United States District Court, D. Columbia.
For LUIS SARCENO, RUDY GODOY, MIGUEL ANGEL IRAHETA, OMAR VASQUEZ, EBER ESTRADA FLORES, Plaintiffs: Daniel Adlai Katz, LAW OFFICES OF GARY M. GILBERT AND ASSOCIATES, P.C., Silver Spring, MD; Laura E. Varela-Addeo, THE LAW OFFICES OF GARY M. GILBERT & ASSOCIATES, Silver Spring, MD.
For KWAN S. CHOI, HWAN P. EUN, Defendants: Charles H. Henderson, LEAD ATTORNEY, PRO HAC VICE, MCNAMEE, HOSEA, JERNIGAN, KIM, GREENAN & LYNCH, P.A., Greenbelt, MD; Meredith R. Philipp, LEAD ATTORNEY, McNamee Hosea, et al., Greenbelt, MD.
For BYUNG CHOI, PYOUNG R. CHOI, Defendants: Jennifer A. Brust, Juanita Fitchett Ferguson, LEAD ATTORNEYS, BEAN, KINNEY & KORMAN, P.C., Arlington, VA.
BERYL A. HOWELL, United States District Judge.
The five plaintiffs in this action, Luis Sarceno, Rudy Godoy, Miguel Angel Iraheta, Omar Vaszuez, and Eber Estrada Flores (collectively, " the plaintiffs" ), filed suit under the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § 201 et seq., and the District of Columbia Minimum Wage Act (" DCMWA" ), D.C. Code § 32-1001 et seq., seeking " damages and other relief because Defendants failed to pay [the plaintiffs] minimum wages and/or overtime wages." Compl. ¶ 1, ECF No. 1. They allege that they worked for the defendants, Kwan S. Choi, Hwan P. Eun (" Eun" ), Byung Choi, and Pyoung R. Choi (collectively, " the defendants" ), performing " general labor tasks" at the defendants' supermarket, Best Way Supermarket, see id. ¶ ¶ 29, 32, 39, 46, 53, 60, regularly working more than forty hours a week, without overtime pay, see id. ¶ ¶ 33, 36, 40, 43, 47, 50, 54, 57, 61, 64. Defendants Byung Choi and Pyoung Choi filed a Motion to Dismiss for failure to state a claim, ECF No. 15, and Defendants Kwan Choi and Eun filed a Partial Motion for Summary Judgment, ECF No. 17. Both motions seek to enforce agreements
executed by the plaintiffs purporting to resolve the FLSA claims asserted in this lawsuit. See Defs. Byung Choi and Pyoung Choi's Mem. Supp. Mot. Dismiss (" Defs. Byung Choi and Pyoung Choi's MTD Mem." ) at 2, ECF No. 15-1 (" [T]his Court need only look to the Settlement Agreement signed by Plaintiffs Sarceno, Godoy, Iraheta and Vasquez to resolve this dispute." ); id. at 2-3 (" In said Settlement Agreement . . . four of the Plaintiffs waived any claim to any and all wage and overtime payments from October 31, 2007 to October 20, 2011 . . . and fully released the Defendants of any and all liabilities, including claims arising from or related to alleged violations of the [FLSA] and or [sic] the [DCMWA]." ); Defs. Kwan Choi and Eun's Mem. Supp. Defs.' Mot. Part. Summ. J. (" Defs. Kwan Choi and Eun's PMSJ Mem." ) at 2, ECF No. 17-1 (" On October 20 and 21, 2011, the Plaintiffs and E & C Foods executed separate Settlement Agreements and Releases . . . resolving all claims that the Plaintiffs had for alleged unpaid wages . . . . As such, summary judgment should be entered in favor of Mr. Choi and Mr. Eun and against the Plaintiffs as to all of the Plaintiffs' claims for unpaid wages that existed as of the dates of the Settlement Agreements." ). Defendants Byung Choi and Pyoung Choi also seek to dismiss the Complaint because, according to these defendants, " Plaintiffs Sarceno, Godoy and Iraheta were paid in compliance with both the FLSA and the District of Columbia Minimum Wage Act," and because " the Complaint fail[s] to allege with any specificity that Plaintiffs Flores and Vasquez worked for All Seasons Food Corp. [the defendants' corporation], or the Defendants." Defs. Byung Choi and Pyoung Choi's MTD Mem. at 4-5. The defendants' motions were denied at the motions hearing held August 6, 2014, and this Memorandum Opinion explains in detail the bases for that ruling.
The events at issue in this matter are related to an earlier suit filed in this District by the plaintiffs' co-workers against defendants Kwan Choi, Byung Choi, and Pyoung Choi, in Munoz v. E& C Foods, Inc., Civil Action No. 11-1416 (" the Munoz suit" ). The circumstances of the Munoz suit are briefly reviewed to provide context for instant dispute.
A. The Munoz Suit
Defendants Byung Choi and Pyoung Choi operated the Best Way Supermarket located at 3178 Mount Pleasant St. NW, in Washington, D.C. until 2007, when ownership shifted to Defendants Kwan Choi and Eun. Parties' Joint Statement of Undisputed Material Facts (" SMF" ) ¶ ¶ 2, 8, ECF No. 18. On August 4, 2011, three of the present plaintiffs' co-workers filed the Munoz suit against three of the defendants named in the instant suit, as well as E& C Foods, Inc., which is the corporation through which defendants Eun and Kwan Choi operated the supermarket. See Compl. (" Munoz Compl." ) at 1-2, No. 11-1416, ECF No. 1. The Munoz suit was a proposed collective action alleging FLSA and DCMWA claims similar to those alleged in this instant matter. Compare Munoz Compl. at 2 (seeking " back pay in the form of wages and/or overtime wages for labor and services rendered on Defendants' behalf" ), with Compl. ¶ 1 (" seeking damages and other relief because Defendants
failed to pay [the plaintiffs] minimum wages and/or overtime wages" ). The Munoz suit was resolved on December 7, 2011, upon approval by this Court of two settlement decrees, one between the Munoz plaintiffs and the current defendants Byung Choi and Pyoung Choi, and the other between the Munoz plaintiffs and the current defendant Kwan Choi and his company, E& C Foods. See Compl. ¶ 98; Order at 1, No. 11-1416, ECF No. 19 (granting Pls. Byung Choi, and Pyoung Choi's Joint Mot. for Entry of Consent Decree (" Choi Decree" ), ECF No. 18, and Pls. Kwan Choi and E& C Foods Inc.'s Joint Mot. for Entry of Consent Decree (" E& C Decree" ), ECF No. 17). The present plaintiffs were not parties to that lawsuit. Compl. ¶ 100; SMF ¶ 9.
The three employees who brought the Munoz suit included Lavaro Hernandez, who was employed as a " stocker." See Munoz Compl. ¶ ¶ 5-6. The plaintiffs in the instant action " performed general labor tasks" for the defendants, Compl. ¶ ¶ 32, 39, 46, 53, 60, which the plaintiffs assert makes them " 'similarly situated' to Mr. Hernandez, and had the Munoz lawsuit continued, these Plaintiffs would likely have been able to opt-in to that lawsuit," Pls.' Omnibus Mem. Opp'n Defs. Byung Choi and Pyoung Choi's Mot. Dismiss and Defs. Kwan Choi and Hwan Eun's Mot. Partial Summ. J. (" Pls.' Opp'n" ) at 4, ECF No. 20. Hernandez, the " stocker" plaintiff in the Munoz suit, was paid a total of $47,131 pursuant to the consent decrees. See E& C Decree at 4 (stating Lazaro Hernandez was to be paid $32,607); Choi Decree at 3 (stating Lazaro Hernandez was to be paid $14,524); Pls.' Opp'n at 4.
B. The Settlement Agreements
Shortly before the settlement decrees were approved in the Munoz suit, the plaintiffs each executed a " Settlement Agreement and Release" on October 20 or 21, 2011, with " E& C Foods, Inc., a District of Columbia Corporation, and its successors, assigns, if any, agents, and attorneys." SMF Ex. A (" Settlement Agreement and Release," Oct. 20, 2011, signed by Plaintiff Sarceno (" Sarceno Agreement" )) at 1, ECF No. 18-1; Ex. B (" Settlement Agreement and Release," Oct. 20, 2011, signed by Plaintiff Vasquez (" Vasquez Agreement" )) at 1, ECF No. 18-2; Ex. C (" Settlement Agreement and Release," Oct. 20, 2011, signed by Plaintiff Godoy (" Godoy Agreement" )) at 1, ECF No. 18-3; Ex. D (" Settlement Agreement and Release," Oct. 21, 2011, signed by Plaintiff Flores (" Flores Agreement" )) at 1, ECF No. 18-4; Ex. E (" Settlement Agreement and Release," Oct. 20, 2011, signed by Plaintiff Iraheta (" Iraheta Agreement" )) at 1, ECF No. 18-5 (collectively, the " Settlement Agreements" ). The Settlement Agreements are identical except for the name of the plaintiff employee signing the agreement and the number of hours claimed to have been worked by, and settlement compensation paid to, that employee. See generally id. Defendants Byung Choi and Pyoung Choi are not parties to the Settlement Agreements. See id. at 1 (naming E& C Foods and each plaintiff individually as only parties to Settlement Agreements).
Each Settlement Agreement covered the period from October 31, 2007 to the date of the Agreement, see, e.g., Sarceno Agreement at 1, and provides that: (1) E& C Foods " did not maintain records to demonstrate the number of hours worked by each Plaintiff," SMF ¶ 27; (2) a bona fide dispute exists " between the parties with respect to the total overtime hours worked and the claims of the Plaintiffs," id. ¶ 28; and (3) " [e]ach Plaintiff was paid, in full, all amounts due and owing pursuant to the
terms of the Settlement Agreement and Releases," SMF ¶ 33.
Three additional provisions in each agreement are notable for purposes of the defendants' instant motions. First, each agreement included a " Release of E& C" stating, in pertinent part, that:
Upon final receipt by Employee of the Settlement Payment, Employee, . . . does thereafter release, remise, acquit and forever discharge E& C and its respective officers, shareholders, agents, attorneys, employees and any other persons or entities acting on its behalf, from any and all claims, causes of action, actions, damages, contracts, debts, complaints, suits, judgments, agreements or claims of any kind or nature arising out of, or in any way related to, or any claims raised or that could have been raised with respect to overtime or other wages claimed by Employee pursuant to its employment by E& C, including any claims arising from or related to alleged violations of the Fair Labor Standards Act of 29 U.S.C. § 201, et seq. and/or the District of Columbia Minimum Wage Act of D.C. Code § 32-1001 et seq., whether those claims and damages are known, unknown, foreseen or unforeseen, or may arise in the future. It is the intent of the parties that the releases and waivers provided for under this paragraph shall become effective immediately upon receipt by Employee of the Settlement Payment, and without further action by any party hereto. Sarceno Agreement at 2-3.
Underlying the pending motion for partial summary judgment by Defendants Eun and Kwan Choi is their assertion that as " shareholders" or " officers" in E& C Foods, Inc., this release bars any claims against them. See Defs. Kwan Choi and Eun's PMSJ Mem. at 2.
Second, each Settlement Agreement contained a " Waiver of Claims" that states, in pertinent part, that:
In addition to the releases . . . and upon receipt by Employee of the Settlement Payment as provided for herein, Employee hereafter waives and forever relinquishes any and all rights or claims related to unpaid wages claimed to be owed by E& C to Employee through the date of this Agreement, including, but not limited to, claims arising from or related to alleged violations of the Fair Labor Standards Act of 29 U.S.C. § 201 et seq. and/or the District of Columbia Minimum Wage Act of D.C. Code § 32-1001 et seq. Sarceno Agreement at 3.
Finally, each Settlement Agreement contained a " Confidentiality and Non Disclosure" provision, written entirely in capital letters, barring the parties from discussing the terms of the Settlement Agreements " to the maximum extent permitted by law," see, e.g., Sarceno Agreement at 3; SMF ¶ 32. The agreements stated, in pertinent part, that " the fact of this agreement and the payment hereunder shall, to the maximum extent permitted by law, remain confidential and shall not be disclosed to anyone by the parties hereto, nor by their attorneys, agents or representatives, from the date of execution of this agreement forward." Sarceno Agreement at 3.
The parties do not dispute the following facts surrounding the execution of these agreements: (1) each of the plaintiffs " appeared at an office located at 7015 Evergreen Court, Suite 200 in Annandale, Virginia," on October 20 or 21, 2011 , SMF. ¶ ¶ 15-16; (2) this office location was the law firm of Megan Chung, Esq., who represented the defendants at the time, id. ¶ ¶ 24-25; (3) each plaintiff signed a " Settlement Agreement and Release in English and Spanish," copies of which have been
provided to the Court, id. ¶ ¶ 17-21;  (4) Ms. Chung was present at the October 20 and 21 meetings, but the plaintiffs did not have an attorney present, id. ¶ ¶ 25-26; (5) the Settlement Agreements were not approved by a District Court, id. ¶ 31; and (6) the Settlement Agreements were executed when no administrative proceeding was pending with the Department of Labor or the District of Columbia's Office of Wage and Hour, id. ¶ ¶ 29-30.
The parties dispute certain circumstances surrounding the plaintiffs' execution of the Settlement Agreements. The plaintiffs allege that they were told by Defendant Kwan Choi to meet at a nearby 7-11 store so they could go to Virginia because the defendants " had money for [them], but that [they] had to go to Virginia to get paid." Pls.' Opp'n Ex. 2 (Affidavit of Pl. Luis Sarceno (" Sarceno Aff." )) ¶ ¶ 7-8, ECF No. 20-2. The plaintiffs aver that they were instructed not to tell the three employees then involved in the Munoz suit " about the meeting and about getting paid." Id. ¶ 8. The plaintiffs (except for Plaintiff Flores, who had a similar experience the next day, see Pls.' Opp'n Ex. 6 (Affidavit of Pl. Eber Flores (" Flores Aff." )) ¶ 8, ECF No. 20-6), and three co-worker cashiers were driven to Virginia in two cars, one driven by Defendant Eun and one driven by Plaintiff Godoy. Id. ¶ 9-10. When they arrived at the aforementioned law office in Virginia, the plaintiffs state they were ushered into a conference room where a woman introduced herself as Defendant Kwan Choi and Eun's lawyer and another woman indicated she would translate, since the plaintiffs " have a limited understanding of spoken English [and] cannot read English." See id. ¶ ¶ 2, 11.
The plaintiffs aver that they were given English and Spanish versions of the Settlement Agreements but were never advised to consult an attorney " prior to signing the document." Id. ¶ 12-13. Through the translator, the plaintiffs allege that Defendant Kwan Choi " warned [them] that if [they] spoke with anybody about the Settlement Agreement and Release, 'You will have problems.'" Id. ¶ 15. The plaintiffs maintain that Defendant Kwan Choi instructed them to tell anyone who asked about overtime wages, such as an attorney, that " everything was fine" and not to tell the three Munoz plaintiffs, whose proposed collective action suit was still pending, about the Settlement Agreements. Id. ¶ ¶ 16-17.
After they signed the documents, the plaintiffs assert that each plaintiff was immediately presented with a check--Sarceno received a check for $8,508.93--and was told he could cash the check at the Supermarket. Id. ¶ ¶ 18-19. The plaintiffs aver that, as salaried employees, before the Virginia meeting they did not know they were entitled to overtime. Id. ¶ 20. Before signing the Settlement Agreements, the plaintiffs allege that they were not represented by counsel, had not asserted a claim for unpaid wages, filed a lawsuit, or filed a complaint with the appropriate labor authorities. Id. ¶ ¶ 21-26. The other plaintiffs filed affidavits that are substantially identical to Sarceno's. See generally
Pls.' Opp'n Exs. 3, 4, 5, (Affidavits of Pls. Godoy, Iraheta, and Vasquez, respectively), ECF Nos. 20-3, 20-4, 20-5; Flores Aff.
The defendants assert that the plaintiffs " voluntarily signed the Settlement Agreements and they were not denied the opportunity to consult with an attorney prior to signing the Settlement Agreements." Defs. Kwan Choi and Eun's Mot. Part. Summ. J. (" Defs.' PMSJ" ) Ex. 1 (Affidavit of Def. Kwan S. Choi (" 1st Kwan Choi Aff." )) ¶ 13, ECF No. 17-2. Defendant Kwan Choi states that he " entered into discussions" with the plaintiffs in " October of 2011 . . . regarding the resolution of any claims that those individuals had for unpaid overtime compensation." Id. ¶ 7. He denies that he tried to keep the meeting secret by arranging for the plaintiffs to meet him at the 7-11 store away from the supermarket, where they were employed, and avers that he merely offered to carpool with the plaintiffs to the lawyer's office in Virginia " [d]uring the course of the [settlement] discussions." Defs. Kwan Choi and Eun's Reply Pls.' Opp'n Defs.' PMSJ (" Defs. Kwan Choi and Eun's PMSJ Reply" ) Ex. 1 (2d Affidavit of Def. Kwan S. Choi (" 2d Kwan Choi Aff." )) ¶ 3, ECF No. 21-1. He further states that he did not " force, coerce or threaten" the plaintiffs regarding the Settlement Agreements. Id. ¶ 4.
Defendant Kwan Choi and Eun's former attorney, Megan Chung, filed an affidavit with the defendants' reply controverting certain aspects of the plaintiffs' recollection of what occurred at the Virginia meeting. Ms. Chung states that she (1) prepared the Settlement Agreements, Defs. Kwan Choi and Eun's PMSJ Reply Ex. 2 (Affidavit of Megan Chung, Esq. (" Chung Aff." )), ¶ 8, ECF No. 21-2; (2) discussed the then-active Munoz suit with the plaintiffs during the meetings on October 20 and 21, 2011, id. ¶ ¶ 13, 19; (3) advised the plaintiffs that they could consult with an attorney, id. ¶ ¶ 14, 20; (4) advised the plaintiffs that she did not represent them and represented their employer, E& C Foods, id. ¶ ¶ 16, 22; (5) and told them that they did not have to sign the Settlement Agreements " if [they] did not wish to do so," id. ¶ ¶ 16, 22.
Defendants Kwan Choi and Eun contend that the Settlement Agreements should be enforced to bar the plaintiffs' instant claims and the other two defendants, Pyoung Choi and Byung Choi, contend the ...