DATE: January 17, 1996

CASE NO.: 94-FLS-00034

In the Matter of

MARIA ECHAVESTE, ADMINISTRATOR,
WAGE AND HOUR DIVISION, USDOL,
    Plaintiff,

    v.

HOUSE OF FABRICS, d/b/a
SO-FRO FABRICS,
    Respondents.

    This matter arises under Section 16(e) of the Fair Labor Standards Act of 1938 (the "FLSA" or "Act"), as amended, 29 U.S.C. § 216(e), and in accordance with 29 C.F.R. Part 580. This matter is referred for a determination of whether Respondents have committed violations of Section 12 of the Act and the appropriateness of the penalties assessed by the Administrator.

    Pursuant to a letter dated November 22, 1993, Plaintiff assessed a civil money penalty against Respondents in the amount of $4,000.00 for violations of the FLSA. By letter dated December 6, 1993, Respondents filed their Exceptions to Assessment and a Request for Hearing in accordance with the applicable regulations. The matter was thereafter referred to the Office of Administrative Law Judges on September 16, 1994.

    On March 30, 1995, the undersigned notified the parties that this matter would be called for a telephonic prehearing conference on April 19, 1995, and that a formal hearing would be held on May 10, 1995.

    By way of letter dated April 6, 1995, addressed to the Plaintiff, and received in this office via facsimile on April 19, 1995, counsel for Respondents notified Plaintiff that Respondents had filed Chapter 11 petitions under the Bankruptcy code. 11 U.S.C. § 101 et seq. As such, counsel noted that "all entities are stayed from commencing or continuing any judicial, administrative or other action or proceeding against House of Fabrics, Inc., or Sofro Fabrics, Inc., that could have been commenced before November 2, 1994, pursuant to Bankruptcy Code § 362(a)(1), 11 U.S.C. § 362(a)(1)." As such, counsel requested that the hearing in this matter be "dismissed."

    Via a telephone conversation with this office on May 5, 1995, counsel for Plaintiff notified the undersigned that the parties had reached a settlement in this matter. Based thereon, the formal hearing scheduled for May 10, 1995, was removed from calendar. On May 26, 1995, the undersigned received the Consent Findings executed by counsel for both parties.

    The consent findings submitted by the parties provide:

    1. By notice dated November 22, 1993, pursuant to Section 16(e) of the FLSA, civil penalties in the amount of $4,000.00 were assessed by Plaintiff against Respondents as a result of the employment of several minors in violation of the child labor provisions of Section 12 of the FLSA;

    2. By letter dated December 6, 1993, Respondents filed a timely exception to the assessed penalties;

    3. Subsequent to the filing of the exception, this matter was referred to the Office of Administrative Law Judges;

    4. Plaintiff alleges and Respondents admit that at all times pertinent hereto, Respondents have been engaged in commerce or in the production of goods for commerce within the meaning of Sections 3(r) and 3(s) of the FLSA;

    5. Respondents certify that they are presently in compliance with the provisions of Section 12 of the FLSA, and further state that they will continue in compliance therewith;

    6. Upon reconsideration of the amount of penalties assessed for employment of several minors in this case, Plaintiff hereby modifies the letter assessing the penalties of $4,000.00 by reducing the assessment of civil money penalties to $2,000.00;

    7. Respondents agree that said amended penalties shall be the final determination of the Secretary;

    8. Because Respondents are undergoing Chapter 11 bankruptcy, they agree to seek approval for this settlement before the bankruptcy court. Upon execution of these Consent Findings and approval by the bankruptcy court, Plaintiff shall have an allowed, unsecured creditor's claim against Respondents in the amount of $2,000.00;

    9. The entire record upon which the Consent Findings and Order are based consists solely of the letter assessing the penalties, as modified herein, the Order of Reference, and these Consent Findings;

    10. All further procedural steps before the Office of Administrative Law Judges, and any rights to challenge or contest the validity of these Consent Findings or any Order issued pursuant thereto are waived by the parties;

    11. Each party agrees to bear its own fees, costs, and other expenses incurred by such party in connection with any stage of this proceeding;

    12. The parties agree that the Order in this case shall have the same force and effect as an order made after full hearing.

    The undersigned finds that the above consent findings are reasonable, and comply with the requirements of 29 C.F.R. § 18.9. Therefore, the undersigned adopts these consent findings as findings of fact and conclusions of law.

    As provided for in the consent finding identified numerically above as number eight (8), Respondents filed a "Motion to Approve Compromise With United States Department of Labor" with the United States Bankruptcy Court for the Central District of California. The bankruptcy court issued its "Order Approving Compromise with United States Department of Labor" on August 10, 1995.

    IT IS HEREBY ORDERED that:

    1. Respondents shall pay to Plaintiff the sum of $2,000.00, said sum representing civil money penalties for Respondents' violations of the Fair Labor Standards Act;

    2. As Respondents have filed for Chapter 11 bankruptcy protection, and in accordance with the Order of the United States Bankruptcy Court for the Central District of California, Plaintiff shall have an allowed, unsecured creditor's claim against Respondents in the amount found to be due and owing herein.

    Entered this 17th day of January, 1996, at Long Beach, California.

      SAMUEL J. SMITH
      Administrative Law Judge