Sergio Lopez v. Babas Motorsports LLC, et al.

• Court: District Court, D. Arizona
• Decided: October 23, 2025
• Docket: 2:24-cv-03090
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Sergio Lopez, No. CV-24-03090-PHX-JJT

10 Plaintiff, ORDER

11 v.

12 Babas Motorsports LLC, et al.,

13 Defendants. 14 15 At issue is Plaintiff’s Motion for Entry of Default Judgment against all Defendants. 16 (Doc. 42, MDJ.) 17 I. BACKGROUND 18 Plaintiff Sergio Lopez filed his First Amended Verified Complaint (Doc. 18, FAVC) 19 seeking unpaid minimum and overtime wages under the Fair Labor Standards Act 20 (“FLSA”) and unpaid minimum wages and unpaid wages under the Arizona Minimum 21 Wage Act (“AMWA”) and the Arizona Wage Act (“AWA”) against Defendants Babas 22 Motorsports, LLC, Amel Mohammed Ataalaha, and Baneta Nahrain Ataalaha. In July 23 2025, the Court entered an Order (Doc. 35) granting Counsel for Defendants’ Motion to 24 Be Relieved as Counsel of Record (Doc. 34). That Order required Defendants to notify the 25 Court by August 28, 2025, whether they intended to proceed pro se or with counsel in this 26 matter. (Doc. 35 at 1.) Defendants filed neither the required notices nor anything else since 27 the Court entered that Order. 28 . . . 1 On September 12, 2025, Plaintiff filed a Notice of Settlement stating that “the 2 parties have reached an agreement to resolve this matter.” (Doc. 36.) A week later, Plaintiff 3 filed a Status Report and Request to Apply for Default Against All Defendants because 4 “[t]he parties’ settlement has apparently fallen through.” (Doc. 38.) The Court granted 5 Plaintiff’s request to apply for default. (Doc. 39.) On Plaintiff’s subsequent application, the 6 Clerk of the Court entered default against Defendants. (Docs 40, 41.) Plaintiff now seeks 7 default judgment. 8 II. LEGAL STANDARD 9 After default is entered, the Court may enter default judgment pursuant to Fed. R. 10 Civ. P. 55(b). The Court’s “decision whether to enter a default judgment is a discretionary 11 one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Although the Court should 12 consider and weigh relevant factors as part of the decision-making process, it “is not 13 required to make detailed findings of fact.” Fair Housing of Marin v. Combs, 285 F.3d 14 899, 906 (9th Cir. 2002). 15 The Court considers the following factors in deciding whether default judgment is 16 warranted: (1) the possibility of prejudice to the plaintiff, (2) the merits of the claims, (3) 17 the sufficiency of the complaint, (4) the amount of money at stake, (5) the possibility of 18 factual disputes, (6) whether default is due to excusable neglect, and (7) the policy favoring 19 decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). In 20 considering the merits and sufficiency of the complaint, the Court accepts as true the 21 complaint’s well-pled factual allegations, but the plaintiff must establish all damages 22 sought in the complaint. Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). 23 III. ANALYSIS 24 A. Possible Prejudice to Plaintiff 25 The first Eitel factor weighs in favor of default judgment. Defendants have failed to 26 appear and participate in this litigation since the withdrawal of their counsel. The Court is 27 satisfied that if Plaintiff’s motion for default judgment is not granted, Plaintiff “will likely 28 be without other recourse for recovery.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1 1172, 1177 (C.D. Cal. 2002). This prejudice to Plaintiff supports the entry of default 2 judgment. 3 B. Merits of the Claims and Sufficiency of the Complaint 4 The second and third Eitel factors favor default judgment where the complaint 5 sufficiently states a plausible claim for relief under the Rule 8 pleading standards. See id. 6 at 1175; Danning v. Lavine, 572 F.2d 1386, 1388–89 (9th Cir. 1978). Plaintiff claims he 7 worked at Babas Motorsports for two workweeks and was never paid. Therefore, Plaintiff 8 alleges enough to give rise to state law claims under the AMWA and the AWA and a 9 federal claim under the FLSA. 10 1. The State Law Claims 11 The AWA requires employers to pay their employees regularly, and the AMWA 12 provides the minimum wage in Arizona. A.R.S. §§ 23-351, 23-363. Plaintiff alleges that 13 Defendants Amel Mohammed Ataalaha and Baneta Nahrain Ataalaha (collectively, the 14 “Ataalahas”), spouses and owners of Babas Motorsports, failed to pay him during his two- 15 week employment at Babas Motorsports. (FAC ¶¶ 102–104.) Under the AMWA, the term 16 “employer” includes individuals “acting directly or indirectly in the interest of an employer 17 in relation to an employee[,]” in addition to a corporation or LLC. A.R.S. § 23-362(B). So, 18 under the AMWA, liability falls on the Ataalahas personally as well as Babas Motorsports, 19 which is an LLC. 20 Under the AWA, the term “employer” means “any individual, partnership 21 association, joint stock company… employing another person[,]” but the AWA’s definition 22 of “employer” does not “authorize individual liability against the owners, officers, and 23 directors of a corporate employer in a case where the claim is for the employer’s wholesale 24 failure to pay wages.” A.R.S. § 23-350; Rosen v. Fasttrak Foods LLC, No. CV-19-05292- 25 PHX-DWL, 2021 WL 2981590, at *5 (D. Ariz. July 15, 2021). So, under the AWA, the 26 Ataalahas are not personally liable, but Babas Motorsports is liable. Therefore, all 27 Defendants are liable under the AMWA, and only Babas Motorsports is liable under the 28 AWA. 1 2 2. FLSA Claim 3 Congress enacted the FLSA “to protect all covered workers from substandard wages 4 and oppressive working hours.” Barrentine v. Arkansas-Best Freight Sys. Inc., 450 U.S. 5 728, 739 (1981). The FLSA requires employers to pay non-exempt workers a minimum 6 wage for any time spent working during the workweek. 29 U.S.C. § 206(a). 7 As mentioned, Plaintiff alleges that Defendants failed to pay him for two 8 workweeks. (FAC ¶¶ 102–104.) Similar to the AMWA, the FLSA defines “employer” as 9 any corporation, LLC, or any individual who acts “directly or indirectly in the interest of 10 an employer in relation to an employee.” 29 U.S.C. § 216. Therefore, considering 11 Plaintiff’s allegations under the FLSA, in addition to Babas Motorsports, the Ataalahas 12 meet the definition of an employer and are personally liable. Because the well-pled factual 13 allegations of the complaint are deemed true upon default, see Geddes, 559 F.2d at 560, 14 Plaintiff has adequately shown that Defendants violated the FLSA. The second and third 15 Eitel factors favor default judgment. 16 C. Amount of Money at Stake 17 Under the fourth Eitel factor, the Court considers the amount of money at stake in 18 relation to the seriousness of the defendant’s conduct. Plaintiff seeks $13,800 in total 19 damages. The requested damages are set by statute, and Defendants’ violation of state and 20 federal labor law is serious enough to justify a default judgment in this amount. See Tolano 21 v. El Rio Bakery, No. CV-18-00125-TUC-RM, 2019 WL 6464748, at *5 (D. Ariz. Dec. 2, 22 2019). The Court finds this amount to be appropriate and not an excessive award of default. 23 Therefore, this factor weighs in favor of default judgment. 24 D. Possible Dispute Concerning Material Facts 25 Plaintiff alleges that there is no dispute concerning the material facts because, at the 26 default stage, Plaintiff’s factual allegations in the complaint are taken as true. (MDJ at 7.) 27 However, Defendants answered the FVAC (Doc. 20), specifically denying that Plaintiff 28 worked there for two weeks and therefore the amount of hours Plaintiff worked. (Doc. 20 1 ¶¶ 77, 81, 102.) As a result, there may be a dispute of material fact, and this factor weighs 2 against default judgment. 3 E. Whether Default Was Due to Excusable Neglect 4 The Court ordered Defendants to notify the Court whether they intended to proceed 5 pro se or with counsel. (Doc. 35.) Defendants then failed to comply with the Order and 6 have not subsequently participated in this matter. So far as the Court can determine, 7 Defendants’ failure to participate is not due to excusable neglect. Therefore, this Eitel 8 factor weighs in favor of default judgment. 9 F. Policy Favoring a Decision on the Merits 10 The last factor usually weighs against default judgment given that cases “should be 11 decided on their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. The mere 12 existence of Rule 55(b), however, “indicates that this preference, standing alone, is not 13 dispositive.” PepsiCo, 238 F. Supp. 2d at 1177. Although the final factor weighs against 14 entry of default judgment, the Court is also compelled to deem the well-pled factual 15 allegations against Defendants as true upon default, see Geddes, 559 F.2d at 560. The Court 16 therefore is not precluded by this factor from entering default judgment against Defendants. 17 See PepsiCo, 238 F. Supp. 2d at 1177; Gemmel, 2008 WL 65604, at *5. 18 G. Conclusion 19 Five of the seven Eitel factors weigh in favor of default judgment, and only two factors 20 weigh against it. Considering all the factors together, the Court concludes that default 21 judgment against Defendants is appropriate. 22 IV. DAMAGES 23 “A default judgment may be entered without a hearing on damages when the amount 24 claimed is capable of ascertainment from definite figures contained in the documentary 25 evidence or in detailed affidavits.” Taylor Made Golf Co. v. Carsten Sports, Ltd., 175 26 F.R.D. 658, 661 (S.D. Cal. 1997). Here, Plaintiff seeks statutory damages and provides 27 sworn affidavits stating hours of unpaid work. (Doc. 42–1.) 28 . . . 1 Plaintiff claims damages under the AWA, the AMWA, and the FLSA. The AWA 2 provides that if an employer fails to pay wages to an employee, the employee may recover 3 against the employer “an amount that is treble the amount of the unpaid wages.” A.R.S. § 23- 4 355(A). Under the AMWA, an employer who fails to pay an employee the state minimum 5 wage is required to pay those wages “and an additional amount equal to twice the underpaid 6 wages.” A.R.S. § 23-364. And under the FLSA, an employee may recover double damages 7 for unpaid time. 29 U.S.C. § 216(b). 8 As illustrated in Plaintiff’s sworn exhibits, Plaintiff did not receive complete time 9 or pay records from Defendants. The failure by an employer to keep and maintain adequate 10 and accurate records for its employees violates the FLSA and the strict recordkeeping 11 requirements of 29 C.F.R. § 516. See also 29 C.F.R. §§ 516.2, 516.5, and 516.6. The Ninth 12 Circuit has held that an employer’s lack of recordkeeping cannot be used to “penalize the 13 employee by denying him recovery on the ground that he is unable to prove the precise 14 extent of uncompensated work.” Brock v. Seto, 790 F.2d 1446, 1448 (9th Cir. 1986) 15 (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946)). Similarly, “if the 16 employer fails to produce [records], the court may then award damages to the employee, 17 even though the result be only approximate.” Anderson, 328 U.S. at 688. 18 The evidence that Plaintiff relies on to establish his hours worked are only estimates, 19 but the Court will credit them. As assigned by Defendants, his rate of pay was 20 approximately $100 per day, plus $1,000 per vehicle he sold. (Doc. 42–1 ¶ 7.) During his 21 two-week employment, Plaintiff worked six approximately 10-hour shifts and sold four 22 vehicles. (Doc. 42–1 ¶ 8.) Therefore, for six ten-hour days, he worked 60 hours. (Doc. 42– 23 1 ¶ 12.) The FLSA entitles employees to a minimum wage of $7.25 an hour. 29 U.S.C. 24 § 206. Plaintiff worked 60 hours, and at $7.25 an hour, his unpaid federal minimum wages 25 are $435 (60 x $7.25). (Doc. 42–1 ¶ 12.) Once doubled under FLSA, his total unpaid 26 minimum wages rise to $870 ($435 x 2). Arizona’s minimum wage in 2024, when Plaintiff 27 worked for Defendants and filed suit, was $14.35. Plaintiff worked 60 hours, and at $14.25 28 an hour, the amount owed under the AMWA is $861 (60 x $14.35). (Doc. 42–1 ¶ 12.) Once 1 trebled, his total damages owed under the AMWA rise to $2,583 ($861 x 3). The AMWA 2 minimum wage amount owed engulfs the amount owed under the FLSA, so the total 3 amount owed for minimum wage is $2,583. For his regular pay established by Defendants, 4 Plaintiff was to be paid $100 per day, and worked 6 days, so his unpaid regular daily wages 5 for the two work weeks are $600 (6 x $100), and his unpaid commission wages are $4,000, 6 totaling $4,600. (Doc. 42–1 ¶ 12.) Once trebled under the AWA, his damages rise to 7 $13,800 ($4,600 x 3). The AWA amount therefore engulfs the AMWA and FLSA amounts, 8 so $13,800 is the appropriate total wages award. Based on the AMWA and FLSA damages 9 and the statutory definitions of employers, $2,583 is awarded against all Defendants, jointly 10 and severally. The remaining $11,217 in unpaid wage damages is awarded against 11 Defendant Babas Motorsports, LLC under the AWA. 12 V. ATTORNEY’S FEES 13 Plaintiff argues that he is entitled to attorney’s fees under 29 U.S.C. § 216(b), which 14 requires the court to “allow a reasonable attorney’s fee to be paid by the defendant, and 15 costs of the action.” The Court agrees, and Plaintiff shall have 21 days from the date of this 16 Order to file his application demonstrating entitlement to and reasonableness of his fees. 17 Although Local Rule 54.2 states it is not entirely applicable “to any motion which may be 18 filed after the entry of a default judgment,” Plaintiff shall comply with Local Rule 54.2(c) 19 with regard to the content of his application for attorney’s fees. 20 IT IS THEREFORE ORDERED granting Plaintiff’s Motion for Entry of Default 21 Judgment against all Defendants (Doc. 42). 22 IT IS FURTHER ORDERED Plaintiff is entitled to default judgment in the 23 amount of $13,800, for which Defendant Babas Motorsports LLC shall be fully liable, and 24 of that $13,800, Defendants Babas Motorsports LLC, Amel Mohammed Ataalaha, and 25 Baneta Nahrain Ataalaha shall be liable for $2,583, jointly and severally. 26 IT IS FURTHER ORDERED directing the Clerk of Court to enter final judgment, 27 as summarized above, and to close this matter. 28 . . . 1 IT IS FURTHER ORDERED that Plaintiff may file an application for attorney’s || fees within 21 days of the date of this Order and shall meet the requirements of Local Rule || 54.2(c) with regard to the content of the application. 4 Dated this 23rd day of October, 2025. CN

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