement of the trial, Quarta told the employees, using another employee as a translator, that if they came to court they " would only have work there until Saturday" ( id. 199), and " if [they] showed up in court then [they] . . . would not have a job anymore," ( id. 202). Quarta also told the employees that it was their decision whether to come to court, because they could " either come to court or [could] go to work." ( Id. 201.) Following these conversations, Mr. Chavez felt pressure not to testify and questioned whether he would testify in court, and was afraid and nervous. ( Id. 202, 214.)

At the continuation of the bench trial on October 4, 2012, Quarta testified that when he told Mr. Acosta and Mr. Cantos-Chavez not to come to work if they testified, he meant that they did not need to show up because he would have either closed the restaurant for the day or gotten temporary replacements. (Oct. Tr. 2, 5-7.)

The Court finds the testimony of Mr. Acosta and Mr. Cantos-Chavez credible, and the testimony of Quarta not credible. It is clear from the evidence, including an evaluation of the credibility of the witnesses, that there was no misunderstanding by the employees of the substance of Quarta's statements. Quarta clearly intended to communicate, and did communicate, his intention to terminate these employees if they testified, in an attempt to retaliate against them and dissuade them from doing so. ...

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