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Perez v. El Tequila, LLC

United States Court of Appeals, Tenth Circuit

February 7, 2017

THOMAS E. PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff - Appellee,
v.
EL TEQUILA, LLC; CARLOS AGUIRRE, individually, Defendants-Appellants.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA(D.C. No. 4:12-CV-00588-JED-PJC)

          Bill V. Wilkinson, Tulsa, Oklahoma, for Defendants - Appellants.

          Jesse Z. Grauman (M. Patricia Smith, Solicitor of Labor, Jennifer S. Brand, Associate Solicitor, and Paul L. Frieden, Counsel for Appellate Litigation, of U.S. Department of Labor, Office of the Solicitor, on the brief), Washington, D.C., for Plaintiff - Appellee.

          Before KELLY, MATHESON, and McHUGH, Circuit Judges.

          KELLY, Circuit Judge.

         Defendants-Appellants El Tequila, LLC, and Carlos Aguirre (collectively, "El Tequila") appeal from a $2, 137, 627.44 judgment in favor of Plaintiff-Appellee, Secretary of the Department of Labor (Secretary). 3 Aplt. App. 352; see also Perez v. El Tequila, LLC, No. 12-CV-588-JED-PJC, 2015 WL 4173541 (N.D. Okla. July 10, 2015) (partial summary judgment opinion and order). Our jurisdiction arises under 28 U.S.C. § 1291, and we affirm.

         Background

         El Tequila is a restaurant with four locations (Harvard, Broken Arrow, Owasso, and Memorial) in Tulsa, Oklahoma. In December 2010, an employee from the Harvard location complained to the Department of Labor's Wage and Hour Division (WHD). 23 Aplee. Supp. App. 1814. This complaint prompted the WHD to investigate the Harvard location (First Harvard Investigation). The First Harvard Investigation consisted of interviews with employees and El Tequila's owner, Mr. Aguirre; examining payroll documents; and touring the restaurant. Id. at 1822. The payroll records showed employees were paid $7.25 per hour (the minimum wage), worked about forty hours a week, and received overtime when required. See 10 Aplee. Supp. App. 780-801. Interviews with Mr. Aguirre and his employees confirmed this information. 23 Aplee. Supp. App. 1822-23. The WHD investigator only found recordkeeping violations, and closed the First Harvard Investigation. 16 Aplee. Supp. App. 1243.

         Additional employee complaints prompted the WHD to investigate the Harvard location again (Second Harvard Investigation). 23 Aplee. Supp. App. 1825-27. This time, the WHD investigator arrived at the Harvard location unannounced, id. at 1827, and discovered several violations. First, the records Mr. Aguirre provided during the First Harvard Investigation, known as middle sheets, were based on his false summaries of how many hours employees worked, rather than actual clock-in and clock-out times. 16 Aplee. Supp. App. 1300; 23 Aplee. Supp. App. 1834. During the Second Harvard Investigation, Mr. Aguirre provided the WHD investigator with time sheets that contained actual clock-in and clock-out times. 23 Aplee. Supp. App. 1829-31. Mr. Aguirre withheld these time sheets during the First Harvard Investigation, and many time entries had been "whited-out" and edited to conform with the Federal Labor Standards Act (FLSA). Id. at 1831.

         Second, employees revealed that Mr. Aguirre instructed them to lie in their interviews during the First Harvard Investigation. Id. at 1831-32. This time, employees told the WHD investigator that they had been working from 60 to 70 hours per week and were paid a salary. Id. at 1831. They said the time sheets were not accurate, and "that they were forced to sign" them. Id.

         Mr. Aguirre admitted that the time sheets and middle sheets were not correct, and that he told his employees what to say in their interviews. Id. at 1835, 1876. The WHD investigator told Mr. Aguirre he had violated the FLSA because his employees' salaries were below minimum wage, he did not pay them overtime, and because he committed recordkeeping violations. Id. at 1836. El Tequila agreed to pay $261, 760.77 to its fifty-eight employees at the Harvard location for unpaid wages from December 2009 to August 2011. 10 Aplee. Supp. App. 802-07.

         In September 2011, the WHD investigated El Tequila's Memorial, Owasso, and Broken Arrow locations because Mr. Aguirre admitted the same impermissible payment practices were occurring there. 23 Aplee. Supp. App. 1844. The WHD investigator discovered FLSA violations for these other three locations. Id. at 1851. Relying on El Tequila's expert report, the Secretary asserts that El Tequila owes $386, 887.82 to its employees at these locations for wages from October 2009 to August 2011. Aplee. Br. at 12-13.

         After the investigations, El Tequila changed the way it paid its employees, but continued to withhold wages from them. El Tequila started paying hourly by check, and employees clocked in and out on the restaurants' touch panel cash registers (Casio QT 6600). 16 Aplee. Supp. App. 1228, 1233-34, 1257. The registers generated weekly reports of employees' regular time and overtime. See id. at 1258; see, e.g., 9 Aplee. Supp. App. 698-709. Managers had the ability to edit the time recorded by the registers. 16 Aplee. Supp. App. 1357-58. Employee hours that had been recorded on the registers were manually removed or reduced many times, apparently by managers.

         El Tequila improperly reduced its employees' hours in yet another way. Rather than provide the register reports themselves, Mr. Aguirre gave El Tequila's accountant summary sheets containing an alphabetical listing of employees and indications of hours worked each day and total weekly hours and tips. 16 Aplee. Supp. App. 1261; see, e.g., 9 Aplee. Supp. App. 745-60. These middle sheets, compiled by Mr. Aguirre and other managers, indicated employees worked even fewer hours than did the altered records from the registers. The Secretary estimates that El Tequila owes its employees at all four locations $636, 483.28 for wages from August 7, 2011, to June 30, 2014. Aplee. Br. at 15.

         In October 2012, the Secretary filed suit because El Tequila refused to pay its employees at the Broken Arrow, Owasso, and Memorial locations for wages from October 2009 to August 2011. In a Third Amended Complaint (TAC) filed on February 5, 2015, the Secretary alleged that El Tequila managers and Mr. Aguirre "manually altered the electronic time record weekly reports in order to reduce the actual hours shown as worked by employees." 1 Aplt. Am. App. 31. El Tequila was required to respond to the TAC by February 23, eighteen days later, but did not. The Secretary filed a motion for summary judgment on March 19, id. at 77-78, and El Tequila filed its motion to file an out-of-time answer to the TAC the next day. Id. at 119-20. The motion explained that El Tequila did not timely respond to the TAC because the answer's due date "was not properly docketed." Id. at 119. The district court denied El Tequila's motion to file its answer out of ...


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