Tolano v. El Rio Bakery

          ORDER

          Hon. Rosemary Marquez, United States District Judge

         Pending before the Court is Plaintiffs' “Motion to Court for Entry of Default Judgment and Request for Monetary Relief” as to Defendants El Rio Bakery and Carlos Guillermo Vargas Mendoza. (Docs. 29, 30.) For the reasons explained below, the Court will grant Plaintiffs' Motion and award the requested relief.

         I. Background

         Plaintiffs filed a Complaint on March 7, 2018 (Doc. 1) and the operative Amended Complaint on June 24, 2018 (Doc. 12). Plaintiffs allege that Defendants El Rio Bakery and its owner, Defendant Carlos Guillermo Vargas Mendoza, failed to pay Plaintiffs for all hours worked, failed to pay overtime, and retaliated against Plaintiffs after they complained. (Doc. 12.) Plaintiffs raise claims for overtime violations under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207(a); failure to pay the minimum wage in compliance with the Arizona Minimum Wage Act (“AMWA”), A.R.S. § 23-362, et. seq.; failure to make timely wage payments under the Arizona Wage Act (“AWA”), A.R.S. § 23-351; retaliation in violation of the FLSA, 29 U.S.C. § 215(a)(3); retaliation in violation of the AMWA, A.R.S. § 23-364(B); and common law unjust enrichment. (Id.) Service was executed upon Defendants El Rio Bakery and Vargas Mendoza on August 28, 2018. (Docs. 15, 16.)

         Neither Defendant filed an Answer to Plaintiff's Amended Complaint. (Doc. 12.) On September 14, 2018, Defendant Vargas Mendoza gave notice via counsel that he had filed a Chapter 13 Bankruptcy Petition. (Doc. 17.) The Court ordered briefing as to whether the automatic stay provision of 11 U.S.C. § 362 applied to Defendants in light of the pending bankruptcy petition. (Doc. 18.) Both parties agreed that the stay provision applied only to Defendant Vargas Mendoza, the debtor in the bankruptcy petition, and not to Defendant El Rio Bakery. (Docs. 19, 20.) On December 17, 2018, the Court provided Defendant El Rio Bakery an extension of time to file its Answer, but no Answer was filed. (Doc. 21.)

         On January 2, 2019, Plaintiffs requested entry of default against Defendant El Rio Bakery pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. (Doc. 22.) Default was entered as to Defendant El Rio Bakery by the Clerk of Court on that same day. (Doc. 23.) On February 19, 2019, the Bankruptcy Court dismissed Defendant Vargas Mendoza's Chapter 13 Petition, thus lifting the automatic stay pursuant to 11 U.S.C. § 362(c)(2)(B). (Doc. 26.) Default was then entered as to Defendant Vargas Mendoza after he failed to timely file an Answer. (Docs. 26, 27.) On April 4, 2019, Plaintiffs moved for entry of default judgments against both Defendant El Rio Bakery and Defendant Vargas Mendoza. (Docs. 29, 30.)

         On August 20, 2019, the Court ordered that Defendants show cause as to why default judgment should not be entered against them. (Doc. 32.) The Court also provided Plaintiffs an opportunity to submit additional evidence and argument on the issue of damages. (Id.) Plaintiffs submitted additional evidence and argument. (Doc. 36.) Defendants did not respond to the Court's Order to Show Cause.

         II. Default Judgment Standard

         Once a party's default has been entered, the district court may grant default judgment against that party. See Fed. R. Civ. P. 55(b)(2); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). A defendant's default does not automatically entitle the plaintiff to a court-ordered judgment. Aldabe, 616 F.2d at 1092. Rather, a court has discretion whether to grant or deny relief. Id. The Ninth Circuit has identified several factors, discussed below, which a court should consider in adjudicating a motion for default judgment. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

         III. Jurisdiction

         As Defendants have failed to appear in this action, the Court has an “affirmative duty to look into its jurisdiction over both the subject matter and the parties” before granting entry of default judgment. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Both subject matter and personal jurisdiction are proper in this case.

         This Court has original federal question jurisdiction over Plaintiffs' FLSA claims. 28 U.S.C. § 1331. The Court also has supplemental jurisdiction over Plaintiffs' claims arising under Arizona law because those claims are so substantially related to Plaintiffs' FLSA claims that they form part of the same “case or controversy.” 28 U.S.C. § 1367(a).

         This Court also has jurisdiction over the parties. Defendants Vargas Mendoza and El Rio Bakery were residents of Tucson, Arizona when the events complained of occurred and this action was filed. (Doc. 12 ¶¶ 16-20.) Defendants conducted business in Arizona, and this case concerns their alleged failure to comply with various employment statutes as applied to their Arizona employees. (Id.) Personal service was properly executed against Defendants on August 28, 2019. (Docs. 15, 16.)

         Accordingly, the Court finds that it has jurisdiction over the subject matter and the parties.

         IV. The Eitel Factors Counsel in Favor of the Entry of Default

         In Eitel, the Ninth Circuit laid out seven factors that may be considered by courts exercising discretion as to the entry of a default judgment:

(1) the possibility of prejudice to the plaintiff;

(2) the merits of plaintiff's substantive claim;

(3) the sufficiency of the complaint;

(4) the sum of money at stake in the action;

(5) the possibility of a dispute concerning material facts;

(6) whether the default was due to excusable neglect; and

(7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits

782 F.2d at 1471-72. In applying the Eitel factors, “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). The Court will discuss each factor in turn.

         A. Possibility of Prejudice to the Plaintiff

         Plaintiffs served Defendants with their Amended Complaint in August 2018. (Docs. 15, 16.) Defendants have failed to answer. In the absence of a default judgment, Plaintiffs will “likely be without other recourse for recovery.” Young Poong USA Corporation v. Young Poong Paper Mfg Co., No. CV-17-02434-PHX-DMF, 2018 WL 4177942, at *4 (D. Ariz. July 3, 2018) (quoting PepsiCo, Inc. v. Cal. Sec. Cans., 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). The possibility of prejudice to plaintiffs therefore weighs in favor of the entry of default judgment.

         B. Merits and Sufficiency of Complaint

         Plaintiffs seek damages on their claims for overtime violations under the FLSA, failure to pay the minimum wage in compliance with the AMWA, and retaliation in violation of the FLSA and AMWA. The Court addresses each claim below.^[1]

         i. Overtime Violations Under the Fair Labor Standards Act

         The overtime provisions of the FLSA provide that employers must pay one and one-half the regular hourly rate of compensation for hours worked beyond a regular forty-hour workweek. 29 U.S.C. § 207(a)(1). To state a plausible claim of an overtime violation under FLSA, a plaintiff must do more than “present[] generalized allegations asserting violations” of the overtime provisions. Landers v. Quality Commc'ns, Inc. 771, F.3d 638, 646 (9th Cir. 2014), cert. denied, 135 S.Ct. 1845 (2015). Rather, under the post-Twombly and Iqbal standard, a plaintiff must plead specific factual allegations “that there was at least one workweek in which they worked in excess of forty hours and were not paid overtime wages.” Id. Here, Plaintiffs' complaint meets this burden because each Plaintiff specifies at least one week in which he or she worked a specific number of ...