SU v. COMPREHENSIVE HEALTHCARE MANAGEMENT SERVICES, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

MARTIN J. WALSH, Secretary of Labor,

United States Department of Labor,

Plaintiff, Civil Action No. 2:18-cv-1608

Vv. Hon. William 8. Stickman IV

COMPREHENSIVE HEALTHCARE

MANAGEMENT SERVICES, LLC, et al,

Defendants.

MEMORANDUM OPINION

WILLIAM S. STICKMAN IV, United States District Judge

This case concerns the allegedly unlawful compensation practices of numerous nursing and

personal care facilities. Plaintiff, Martin J. Walsh, Secretary of Labor for the United States

Department of Labor (“the Secretary”), filed a collective action on behalf of thousands of

employees working for these facilities, alleging that the facilities and some of their leadership

individually and collectively violated various provisions of the Fair Labor Standards Act of 1938

(“FLSA”), 29 U.S.C. §§ 201-219, by under-compensating their employees and failing to maintain

accurate pay records.

The parties filed cross-motions for partial summary judgment, each requesting that the

Court grant partial summary judgment in their favor. Oral argument was held on the dueling

motions and the issues are fully briefed. For the reasons that follow, the Court will deny the

Secretary’s Motion for Partial Summary Judgment (ECF No. 180) and deny Defendants’ Motion

for Partial Summary Judgment (ECF No. 182).

I. BACKGROUND

The various facilities at issue are residential, skilled nursing, rehabilitation, and assisted

living facilities operating throughout western Pennsylvania. (ECF No. 185, 7-8); (ECF No.

198, {| 7-8). Those facilities include the following: Comprehensive Healthcare Management

Services, LLC (“CHMS Services”), Maybrook-C Kade Opco, LLC (“Kade”), Maybrook-C

Evergreen Opco, LLC (“Evergreen”), Maybrook-C Whitecliff Opco, LLC (“Whitecliff’),

Maybrook-C Latrobe Opco, LLC (“Latrobe”), Maybrook-C Overlook Opco, LLC (“Overlook’’),

Maybrook-C Silver Oaks Opco, LLC (“Silver Oaks”), Maybrook-C Briarcliff Opco, LLC

(“Briarcliff”), Mount Lebanon Operations LLC (“Mt. Lebanon”), Murrysville Operations LLC

(“Murrysville”), South Hills Operations LLC (“South Hills”), Cheswick Rehabilitation and

Wellness Center, LLC (“Cheswick”), Monroeville Operations LLC (“Monroeville”), North

Strabane Rehabilitation and Wellness Center, LLC (“North Strabane Rehab”), and North Strabane

Retirement Village, LLC (“North Strabane Retirement’).

They are staffed by hourly and operational staff. The hourly staff includes, among others,

Registered Nurses, Licensed Practical Nurses, Certified Nursing Assistants, Therapists, Aides,

Admissions Coordinators, Clerks, Cooks, Social Services, Coordinators, Housekeeping and

Maintenance Technicians, and Administrative Staff. The operational support staff includes,

Facility Directors, Admissions Directors, Business Office Managers, Human Resource Directors,

MDS Coordinators, Medical Records Directors, Human Resources Personnel, RN Educators,

Social Work Directors, Assistant Directors of Nursing, Assistant Administrators, Dietary

Supervisors, Directors of Activities, Directors of Nursing, Housekeeping Supervisors,

Maintenance Supervisors, Rehabilitation Coordinators, RN Supervisors, and Unit Directors.

These individuals provide direct care or coordination of services within the facilities, and their

goals involve improving functionality and enabling patients to return to their prior level of function

and residence. (ECF No. 185, 99 31-33); (ECF No. 198, 44 31-33).

The facilities share common ownership, as well as officers, directors, and executives. Sam

Halper has an ownership interest in each, and he also serves as the Chief Executive Officer for

each of the facilities. (ECF No. 185, J 57-60); (ECF No. 198, §§ 57-60). Outside of this, the

parties generally do not agree on the nature of Sam Halper’s role within the facilities, and the

parties disagree extensively on the role CHMS Group LLC (“CHMS Group”) played. While the

Secretary contends that both Sam Halper and CHMS Group exercised significant authority and

control over all of these facilities, Defendants submit that Sam Halper and CHMS Group lacked

the same, and that CHMS Group was simply a third-party payroll service provider for the nursing

and care facilities.

From the Secretary’s perspective, the facilities’ employment records were inaccurate, and

thousands of employees listed on the Third Revised Schedule A were undercompensated by the

facilities at the direction of Sam Halper and CHMS Group. These alleged violations include

alternating the pay of supervisory employees between hourly and salary depending on the number

of hours they worked, failing to compensate employees for the hours they worked outside of their

predetermined schedules—including meal breaks——failing to include non-discretionary bonuses

and shift differentials in the regular rates of employees, failing to aggregate the hours some

employees spent working at more than one facility, and paying employees at their regular rates

instead of time-and-one-half for their overtime hours.

I. STANDARD OF REVIEW

Summary judgment is warranted if a court is satisfied that there is no genuine issue as to

any material fact and that the moving party is entitled to a judgment as a matter of law. Celotex

Corp. v. Cattrett, 477 U.S. 317, 322 (1986). A fact is material if it must be decided to resolve the

substantive claim or defense to which the motion is directed. In other words, there is a genuine

dispute of material fact “if the evidence is such that a reasonable jury could return a verdict for the

nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A court must view

the evidence presented in the light most favorable to the nonmoving party. Jd. at 255. It refrains

from making credibility determinations or weighing evidence. Jd. “Real questions about

credibility, gaps in the evidence, and doubts as to the sufficiency of the movant’s proof,” will

defeat a motion for summary judgment. E/ vy. Se. Pa. Transp. Auth., 479 F.3d 232, 238 (Gd Cir.

2007).

‘When both parties move for summary judgment, ‘[t]he court must rule on each party’s

motion on an individual and separate basis, determining for each side whether a judgment may be

entered in accordance with the Rule 56 standard.’” Auto-Owners Ins. Co. v. Stevens & Ricci Inc.,

835 F.3d 388, 402 Gd Cir. 2016) (quoting 10A CHARLES ALAN WRIGHT ET AL., FEDERAL

PRACTICE AND PROCEDURE § 2720 (3d ed. 2016)). Under the same rule, if upon review of a party’s

motion for summary judgment, the court, viewing the evidence in the light most favorable to the

non-moving party, enters summary judgment for the moving party, a court may properly declare

the opposing party’s cross-motion for summary judgment as moot. Beenick y. LeFebvre, 684 F.

App’x 200, 205-06 (3d Cir. 2017).

Iii. ANALYSIS

As a threshold matter, both parties correctly identify that, in order for liability to be

imposed for the alleged overtime and recordkeeping violations at issue, the Court must be satisfied

that there are no genuine issues of material fact, and that a factfinder could reasonably find that

there are actionable employer-employee relationships at play. See Thompson v. Real Estate Mortg.

Network, 748 F.3d 142, 148 (3d Cir. 2014) (stating that the “first inquiry in most FLSA cases is

whether the plaintiff has alleged an actionable employer-employee relationship.”).

The Secretary contends that the facilities, Sam Halper, and CHMS Group are all properly

considered joint employers of the employees included on the Third Revised Schedule A because

of the control and authority allegedly exercised by Sam Halper and CHMS Group over the

individual facilities. To that end, the Secretary has, throughout his papers, referred to the various

facilities, Sam Halper, and CHMS Group collectively. Defendants have, to some extent, given

some support to this theory because they have opted to collectively litigate this case by jointly

filing their papers and responding to the Secretary’s arguments with one voice. Indeed, Defendants

often appear to concede (albeit often in the form of a “dispute”) or oppose things in unison.

Defendants, however, still maintain that neither Sam Halper nor CHMS Group are employers

under the FLSA. Accordingly, the Court’s first concern is whether the employees included on the

Secretary’s Third Revised Schedule A are connected with the facilities, Sam Halper, and CHMS

Group in such a way that each employee may be considered to be jointly employed by Sam Halper

and CHMS Group.

Under the FLSA, an employer is “any person acting directly or indirectly in the interest of

an employer in relation to an employee[,|” 29 U.S.C. § 203(d) and an employee is “any individual

employed by the employer.” 29 U.S.C. § 203(e)(1). The term “employ” means “to suffer or permit

to work.” 29 U.S.C. § 203(g). Under the FLSA, the definition of an employer is an expansive

one, In re Enterprise Rent-A-Car Wage & Hour Practices Litig., 683 F.3 462, 467 (3d Cir. 2012),

and “multiple persons or entities can be responsible for a single employee’s wages as ‘joint

employers’ in certain situations.” Thompson, 748 F.3d at 148. “[A] company’s owners, officers,

or supervisory personnel may also constitute ‘joint employers’ for purposes of liability under the

FLSA.” Jd. at 153.

Joint employment situations are typically present “where both employers ‘exert significant

control’ over the employee, . . . ‘by reason of the fact that one employer controls, is controlled by,

or is under common control with the other employer.’” Jd at 148 (first quoting V.L.R.B. v.

Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117, 1124 (3d Cir. 1982) then quoting 29 C.F.R. §

791.2(b)(3)). Ifa joint employment relationship is established, “each joint employer may be held

jointly and severally liable for the FLSA violations of the other, in addition to direct liability for

its own violations.” Jd. To determine whether individuals or entities are jointly and severally

liable, a court must consider all the facts and circumstances relevant to the employment

relationship, and the following four factors are particularly relevant:

(1) the alleged employer's authority to hire and fire the relevant employees; (2) the

alleged employer's authority to promulgate work rules and assignments and to set

the employees’ conditions of employment: compensation, benefits, and work

schedules, including the rate and method of payment; (3) the alleged employer's

involvement in day-to-day employee supervision, including employee discipline;

and (4) the alleged employer's actual control of employee records, such as payroll,

insurance, or taxes.

Id. at 149 (quoting In re Enterprise, 683 F.3d at 469).

After careful review of the arguments and factual circumstances identified by the parties,

there are genuine disputes of material fact precluding the Court from granting summary judgment

in favor of either party on the issues surrounding joint and several liability. The parties have

submitted sufficient evidence from which a factfinder could reasonably differ as to the extent of

Sam Halper’s and CHMS Group’s involvement in the operations of the facilities, including, inter

alia, their authority to hire and fire employees, promulgate work rules, assignments, and conditions

of employment, involvement in day-to-day operations, and control records. Because there are

genuine disputes of material facts surrounding the nature of Sam Halper’s and CHMS Group’s

control of the facilities, whether they integrally tied the facilities together as joint employers under

the FLSA are determinations that must be made by the factfinder at trial.

Consequently, the Court also cannot at this time proceed to adjudicate the remaining

overtime and recordkeeping violations as they are currently presented because of the manner in

which the material factual circumstances are ageregately addressed and argued. Although there is

a substantial evidentiary record tending to support the presence of overtime and recordkeeping

violations at various individual facilities, the specific circumstances surrounding the violations as

they pertain to individual employees and facilities are not set forth with detail or presented on a

per facility basis. It would be unsound for the Court to aggregately adjudicate these violations

when it cannot be said for sure that Defendants were operating as a single entity, or for that matter,

as joint employers under the FLSA, and it is not the Court’s role at summary judgment to develop

the Secretary’s case for him by sifting through the substantial evidentiary record in an attempt to

circumstantially differentiate and associate overtime and recordkeeping violations with particular

employees and facilities. See Perkins v. City of Elizabeth, 412 F. App’x 554, 555 (3d Cir. 2011)

(affirming district court’s grant of summary judgment, emphasizing that the district court was “not

obliged to scour the record to find evidence that will support a party’s claims... . [and] [that]

[clourts cannot become advocates for a party by doing for that party what the party ought to have

done for him or herself.”). See also Love v. Whitman, No. 15-1712, 2019 WL 4597585, at *9

(W.D. Pa. Sep. 23, 2019) (citing Doeblers’ Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 820 n.8

(3d Cir. 2018)) (“The court is not required to scour the record without specific guidance from the

parties to construct specific facts or legal arguments that support or defend against claims.”’); Gary

Miller Imports, Inc. v. Doolittle, No. 11-178, 2020 WL 7027483, at *9 (W.D. Pa. Nov. 30, 2020)

(declining to search through thousands of pages of documentary evidence to further develop the

defendants’ statute of limitations defense because they failed to do so, and “[n]either the Rules of

Civil Procedure nor the interests of judicial economy allow for the Court to search for evidence

either to support a party’s position or to find a dispute to defeat summary judgment.”); Wiest v.

Tyco Electronics Corp., No. 10-3288, 2015 WL 1636860, at *9 n.10 (E.D. Pa. Apr. 13, 2015)

(declining “to sift blindly through hundreds of pages of emails to find the evidence that [p]laintiffs

may or may not have to support their claim.”).

Under these circumstances, the Court will deny the parties’ respective requests for

summary judgment on whether Sam Halper, CHMS Group, and the facilities jointly employed the

employees because there are genuine disputes of material fact concerning Sam Halper’s and

CHMS Group’s involvement in the operations of the facilities. The Court will similarly deny the

parties’ respective requests for summary judgment on the issues surrounding the overtime and

recordkeeping violations because the underlying factual circumstances have been set forth

ageregately, and the direct violations, as they pertain to individual employees and facilities, have

not been set forth in detail.

IV. CONCLUSION

For the reasons set forth above, the Court will deny the parties’ respective requests for

summary judgment on joint and several liability because there are genuine issues of material fact

as to whether Sam Halper, CHMS Group, and the facilities jointly employed the employees. The

Court will deny the parties’ respective requests for summary judgment on the overtime violations

under 29 U.S.C. § 207 and recordkeeping violations under 29 U.S.C. § 211(c) because there remain

genuine issues of material fact surrounding the violations as they pertain to individual facilities

and employees. The Court will also deny the parties’ requests for summary judgment on whether

liquidated damages should be awarded under 29 U.S.C. § 216(b), whether the violations at issue

_ were willful under 29 U.S.C. § 255(a), and whether injunctive relief should be awarded under 29

U.S.C. § 217 because the underlying violations have not been established at this time.

BY THE COURT:

DLA € Sv

WILLIAM S. STICKMAN IV

UNITED STATES DISTRICT JUDGE

G- “T- Zt

Dated