United States Department of Labor v. Mr. Cao's LLC

District Court, D. Kansas·Decided December 27, 2024·No. 6:22-cv-01165·Unknown

Opinion

In the United States District Court for the District of Kansas _____________

Case No. 22-cv-01165-TC-RES _____________

UNITED STATES DEPARTMENT OF LABOR,

Plaintiff

v.

MR. CAO’S LLC, ET AL.,

Defendants _____________

MEMORANDUM AND ORDER

The United States Department of Labor sued Mr. Cao’s LLC, Caozheng Corporation, and Jason Cao. Doc. 1. It argues that Defend- ants violated multiple provisions in the Fair Labor Standards Act and the Families First Coronavirus Response Act. Id. at 3–7. The Depart- ment successfully sought an entry of default against Mr. Cao’s LLC and Caozheng Corporation. Doc. 84 at 11. It now moves for default judgment against the two corporate defendants, and for summary judg- ment against Jason Cao. Doc. 90. For the following reasons, the De- partment’s motion is granted. I A 1. Summary judgment is proper under the Federal Rules of Civil Procedure when the moving party demonstrates “that there is no gen- uine dispute as to any material fact and the movant is entitled to judg- ment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” when it is necessary to resolve a claim. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998). And disputes over material facts are “genuine” if the competing evidence would permit a reasonable jury to decide the issue in either party’s favor. Id. Disputes—even hotly contested ones—over facts that are not essential to the claims are irrelevant. Brown v. Perez, 835 F.3d 1223, 1233 (10th Cir. 2016). Indeed, belaboring such disputes undermines the efficiency Rule 56 seeks to promote. Adler, 144 F.3d at 670. At the summary judgment stage, material facts “must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.” Adler, 144 F.3d at 671; see also D. Kan. R. 56.1(d). To determine whether a genuine issue of fact exists, the Court views all evidence, and draws all reasonable inferences, in the light most favorable to the nonmoving party. See Allen v. Muskogee, Okla., 119 F.3d 837, 839–40 (10th Cir. 1997). That said, the nonmoving party cannot create a genuine factual dispute by making allegations that are purely conclusory, Adler, 144 F.3d at 671–72, 674, or unsupported by the record, see Scott v. Harris, 550 U.S. 372, 378–81 (2007). The moving party bears the initial burden of showing the absence of any genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hicks v. City of Watonga, Okla., 942 F.2d 737, 743 (10th Cir. 1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial as to disposi- tive matters. Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991). 2. A court may enter default judgment against a party that has failed to defend an action brought against it. Fed. R. Civ. P. 55(b)(2). Such a party effectively halts the adversary process. See In re Rains, 946 F.2d 731, 732 (10th Cir. 1991). Default judgment may therefore be neces- sary to protect “the diligent party…[from] interminable delay and con- tinued uncertainty as to his rights.” Id. However necessary, “[d]efault judgments are a harsh sanction” and “[s]trong policies favor resolution of disputes on their merits.” Id. at 732–33. Consequently, default judgment is not an automatic entitlement. Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010). By failing to respond, “a defendant admits to a complaint’s well-pleaded facts.” Tripodi v. Welch, 810 F.3d 761, 764 (10th Cir. 2016). These factual admissions must satisfy “all material elements necessary to sustain a recovery un- der some viable legal theory” before a court grants default judgment. Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008); see also Vulfova v. Brand Brain Media, LLC, No. 22-CV-01477, 2023 WL 7089909, at *2 (D. Colo. Oct. 26, 2023) (noting that the showing required to obtain a default judgment is similar to that required to defeat a motion to dis- miss for failure to state a claim) (citing Graveling v. Castle Mortg. Co., 631 F. App’x 690, 698 (11th Cir. 2015)). 3. Jason Cao now proceeds pro se, which requires a generous con- struction of his filings. See Smith v. United States, 561 F.3d 1090, 1096 (10th Cir. 2009). That generosity means a court should overlook the failure to properly cite legal authority, confusion of various legal theo- ries, and apparent unfamiliarity with pleading requirements. Id. But it does not permit construction of legal theories on a plaintiff’s behalf or assumption of facts not pled. See id.; Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005). B The following facts are taken from the Department’s statement of uncontroverted facts. Doc. 91 at 3–19.1 Those facts, where properly supported, are accepted as true for purposes of this motion because Defendants failed to respond as required by Fed. R. Civ. P. 56(e).2 Jason Cao and his wife own and operate two restaurants: Mr. Cao Japanese Steakhouse and Daimaru Steakhouse. See Doc. 91 at ¶¶ 6–8. Daimaru was investigated by the Department for compliance with the Fair Labor Standards Act roughly a decade ago. Id. at ¶ 12. It was then, as it is now, managed by Jason Cao. Id. at ¶ 13. When that investigation concluded, Jason Cao agreed to pay “minimum wage and overtime back wages to 39” Daimaru employees, “plus an equal amount in liq- uidated damages.” Id. at ¶ 15. He also told an investigator that Daimaru “would take steps to ensure future FLSA compliance,” after having “the general provisions of the FLSA” explained to him. Id. at ¶ 16–17.

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