Miles v. Thomas Suites Campus of Care LLC

[5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Joyce Faye Miles, No. CV-24-01286-PHX-JZB 10 Plaintiff, REPORT AND RECOMMENDATION 11 v. 12 Thomas Suites Campus of Care LLC, et al., 13 Defendants. [14] 15 TO THE HONORABLE STEPHEN M. MCNAMEE, SENIOR UNITED STATES 16 DISTRICT JUDGE: 17 This Report and Recommendation is filed pursuant to General Order 21-25.1 18 Pending before the Court is “Plaintiff’s Motion for Entry of Default Judgment Against 19 Defendants” (“Motion for Default Judgment”). (Doc. 15.) The Court will recommend that 20 1 General Order 21-25 states in relevant part: 21 When a United States Magistrate Judge to whom a civil action has been assigned pursuant to Local Rule 3.7(a)(1) considers 22 dismissal to be appropriate but lacks the jurisdiction to do so under 28 U.S.C. § 636 (c)(1) due to incomplete status of 23 election by the parties to consent or not consent to the full authority of the Magistrate Judge, [24] IT IS ORDERED that the Magistrate Judge will prepare a 25 Report and Recommendation for the Chief United States District Judge or designee. [26] IT IS FURTHER ORDERED designating the following 27 District Court Judges to review and, if deemed suitable, to sign the order of dismissal on my behalf: Phoenix/Prescott: Senior 28 United States District Judge Stephen M. McNamee[.] 1 Plaintiff’s motion be granted. 2 I. Background. 3 Plaintiff seeks damages for unpaid wages under the Fair Labor Standards Act 4 (“FLSA”), the Arizona Minimum Wage Act (“AMWA”), and the Arizona Wage Act 5 (“AWA”) against Defendants Thomas Suites Campus of Care LLC, an Arizona limited 6 liability company (“Thomas Suites”); New Life Wellness Center, LLC, an Arizona Limited 7 Liability Company (“New Life”); and James Demasi and Jane Doe Demasi. (Doc. 1 at 38 5.)2 Plaintiff alleges she was employed by Defendants as a food and beverage server 9 beginning on or around August 23, 2023, was paid a $20 hourly rate, and worked between 10 28 and 35 hours per week. (Id. at 9.) She alleges she was not paid for the “final 11 approximately 12 weeks of her employment[,]” which amounts to 300 hours of unpaid 12 work. (Doc. 1 at 9.) She requests judgment in the amount of $18,000—an amount 13 representing treble unpaid wages under the AWA—plus post-judgment interest, attorneys’ 14 fees, and costs. (Doc. 15 at 9, 11.) 15 Plaintiff filed the Complaint initiating this civil action on May 29, 2024. (Doc. 1.) 16 She served Defendant Thomas Suites on June 6, 2024, through a registered agent (doc. 4) 17 and Defendants New Life and James Demasi through U.S. standard and certified mail, as 18 authorized by the Court, on September 12, 2024 (doc. 10, 11). Defendant Thomas Suites’ 19 deadline to answer or otherwise respond to Plaintiff’s Complaint was June 27, 2024. (Doc. 20 7; Doc. at 15 at 2); see Fed. R. Civ. P. 12(a)(1)(A)(i). Defendants New Life and Demasi’s 21 deadline to answer or otherwise respond to the Complaint was October 3, 2024. (Doc. 10, 22 11; Doc. 15 at 2.) No Defendant appeared to defend the case, and Plaintiff applied to the 23 Clerk of Court for Entry of Default as to all Defendants on October 5, 2024. (Doc. 12.) The 24 Clerk entered default against all Defendants on October 9, 2024. (Doc. 13.) Plaintiff then 25 filed this Motion for Default Judgment. (Doc. 15.) 26 2 Plaintiff alleges Defendants James and Jane Doe Demasi “caused events to take place giving rise to the claims in this Complaint as to which their marital community is fully 27 liable.” (Doc. 1 at 5.) Plaintiff appears to have named James Demasi’s spouse because, “[U]nder Arizona law, spouses must be sued jointly in order to reach assets of community 28 property.” R. Prasad Indus. v. Flat Irons Env’t Sols. Corp., No. CV 12-8261-PCT-JAT, 2013 WL 2217831 , at *5 (D. Ariz. May 20, 2013) (citations omitted). 1 II. Motion for Default Judgment. 2 A. Legal Standard. 3 Federal Rule of Civil Procedure 55(a) provides that “[w]hen a party against whom 4 a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that 5 failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. 6 Civ. P. 55(a). After a party’s default has been entered, the district court has discretion to 7 grant default judgment against that party. See Fed. R. Civ. P. 55(b)(2); Aldabe v. Aldabe, [8] 616 F.2d 1089, 1092 (9th Cir. 1980). 9 When evaluating a motion for default judgment the district court “has an affirmative 10 duty to look into its jurisdiction over both the subject matter and the parties.” Tuli v. 11 Republic of Iraq, 172 F. 3d 707, 712 (9th Cir. 1999) (“[T]o avoid entering a default 12 judgment that can later be successfully attacked as void, a court should determine whether 13 it has the power, i.e., the jurisdiction, to enter the judgment in the first place.”). 14 After establishing its jurisdiction, the court must consider whether default judgment 15 is proper under the Eitel factors. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 16 1986). Specifically, a court should consider: 17 (1) the possibility of prejudice to the plaintiff[;] 18 (2) the merits of plaintiff’s substantive claim[;] 19 (3) the sufficiency of the complaint[;] 20 (4) the sum of money at stake in the action; 21 (5) the possibility of a dispute concerning material facts; 22 (6) whether the default was due to excusable neglect[;] and 23 (7) the strong policy underlying the Federal Rules of Civil Procedure favoring 24 decisions on the merits. [25] Id. When applying the Eitel factors, “the factual allegations of the complaint, except those 26 relating to the amount of damages, will be taken as true.” Geddes v. United Fin. Grp., 559 27 F.2d 557 , 560 (9th Cir. 1977). 28 B. Discussion. 1 1. Jurisdiction. 2 “When entry of judgment is sought against a party who has failed to plead or 3 otherwise defend, a district court has an affirmative duty to look into its jurisdiction over 4 both the subject matter and the parties.” Tuli, 172 F.3d at 712 . Plaintiff asserts claims 5 arising under the FLSA, AMWA, and AWA. (Doc. 1.) The Court has subject matter 6 jurisdiction over claims arising from federal law, including the FLSA, pursuant to 28 7 U.S.C. § 1331 and 29 U.S.C. § 201 , et seq. The Court exercises supplemental jurisdiction 8 over Plaintiff’s state law claims because they are “so related to claims in the action within 9 such original jurisdiction that they form part of the same case or controversy[.]” 28 U.S.C. 10 § 1367(a). 11 Venue and personal jurisdiction requirements are also satisfied. Defendant Thomas 12 Suites was served by registered agent (doc. 4), and Defendants New Life and James Demasi 13 were served by U.S. standard and certified mail to a business address associated with both 14 Defendants. (Doc. 8; Doc. 9 at 2.)3 Plaintiff alleges “Defendants regularly conduct business 15 in and have engaged in the wrongful conduct alleged herein – and, thus, are subject to 16 personal jurisdiction in – this judicial district.” (Doc. 1 at 3.) Plaintiff further alleges that 17 both the individual and entity Defendants constitute “a single enterprise,” under the FLSA, [18] 29 U.S.C. § 203 (r)(1), insofar as they “perform related activities through unified operation 19 and common control for a common business purpose; namely, the operation of a 20 transitional living facility for formerly incarcerated, recently released individuals in 21 Maricopa County, Arizona.” (Doc. 1 at 6.) 22 Accordingly, service is complete, and the Court has personal jurisdiction of the 23 parties and subject matter jurisdiction over the causes of action. 24 // 25 2. Eitel Factors. [26] 3 The Court authorized alternative service, upon Plaintiff’s motion, after concluding 27 traditional service was impracticable, and that the alternative service Plaintiff proposed was reasonably calculated to apprise Defendants New Life and James Demasi of the 28 pendency of the action. (Doc. 9 at 2, citing Rio Properties, Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1016 (9th Cir. 2002)). 1 Having determined that the Court has jurisdiction, the Court will now examine 2 whether entry of default judgment is proper under the Eitel factors. 3 a. The First, Fifth, Sixth, and Seventh Eitel factors. 4 When Defendants have not responded or participated in the litigation, the “first, 5 fifth, sixth, and seventh [Eitel] factors are easily addressed.” Zekelman Industries Inc. v. 6 Marker, No. CV-19-02109-PHX-DWL, 2020 WL 1495210 , at *3 (D. Ariz. March 27, 7 2020). 8 The first factor weighs in favor of default judgment because denying Plaintiff’s 9 Motion for Default will leave her “without other recourse for recovery,” PepsiCo, Inc. v. 10 Cal. Security Cans., 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002), and would prejudice her 11 because she would lose the right to a “judicial resolution” of her claims. Elektra 12 Entertainment Group, Inc. v. Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005)). 13 The fifth factor weighs in favor of default judgment because the facts pleaded in the 14 complaint are taken as true. PepsiCo, 238 F. Supp. 2d at 1177 . Because the factual 15 allegations are taken as true, there is no “genuine dispute of material facts” to preclude 16 granting a motion for default judgment. Id. (citations omitted). 17 The sixth factor inquires as to whether the default was due to excusable neglect. 18 Eitel, 782 F.2d at 1472 . Here, Defendants’ failure to participate after being served does not 19 support a finding of excusable neglect. See Twentieth Century Fox Film Corp. v. Streeter, [20] 438 F. Supp. 2d 1065, 1071-72 (D. Ariz. 2006) (finding it unlikely that a personally served 21 defendant failing to answer and a resulting default were the result of excusable neglect). 22 The seventh Eitel factor favoring decisions on the merits generally weighs against 23 default judgment, but “the mere existence of [Rule] 55(b) indicates that ‘this preference, 24 standing alone, is not dispositive[.]’” PepsiCo, 238 F. Supp. 2d at 1177 . Thus, the 25 preference favoring a decision on the merits does not preclude the entry of default judgment 26 in this case. Warner Bros. Entertainment Inc. v. Caridi, 346 F. Supp. 2d 1068, 1073 (C.D. 27 Cal. 2004 ). Courts have concluded that “this factor does not weigh very heavily” and that 28 this factor “standing alone, cannot suffice to prevent entry of default judgment for 1 otherwise default judgment could never be entered.” Id. The first, fifth, sixth, and seventh 2 Eitel factors weigh in favor of default judgment. 3 b. The Second and Third Eitel Factors. 4 The second and third Eitel factors are the merits of the plaintiff’s substantive claim 5 and the sufficiency of the complaint, respectively. Eitel, 782 F.2d at 1471 . These factors 6 are “often analyzed together and require courts to consider whether a plaintiff has stated a 7 claim on which [she] may recover.” Vietnam Reform Party v. Viet Tan-Vietnam Reform 8 Party, 416 F. Supp. 3d 948 , 962 (N.D. Cal. 2019). The Court must first examine Plaintiff’s 9 and Defendants’ employer-employee status as alleged in the Complaint. 10 The FLSA defines an “employee” as “any individual employed by an employer.” [11] 29 U.S.C. § 203 (e)(1). It defines an “employer” as “any person acting directly or indirectly 12 in the interest of an employer in relation to an employee[.]” Id. § 203(d). The Court finds 13 that Plaintiff was an employee, and that Defendants were employers, as those terms are 14 used under the FLSA. 15 Plaintiff alleges Defendants owned Thomas Suites and New Life, which are 16 transitional living facilities in Maricopa County, Arizona for individuals recently released 17 from prison. (Doc. 1 at 8.) Plaintiff alleges Defendants supervised her, controlled her work 18 schedule and “conditions of employment,” determined her pay, and maintained records of 19 her employment. (Id. at 4-5.) These allegations, accepted as true, support the conclusion 20 that Defendants employed Plaintiff. 21 Like the FLSA, the AMWA describes an “employee” as “any person who is or was 22 employed by an employer[.]” A.R.S. § 23-362(A). It defines an “employer” as “any 23 corporation, proprietorship, partnership, joint venture, limited liability company, trust, 24 association, political subdivision of the state, individual or other entity acting directly or 25 indirectly in the interest of an employer in relation to an employee[.]” A.R.S. § 23-362(B). 26 Since the definition of an employee is the same under both the FLSA and AMWA, the 27 Court’s analysis of the Plaintiff’s employee status under the FLSA applies to the AMWA 28 claim. The Court finds that Plaintiff was an employee of Defendants, and that Defendants 1 employed Plaintiff, as those terms are used under the AMWA. 2 Like the FLSA and AMWA, the AWA defines an “employee” as “any person who 3 performs services for an employer under a contract of employment either made in this state 4 or to be performed wholly or partly within this state.” A.R.S. § 23-350(2). The AWA 5 defines “employer” as “any individual, partnership, association, joint stock company, trust 6 or corporation, the administrator or executor of the estate of a deceased individual or the 7 receiver, trustee or successor of any of such persons employing any person.” A.R.S. § 238 350(3). The Court’s prior reasoning as to Plaintiff’s employee status applies to the AWA 9 claim. It is also clear that Defendants Thomas Suites and New Life are employers under 10 the AWA. The Demasi Defendants, however, are not employers under the AWA. Rosen v. 11 Fasttrak Foods LLC, No. CV-19-05292-PHX-DWL, 2021 WL 2981590 , at *5 (D. Ariz. 12 July 15, 2021) (“This statutory definition [of ‘employer’ under the AWA] does not[ 13 ]authorize individual liability against the owners, officers, and directors of a corporate 14 employer in a case where the claim is for the employer’s wholesale failure to pay wages.”); 15 Rios v. Lux Interior & Renovation LLC, No. CV-23-01686-PHX-DJH, 2025 WL 871021 , 16 at *8 n. 1 (D. Ariz. Mar. 20, 2025) (“[T]he definition of employer under the AWA[] 17 precludes liability for individual Defendants.”). Defendants Thomas Suites and New Life 18 are employers, and Plaintiff was their employee, under the AWA, but the Demasi 19 Defendants are not employers under the AWA. 20 Plaintiff argues she is entitled to unpaid wages, including minimum wages, under 21 the FLSA, AMWA, and AWA. (Doc. 1 at 11-15.) Because the Court accepts these 22 allegations as true, Geddes, 559 F.2d at 560, and finds that Defendants are employers and 23 Plaintiff was an employee of Defendants, Plaintiff “has stated a claim on which [s]he may 24 recover.” Vietnam Reform Party, 416 F. Supp. 3d at 962. The second and third Eitel factors 25 support default judgment. 26 c. The Fourth Eitel Factor. 27 The fourth Eitel factor considers “the amount of money at stake in relation to the 28 seriousness of Defendant’s conduct.” PepsiCo, 238 F. Supp. 2d at 1176 . “If the sum of 1 money at stake is completely disproportionate or inappropriate, default judgment is 2 disfavored.” Twentieth Century Fox Film Corp., 438 F. Supp. 2d at 1071 . 3 The Plaintiff seeks unpaid wages, including minimum wages, she is owed under the 4 FLSA, AMWA, and AWA. (Doc. 1 at 15.) Plaintiff is requesting $18,000 plus post5 judgment interest and attorneys’ fees and costs. (Doc. 15 at 11.) The Court finds the amount 6 requested is reasonable and not disproportionate to the harm alleged. The Court finds the 7 fourth Eitel factor weighs in favor of default judgment. 8 Overall, the Court finds that the Eitel factors weigh in favor of entering default 9 judgment against Defendants. 10 3. Damages. 11 Having found that entry of default judgment is proper under the Eitel factors, the 12 Court will turn to the issue of damages. The Court does not accept allegations of damages 13 as true, Geddes, 559 F.2d at 560, see also TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 , 14 917-18 (9th Cir. 1987), but may rely on declarations submitted by the plaintiff in 15 determining damages. Tolano v. El Rio Bakery, No. CV-18-00125-TUC-RM, 2019 WL 16 6464748, at *6 (D. Ariz. Dec. 2, 2019) (citing Phillip Morris USA, Inc. v. Castworld 17 Prods., Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003)). Plaintiffs have the burden of “proving 18 up” damages, and “if the facts necessary to determine damages are not contained in the 19 complaint, or are legally insufficient, they will not be established by default.” Phillip 20 Morris USA, Inc, 219 F.R.D. at 498 . 21 Plaintiff’s declaration establishes she was employed by Defendants as a food and 22 beverage server from approximately April 23, 2023, to April 23, 2024, and that Defendants 23 paid her $20 per hour, but that she was not paid over the final 12 weeks of her employment, 24 which amounts to approximately 300 hours of unpaid work. (Doc. 15-1 at 3.) She calculates 25 her unpaid federal minimum wages are $2,175, or $7.25 times 300 unpaid hours. (Id.) 26 Plaintiff requests an additional, equal amount in liquidated damages, bringing her damages 27 for unpaid federal minimum wages to $4,350. (Doc. 15 at 8-9, citing Chao v. A-One Med. [28] 1 Servs., Inc., 346 F.3d 908 , 919–20 (9th Cir. 2003)).4 2 Plaintiff calculates her unpaid Arizona minimum wages are $4,305, or $14.35 x 300 3 unpaid hours. (Id.)5 Under state law, this amount is trebled. (Doc. 15 at 8, citing A.R.S. § 4 23-364(G) (“Any employer who fails to pay the wages or earned paid sick time required 5 under this article shall be required to pay the employee the balance of the wages or earned 6 paid sick time owed, including interest thereon, and an additional amount equal to twice 7 the underpaid wages or earned paid sick time.”)). Plaintiff’s unpaid Arizona minimum 8 wage damages are $12,915 ($4,305 x 3). (Doc. 15 at 9.) 9 Plaintiff also seeks trebled unpaid wages under the AWA. (Doc. 15 at 9, citing 10 A.R.S. § 23-355). The amount is comprised of $6,000 in unpaid wages (Plaintiff’s $20 11 hourly wage multiplied by 300 unpaid hours) trebled, for a total of $18,000 ($6,000 x 3). 12 (Doc. 15 at 9). This amount engulfs Plaintiff’s federal minimum wage damages ($4,350) 13 and Arizona minimum wage damages ($12,915). (Doc. 15 at 9.) Plaintiff requests that 14 Defendants Thomas Suites, New Life, and James Demasi be held jointly and severally 15 liable for $12,915 of the proposed $18,000 award, which is equivalent to Plaintiff’s [16] 17 4 Plaintiff’s approximation of the total number of unpaid hours worked, corroborated in her declaration, is sufficient to establish that fact under these circumstances. In Anderson v. 18 Mt. Clemens Pottery Co., the Supreme Court concluded, “In such a situation [where the employer’s records of employment are inaccurate or inadequate,] we hold that an employee 19 has carried out his burden [under the FLSA] if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show 20 the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work 21 performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence.” 328 U.S. 680, 687-88 (1946), superseded by statute on 22 other grounds; Senne v. Kansas City Royals Baseball Corp., 934 F.3d 918, 939 (9th Cir. 2019) (“Mt. Clemens explicitly rejected the notion that allowing approximate damages in 23 such situations would be unfair due to its speculative and imprecise nature . . . .”); Ader v. SimonMed Imaging Inc., 465 F. Supp. 3d 953 , 964 (D. Ariz. 2020) (“Plaintiffs admit they 24 can only estimate the amount of overtime worked. However, estimates are not fatal. They are expected, and frequently relied upon in cases where the employer failed to keep 25 accurate time of an employee’s hours.”). 26 5 Plaintiff’s declaration includes an apparent mathematical error in her state minimum wages calculation: “$4,305 ($14.35 * 630).” (Doc. 15-1 at 3.) This is remedied by 27 multiplying Arizona’s minimum wage in 2024, $14.35 per hour, Salgado v. Synergy Payment Sols. Inc., No. CV-24-00523-PHX-DWL, 2024 WL 4492467 , at *3 (D. Ariz. Oct. 28 15, 2024), by the number of unpaid hours Plaintiff alleges working. 1 Arizona minimum wage damages. (Doc. 15 at 9.)6 Plaintiff requests that Defendants 2 Thomas Suites and New Life be held jointly and severally liable for the remaining $5,085 3 in total unpaid wages. (Id. at 10.) Plaintiff further requests post-judgment interest under 28 4 U.S.C. § 1961 and attorneys’ fees and costs. (Id.) 5 The Court finds that Plaintiff’s requested relief reflects her statutory entitlement and 6 is supported by her Declaration. (Doc. 15-1 at 14-16.) 7 III. Conclusion and Recommendation 8 Having reviewed Plaintiff’s Motion and the underlying documents in the record, the 9 Court finds that the Eitel factors weigh in favor of granting default judgment in favor of 10 Plaintiff for the requested amount. 11 Accordingly, 12 IT IS RECOMMENDED that the Plaintiff’s Motion for Default Judgment (doc. 13 15) be GRANTED; 14 IT IS FURTHER RECOMMENDED that Plaintiff be awarded $18,000.00 15 against Defendants Thomas Suites and New Life, jointly and severally, plus post-judgment 16 interest at the applicable statutory rate; 17 IT IS FURTHER RECOMMENDED that Defendants Thomas Suites, New Life, 18 and James Demasi be held liable, jointly and severally, for $12,915 of that amount; 19 IT IS FURTHER RECOMMENDED Plaintiff be permitted to file a motion for 20 attorneys’ fees in due course. 21 This recommendation is not an order that is immediately appealable to the Ninth 22 Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of 23 Appellate Procedure, should not be filed until entry of the district court’s judgment. The 24 parties shall have 14 days from the date of service of a copy of this Report and 25 Recommendation within which to file specific written objections with the Court. See 28 26 6 As discussed previously, the District of Arizona has held that employers may be individually liable under both the FLSA and the AMWA but are excluded under the AWA. 27 See, e.g., Rosen, No. 2021 WL 2981590 , at *5; Rios, 2025 WL 871021 , at *8 n. 1; Nichol v. On Point Solar Power LLC, No. CV-22-00031-PHX-SPL, 2022 WL 2159051 at *4 (D. 28 Ariz. June 15, 2022). Accordingly, Defendant James Demasi is only liable for Plaintiff’s FLSA and AMWA damages. 1] U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(b) and 72. Thereafter, the parties have 14 days □□ within which to file a response to the objections. Failure to timely file objections to the || Magistrate Judge’s Report and Recommendation may result in the acceptance of the Report 4|| and Recommendation by the district court without further review. See United States v. || Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). Failure to timely file objections to any 6|| factual determinations of the Magistrate Judge will be considered a waiver of a party’s 7\|| right to appellate review of the findings of fact in an order of judgment entered pursuant to 8 || the Magistrate Judge’s Report and Recommendation. See Fed. R. Civ. P. 72. 9 Dated this 25th day of July, 2025. [10] i ol oy — 2 United States Magistrate Judge [28] -ll-