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Sergiyenko v. McCusker

United States District Court, D. Kansas

March 27, 2018

REGINA SERGIYENKO AND RUSSELL JOLY, Plaintiffs,
v.
MCCUSKER HOLDING CORP., Defendant.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge.

         This matter comes before the court on plaintiffs' Amended Motion for Default Judgment against defendant McCusker Holding Corp. Doc. 10. On February 15, 2018, the court held a hearing on this motion. Both plaintiffs Regina Sergiyenko and Russell Joly testified at the hearing and presented other evidence. Plaintiffs asked the court to enter default judgment against defendant McCusker Holding Corporation on the three claims they assert against it: (1) Fair Labor Standards Act (“FLSA”) violations, 29 U.S.C. § 201 et seq., (2) Kansas Wage Payment Act (“KWPA”) violations, Kan. Stat. Ann. § 44-313 et seq., and (3) breach of contract. Plaintiffs also made a damage request at the hearing, asking the court to award them damages for unpaid contract wages, unpaid overtime wages, unpaid expenses, liquidated damages, state statutory penalties, and attorney's fees.

         After carefully considering the evidence adduced at the February 15, 2018 hearing and plaintiffs' submissions, the court grants plaintiffs' Amended Motion for Default Judgment against McCusker Holding Corporation and awards damages to each plaintiff. The court awards plaintiff Regina Sergiyenko: $13, 730.76 for unpaid contract wages, $2, 055.94 for unpaid expenses, $4, 903.50 for FLSA unpaid overtime wages, $4, 903.50 for FLSA liquidated damages, and $13, 730.76 for KWPA statutory penalties. The court awards plaintiff Russell Joly: $16, 384.56 for unpaid contract wages, $5, 775.00 for unpaid expenses, $3, 115.80 for FLSA unpaid overtime wages, and $3, 115.80 for FLSA liquidated damages. The court also awards plaintiffs their attorney's fees in the amount of $17, 610.00 and costs in the amount of $1, 353.69. The court explains how it reaches this decision below.

         I. Procedural Background

         On June 1, 2017, plaintiffs filed this lawsuit against their former employers McCusker Holding Corporation (“McCusker”) and Willard L. McCusker.[1] Doc. 1. Plaintiffs served the Complaint on both defendants on July 10, 2017. Doc. 4. Neither defendant responded to the Complaint or otherwise appeared in the lawsuit.

         On September 12, 2017, plaintiffs filed an Application for Clerks Entry of Default against both defendants. Doc. 5. On September 14, 2017, the Clerk entered default against both defendants under Federal Rule of Civil Procedure 55(a). Doc. 6.

         On January 11, 2018, plaintiffs filed an Amended Motion for Default Judgment. Doc. 10. The motion seeks a default judgment against defendant McCusker. On February 14, 2018, plaintiff voluntarily dismissed defendant Willard L. McCusker from the lawsuit without prejudice. Doc. 16. So, defendant McCusker is the only defendant remaining in the case. The court thus refers to McCusker as the “defendant”-in the singular form-for the remainder of this Order.

         To date, defendant never has answered or otherwise appeared in this lawsuit. Defendant, thus, is in default. Also, defendant never has appeared personally or by a representative at any time in this case. Thus, written notice of the application for default to defendant is not required. See Fed. R. Civ. P. 55(b)(2) (requiring seven days' notice of the application for default judgment only when “the party against whom a default judgment is sought has appeared personally or by representative”); see also Winfield Assocs., Inc. v. Stonecipher, 429 F.2d 1087, 1091 (10th Cir. 1970) (denying relief from a default judgment entered by a district court in Illinois without notice to defendant because the Illinois court concluded that defendant had not entered an appearance in the case); Local Union No. 226 Int'l Bhd. of Elec. Workers Open End Pension Tr. Fund v. Flowers Elec., Inc., No. Civ. A. 04-2237-CM, 2004 WL 2278562, at *1 (D. Kan. July 23, 2004) (holding that defendant's acceptance of service was not an appearance for purposes of Rule 55(b)(2), and thus concluding that no written notice of the motion for default judgment was required because defendant had not appeared in the action).

         Nevertheless, plaintiffs' counsel provided notice of their Amended Motion for Default Judgment to defendant in several ways. First, plaintiffs' counsel mailed copies of the Amended Motion for Default Judgment and the Notice of Hearing on the motion to defendant's registered agent in Nevada and to Mr. McCusker's personal address in Texas. Also, plaintiffs' counsel emailed the Amended Motion for Default Judgment and the Notice of Hearing to Mr. McCusker's email address. Plaintiffs' counsel previously had used this email address to correspond with Mr. McCusker. And plaintiffs' counsel sent the email with an electronic read receipt verifying that the email recipient received and opened the email.

         II. Legal Standard

         Federal Rule of Civil Procedure 55 provides a two-step process for securing a default judgment. First, Rule 55(a) allows the Clerk to enter default against a party who “has failed to plead or otherwise defend” a lawsuit. Second, after the Clerk enters default, plaintiff may request the Clerk to enter judgment in an amount that is “a sum certain or a sum that can be made certain by computation.” Fed.R.Civ.P. 55(b)(1). But, when a plaintiff's claim does not seek such a sum, plaintiff must apply to the court for a default judgment under Rule 55(b)(2). When considering a motion for default judgment, the court may hold a hearing if “it needs to (A) conduct an accounting; (B) determine the amount of damages; (C) establish the truth of any allegation by evidence; or (D) investigate any other matter.” Fed.R.Civ.P. 55(b)(2).

         “Once the default is established, defendant has no further standing to contest the factual allegations of plaintiff's claim for relief.” Mathiason v. Aquinas Home Health Care, Inc., 187 F.Supp.3d 1269, 1274 (D. Kan. 2016) (citations and internal quotation marks omitted). The court accepts as true the well-pleaded factual allegations from plaintiff's Complaint but not allegations about the amount of damages. Id.

         But, even after default, “‘it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.'” Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010) (quoting 10A Charles A. Wright et al., Federal Practice and Procedure § 2688, at 63 (3d ed. 1998)). The district court exercises broad discretion when deciding whether to enter a default judgment. Mathiason, 187 F.Supp.3d at 1274.

         A default judgment also does not establish the amount of damages. Id. at 1274-75. Instead, “[p]laintiff must establish that the amount requested is reasonable under the circumstances.” Id. at 1275 (citing DeMarsh v. Tornado Innovations, LP, No. 08-2588-JWL, 2009 WL 3720180, at *2 (D. Kan. Nov. 4, 2009)). A court may award damages “‘only if the record adequately reflects the basis for [the] award via a hearing or a demonstration by detailed affidavits establishing the necessary facts.'” DeMarsh, 2009 WL 3720180, at *2 (quoting Adolph Coors Co. v. Movement Against Racism & the Klan, 777 F.2d 1538, 1544 (11th Cir. 1985) (further citations and internal quotation marks omitted)).

         III. Findings of Fact

         The court finds that plaintiffs are entitled to recover damages for their FLSA, KWPA, and breach of contract claims, based on these facts, taken from plaintiffs' Complaint as well as testimony and evidence presented at the February 15 hearing. Both plaintiffs testified during this hearing. Defendant neither appeared personally or by a representative at the hearing. Defendant thus presented no witnesses or evidence on its behalf. Defendant also did not cross-examine either plaintiff. The court found each plaintiff's testimony credible and incorporates their testimony into its factual findings below.

         A. Facts Establishing FLSA and KWPA Violations and Breach of Contract

         Defendant is a company who assists other companies with processing extended warranties. It operates a call center in Texas. There, defendant's employees make inbound and outbound telephone calls to other states in the country.

         Plaintiff Regina Sergiyenko's Employment

         On October 24, 2016, defendant hired plaintiff Regina Sergiyenko as its Executive Vice President. Ms. Sergiyenko and defendant entered into a written employment agreement. The agreement provided that defendant would pay Ms. Sergiyenko an annual salary of $119, 000 plus commissions. Defendant also agreed to reimburse Ms. Sergiyenko for her work expenses. Ms. Sergiyenko primarily worked for defendant from her home in Kansas. But she sometimes traveled to the call center in Texas to perform work in that location.

         From October 2016 through January 2017, defendant paid Ms. Sergiyenko her salary and expense reimbursements. But, beginning in February 2017, defendant stopped paying Ms. Sergiyenko any salary. Also, Ms. Sergiyenko regularly worked more than 40 hours in a workweek, but received no overtime compensation for such work. Ms. Sergiyenko testified that she worked from 8:00 a.m. to 7:00 or 8:00 p.m. every day, with a 30 minute meal break. She estimated that she worked a minimum of 10.5 hours each day for the six weeks that she worked for defendant.

         After February 2017, Ms. Sergiyenko continued to perform work for defendant even though she never received a salary or expense reimbursement. She did so because Mr. McCusker repeatedly responded to her demands for payment by promising that the company would pay her soon. But it never did. So, on March 10, 2017, Ms. Sergiyenko ended her employment with defendant because it had failed to pay her.

         Plaintiff Russell Joly's Employment

         On January 3, 2017, defendant hired plaintiff Russell Joly as Vice President of Operations and Strategy. Mr. Joly worked for defendant in its office located in Coffeyville, Texas. Mr. Joly and defendant entered into a written employment agreement. It provided that defendant would pay Mr. Joly an annual salary of $90, 000 plus commissions. Defendant also agreed to reimburse Mr. Joly's expenses. ...


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