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Perez v. Lantern Light Corporation

United States District Court, W.D. Washington, Seattle

September 8, 2014

THOMAS PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
LANTERN LIGHT CORPORATION d/b/a Advanced Information Systems, a corporation; DIRECTV LLC, a limited liability company; and RAMON MARTINEZ, an individual, Defendants.

ORDER ON PENDING MOTIONS

RICARDO S. MARTINEZ, District Judge.

I. INTRODUCTION

THIS MATTER came before the Court on a Show Cause Hearing held on September 5, 2014, during which Defendant DIRECTV was asked to show why sanctions should not be imposed for failing to attend in person a judicial settlement conference previously scheduled before Judge Jones. (Dkt. #75). At the same hearing, the Court considered multiple pending motions, including DIRECTV's Motion to Compel Discovery from Plaintiff (Dkt. #41), Plaintiff's Motion to Compel Discovery from DIRECTV (Dkt. #55), DIRECTV's Motion for Protective Order limiting the scope of a requested 30(b)(6) deposition (Dkt. #63), and DIRECTV's Motion for Protective Order regarding the deposition of one of its executives, David Baker (Dkt. #69). The Court also heard arguments regarding a dispute between the parties, which had been raised by oral and letter communication to the Court during the week of August 12th, regarding the refusal to produce certain witnesses at depositions that were to have occurred during that week. This Order memorializes any oral rulings made during the September 5th hearing and resolves all of the pending motions and requests before the Court.

II. SETTLEMENT CONFERENCE SANCTIONS

Having reviewed the parties' responses to the Court's Show Cause Order (Dkts. #76 and #77), and having considered the arguments of the parties on September 5th, the Court concludes that DIRECTV has not shown good cause for its failure to produce a representative with authority at the previously-scheduled settlement conference, and therefore finds that limited sanctions are warranted. DIRECTV shall pay the airfare, meal and hotel costs of Plaintiff's counsel's travel to Seattle for the cancelled settlement conference, as well as Plaintiff's fees and costs for preparing its settlement brief for Judge Jones.

III. BACKGROUND RELEVANT TO PENDING MOTIONS

Plaintiff has brought this case on behalf of 82 current and former Satellite Installation Technicians employed by Defendant Lantern Light Corporation d/b/a Advanced Information Systems ("AIS"). Dkt. #31. AIS installs and services satellite televisions for Defendant DIRECTV. Dkt. #38 at ¶ 5. Defendant DIRECTV is a business providing satellite television services. Dkt. #32 at ¶ 5. Defendant Ramon Martinez is the sole owner and President of AIS. Dkt. #38 at ¶ 5.

Plaintiff alleges that Defendants AIS, DIRECTV and Ramon Martinez have violated the Fair Labor Standards Act ("FLSA") by repeatedly paying employees wages less than the federal minimum wage, by failing to pay employees who worked in excess of 40 hours per week at a rate of one-and-a-half times the regular rate at which they were employed, and by failing to keep and preserve accurate records of employees and the wages, hours and other conditions of employment maintained by them, since at least August 21, 2009. Dkt. #31. Plaintiff asserts that AIS and Martinez are liable under the FLSA as employers of the aforementioned Satellite Installation Technicians. Plaintiff further alleges that DIRECTV is a joint employer of AIS's employees and is therefore also liable under the FLSA. Id. Plaintiff seeks to recover unpaid minimum wage and overtime compensation and liquidated damages. Id.

Defendants deny the substantive allegations. Dkts. #32 and #38. DIRECTV has asserted as an affirmative defense that it is not a joint employer of the AIS employees. Dkt. #32. DIRECTV asserts that AIS hires and employs its own technicians, without input from DIRECTV. Id. DIRECTV further asserts that AIS alone sets their rates of pay, signs their checks, pays their wages, issues W-2s, and maintains their own personnel and payroll information. Id. at p. 8. This affirmative defense has given rise to the motions discussed below.

IV. DISCUSSION

A. DIRECTV's Motion to Compel Discovery (Dkt. #41)

DIRECTV has moved to compel the identity of persons with knowledge of the Plaintiff's allegations and the subject of such persons' knowledge. Dkt. #41. Specifically, DIRECTV would like the identities of the person's interviewed by the Department of Labor's Wage and Hour Investigator prior to the filing of the Secretary's Complaint, and those employees interviewed as potential witness after the filing of the Complaint, in order to ascertain whether any of those informants/witnesses are also on the list of 82 represented current or former employees of AIS, and to ascertain what information those informants/witnesses have that is relevant to this matter. Id. DIRECTV asserts that the identities of these people are necessary to defend the case, particularly because of the theory of liability on which the government proceeds against it - that of joint employer. DIRECTV argues this is an atypical FLSA case, and that it must obtain information related to the control of DIRECTV over AIS employees directly from the informants in order to adequately present a defense. Id.

The Secretary relies on the "informant privilege" in refusing to provide the identities of its informants/witnesses, arguing that protection under the privilege is necessary because disclosing the information sought would reveal the identities of individuals who have cooperated with a Department investigation and litigation, and witness identification would adversely affect those persons and might deter other persons from reporting violations to the Agency. Dkt. #46.

The Ninth Circuit Court of Appeals recently reviewed the informants' privilege, reversing this Court's order directing the Secretary of Labor to reveal the identities of its informants, along with the same type of identifying information sought in the instant matter. Perez v. United States District Court, Tacoma, 749 F.3d 849 (9th Cir. Apr. 18, 2014). The Court set forth the parameters of the privilege, which protects the identity of persons who furnish information of violations of law to officers charged with enforcement of that law from those who would have cause to resent the communication. The Court also noted that the privilege will give way only where the disclosure of an informer's identity, or of the contents of his communication, is relevant and helpful to the defense of an accused, or is essential to a fair determination of a cause. Id. at 856.

Relevant to this determination is an examination of the theory of liability upon which the Secretary relies against DIRECTV. In this case, the Secretary has alleged liability against DIRECTV based on the theory that DIRECTV is a joint employer of the AIS installation technicians represented in this case. Second Amended Complaint at ¶ 5(c). There is no dispute that DIRECTV did not employ the technicians directly.

Under the FLSA, an employer is defined broadly as "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). In circumstances in which a company has contracted for workers who are directly employed by an intermediary company, the Court uses the "economic reality" test to determine whether the two companies are joint employers. Chao v. A-One Med. Servs., 346 F.3d ...


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