DECISION AND ORDER GRANTING MOTION FOR SUMMARY DECISION
The above-captioned matter arises from a request for a hearing concerning the Complainant's assessment of a $5,100 civil penalty against the Respondents under the provisions of subsection 16(e) of the Fair Labor Standards Act (hereinafter "the Act" or "the FLSA"), 29 U.S.C. §216(e). The civil penalty assessment is based on alleged willful violations of section 7 of the Act, 29 U.S.C. §207. This proceeding is governed by regulations set forth at 29 C.F.R. §18, 29 C.F.R. §578, and 29 C.F.R. §580.
BACKGROUND
Respondents A-One Medical Services, Inc. (hereinafter "A-One"), and Alternative Rehabilitation Home Health Care, Inc. (hereinafter "Alternative Rehabilitation"), are separately-owned companies which are incorporated in the State of Washington. Both are in the business of providing home health care services to patients in the vicinity of Seattle, Washington. Lorraine Black is the director, president and sole shareholder, of A-One. Hanahn Korman is the director, president and sole shareholder of Alternative Rehabilitation. In 1996, A-One entered into an agreement to purchase Alternative Rehabilitation, but, because of Alternative Rehabilitation's unresolved tax liabilities, the sale has not yet been formally consummated. As the result of mediation that occurred in 1999, Ms. Korman discontinued her employment by Alternative Rehabilitation and Ms. Black began managing that company's clinical operations. Although there is no formal agreement between the companies to share employees, both companies conduct operations from the same building and have various common employees.
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On March 13, 2001, the Complainant filed a civil action against the Respondents in the United States District Court for the Western District of Washington under the provisions of the FLSA. Among other things, the civil complaint alleged that the Respondents had jointly employed eight former employees and that these employees had not been paid all the overtime pay to which they were entitled under the overtime provisions of the Act.
On September 7, 2001, the Complainant sent the Office of Administrative Law Judges an Order of Reference requesting that an administrative hearing be held pursuant to the provisions of 29 C.F.R. §18 and 29 C.F.R. §580 to determine if the Respondents were liable for a civil money of $5,100 for committing the same violations alleged in the civil action before the District Court. The imposition of such civil money penalties is authorized under the provisions of subsection 16(e) of the FLSA in cases where an employer has "repeatedly or willfully" violated section 206 or 207 of the Act.
On November 28, 2001, the District Court issued an order which granted in part the Complainant's motion for summary judgment. Among other things, the District Court's order found that: (1) Respondents A-One and Alternative Rehabilitation are a single enterprise for purposes of applying the FLSA, (2) that the two companies are "joint employers," (3) that the companies committed "willful" violations of the FLSA because they "knew or should have known" that their conduct was prohibited by the Act, and (4) that the Respondents are therefore obligated to pay a total of $7,294.85 in back wages and liquidated damages to the employees who had not been fully paid for their overtime work.
On December 13, 2001, the Complainant filed a motion for summary decision in this proceeding pursuant to the provisions of 29 C.F.R. §18.41. Among other things, the motion alleges (1) that the aforementioned findings of the District Court resolved all possible disputes of material fact concerning the liability of the Respondents for the payment of the $5,100 civil penalty assessment, and (2) that the doctrine of collateral estoppel therefore requires a finding in favor of the Complainant. On December 21, 2001, the Respondents filed a reply which contended that the motion must be denied. In brief, the reply alleged: (1) that the determination of the District Court is not final and will be appealed, (2) that the Complainant has failed to prove that the Respondents engaged in repeated violations of the FLSA's overtime provisions, and (3) that the Complainant has failed to show any "willfulness" sufficient to satisfy the criteria set forth at 29 C.F.R. §578.3(c).
ANALYSIS
Under the provisions of 29 C.F.R. §18.41(a), a motion for summary decision can be granted if "no genuine issue of a material fact is found to have been raised."
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In this case, the only possible issue of fact raised in response to the Complainant's motion for summary decision is the question of whether the Respondents have "repeatedly or willfully" violated sections 206 or 207 of the FLSA. In particular, the Respondents assert that there is insufficient evidence that they have engaged in "repeated" violations and contend that there has been no showing of "willfulness" as that term is defined at 29 C.F.R. §578.3(c). They further contend that the District Court's order of November 28, 2001 cannot be used to resolve these questions because they intend to appeal that order to a higher court.
I find that the Respondents have failed to show that there is any genuine issue of material fact in this proceeding and therefore conclude that the Complainant's motion for summary decision must be granted. There are two reasons for this conclusion.
First, the Respondents are in error in contending that their appeal of the District Court's November 28, 2001 order precludes reliance on the District Court's factual findings in this proceeding. In fact, it is well settled that in the Federal Court system, the doctrine of collateral estoppel (also known as "issue preclusion") can be applied even when the prior decision has been appealed to a higher court. See, e.g., Hawkins v. Risley, 984 F.2d 321, 324 (9th Cir. 1993)(holding that in the federal courts the preclusive effects of a lower court judgment cannot be suspended simply by taking an appeal that remains undecided); Nixon v. Richey, 513 F.2d 430, 438, n. 75 (D.C. Cir. 1975) (holding that the "federal rule is that pendency of an appeal does not suspend the operation of a final judgment for purposes of collateral estoppel, except where appellate review constitutes a trial de novo").
Second, although the Respondents are correct in contending that the Complainant has not shown evidence of repeated violations, the Respondents are incorrect insofar as they suggest that the finding of "willfulness" in the District Court's decision is not consistent with the definition of willfulness set forth at 29 C.F.R. §578.3(c). Under that provision, a violation of the Act is defined as being "willful" "if an employer knew that its conduct was prohibited by the Act or showed reckless disregard for the requirements of the Act." Significantly, on page 13 of the District Court's decision, the Court found that the Respondents: "have, at least shown reckless disregard for the requirements of the statute." Likewise, on page 12 of the decision, the District Court found that there was "undisputed evidence" that "the defendants knew or should have known'" that their conduct was prohibited by the FLSA.
Finally, it is noted that the Respondents have not raised any material issues of fact concerning the amount of the proposed civil penalty and that the Complainant has shown that the amount is appropriate for the violations.
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ORDER
1. The Respondents are hereby ordered to pay a civil money penalty of $5,100 within 30 days of the issuance of this Decision and Order.
Paul A. Mapes
Administrative Law Judge
NOTICE OF APPEAL RIGHTS
Pursuant to 29 C.F.R. §580.13 and the regulations set forth at 61 Federal Register 19978 (May 3, 1996), any party dissatisfied with this Decision and Order may appeal it within 30 days of the date of its issuance by filing a notice of appeal with the United States Department of Labor Administrative Review Board, 200 Constitution Avenue, N.W., Washington, D.C. 20210. A copy of the notice of appeal must be served on all parties to this Decision and Order and on the Chief Administrative Law Judge, United States Department of Labor, 800 K Street, N.W., Suite 400, Washington, D.C. 2001-8002. If no timely appeal is made, this Decision and Order shall be deemed the final agency action.
