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Gibson v. Only Choice Home Health Care Agency, LLC

United States District Court, E.D. Virginia, Alexandria Division

November 16, 2018



          John F. Anderson United States Magistrate Judge.

         This matter is before the court on a motion for default judgment filed by plaintiff Heather Gibson ("plaintiff") against defendants Only Choice Home Health Care Agency, LLC ("Only Choice") and Beverly Ann McNairy ("McNairy") (collectively "defendants"). (Docket no. 12). Pursuant to 28 U.S.C. § 636(b)(1)(C). the undersigned magistrate judge is filing with the court his proposed findings of fact and recommendations, a copy of which will be provided to all interested parties.

         Procedural Background

         On March 25, 2018. plaintiff filed this action against defendants alleging violations of the Fair Labor Standards Act ("FLSA"). (Docket no. 1). On May 7. 2018. plaintiff notified the Clerk of Court that she had served the defendants on April 18, 2018. (Docket no. 5). On May 10, 2018, plaintiff filed a request for entry of default against defendants (Docket nos. 6, 7), which the Clerk of Court entered on May 11. 2018 as to McNairy and Only Choice for failure to plead or otherwise defend (Docket nos. 8, 9). On May 22, 2018. McNairy informed the court that Only Choice is closed and no longer doing business. (Docket no. 10). On September 19, 2018, the court ordered plaintiff to promptly file either a motion for default judgment, an accompanying memorandum in support, and a notice setting the hearing, or a request that the action be dismissed without prejudice. (Docket no. 11). On October 3, 2018, plaintiff filed this motion for default judgment and noticed the hearing for November 2, 2018 at 10:00 a.m. (Docket nos. 12, 13). On October 18, 2018, plaintiff filed an amended notice of hearing for November 16, 2018 at 10:00 a.m. (Docket no. 15), and served a copy of her motion for default judgment with Roseboro notice and exhibits, memorandum in support, and proposed order of default judgment on defendants (Docket no. 16). At the hearing on November 16, 2018, counsel for plaintiff appeared, but no one appeared on behalf of defendants.

         Factual Background

         The following facts are established by the complaint (Docket no. 1) ("Compl."). Only Choice was formed in the Commonwealth of Virginia and employed therapists, medical social workers, and nurses to provide in-home health care services. (Compl. ¶ 1). McNairy, a resident of Virginia, had an ownership interest in Only Choice and served as its registered agent and Patient Care/Administrator. (Compl. ¶¶ 3-5). Defendants employed plaintiff as a full-time private-duty nurse from April 2015 until August 2017. (Compl. ¶¶ 21-22, 35-36, 41-42, 147). McNairy, who established pay policies and acted as an Only Choice employer, controlled plaintiffs work schedule. (Compl. ¶¶ 13, 38-39).

         Plaintiff entered into an employment contract with defendants on April 30, 2015 that provided defendants would pay plaintiff $17.00 per hour for her private-duty nursing services. (Compl. ¶¶ 20-21). Plaintiff entered into an amended employment contract in February 2016 that described her employment as "at will" and raised her rate to $18.00 per hour effective March 1, 2016. (Compl. ¶¶ 26-28, 43, 45-46). The February 2016 contract also provided that plaintiff would receive a rate of $30.00 per hour when she provided skilled nursing services to Only Choice's customers. (Compl. ¶ 44). Failure to appear for a shift would result in a "voluntary resignation." (Compl. ¶ 40). Despite the language of the employment contracts, defendants treated plaintiff as an independent contractor, providing her with a Form 1099 for tax years 2015, 2016, and 2017, never having her fill out a Form W-4, and describing her as a contractor in an email sent to plaintiff on February 1, 2017. (Compl. ¶¶ 23-24, 30-32, 34).

         Defendants raised plaintiffs pay rate to $18.00 per hour on March 1, 2016, raised it in error to $20.00 per hour on September 13, 2016, and decreased it back to $18.00 per hour on December 1, 2016. (Compl. ¶¶ 46, 48-50). Defendants failed to notify plaintiff of the September pay increase or the December pay decrease. (Compl. ¶ 49, 51). Only Choice notified plaintiff of the erroneous pay increase in February 2017 and stated its intention to recoup the $895.00 overpayment from plaintiffs next paycheck. (Compl. ¶ 52-56). When Only Choice's human resources employee, Tina DePalma, notified plaintiff of this deduction, plaintiff responded by stating that she disagreed with Ms. DePalma and declaring "her intent to address the issue with the proper authority to determine if Only Choice's actions were legal." (Compl. ¶¶ 159-60). Only Choice deducted the overpayment from plaintiffs next paycheck. (Compl. ¶¶ 56-57, 162).

         Plaintiff also regularly worked more than forty hours per week, but defendants did not pay her an overtime premium. (Compl. ¶¶ 37, 58-81, 100-39, 141-42, 144-45). The number of days defendants included in a pay period varied, and defendants often deposited plaintiffs wages into her bank account in an untimely manner. (Compl. ¶¶ 87-96). Defendants also failed to pay plaintiff for hours worked between May 24, 2017 and May 31, 2017; July 3, 2017 and July 9, 2017; and July 28, 2017 and August 2, 2017.[1] (Compl. ¶¶ 97-99, 140, 143, 146; Docket no. 14-1 ¶ 69-71). Plaintiff resigned from Only Choice in August 2017. (Compl. ¶ 147).

         Proposed Findings and Recommendations

         Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default judgment when "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Based on the failure to plead or otherwise defend against the action, the Clerk of Court has entered a default as to Only Choice Home Health Care Agency, LLC and Beverly Ann McNairy. (Docket nos. 8, 9).

         A defendant in default admits the factual allegations in the complaint. See Fed. R. Civ. P. 8(b)(6) ("An allegation-other than one relating to the amount of damages-is admitted if a responsive pleading is required and the allegation is not denied."); see also GlobalSantaFe Corp. v., 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003) ("Upon default, facts alleged in the complaint are deemed admitted and the appropriate inquiry is whether the facts as alleged state a claim."). Rule 55(b)(2) of the Federal Rules of Civil Procedure provides that a court may conduct a hearing to determine the amount of damages, establish the truth of any allegation by evidence, or investigate any other matter when necessary to enter or effectuate judgment.

         Jurisdiction and Venue

         A court must have both subject matter and personal jurisdiction over a defaulting party before it can render a default judgment. 28 U.S.C. § 1331 provides that "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Similarly, 28 U.S.C. § 1337(a) provides that "district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies." The FLSA itself also states that any action to recover unpaid minimum or overtime wages may be maintained "in any Federal or State court of competent jurisdiction." 29 U.S.C. § 216(b). Since this action arises from a law of the United States, the FLSA, and further arises from an Act of Congress regulating commerce, this court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§1331 and 1337.

         This court also has personal jurisdiction over defendants. As stated in the complaint, McNairy is a resident of the Commonwealth of Virginia, and Only Choice had its principal office located in Fredericksburg, Virginia and regularly conducted business in this District. (Compl. ¶¶ 2, 4, 17-18).

         For these reasons, the undersigned recommends a finding that this court has subject matter jurisdiction over this action, that this court has personal jurisdiction over the ...

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