Opinion
Civil Action No. 02-CV-597.
September 10, 2004
MEMORANDUM
This matter has been remanded from the Court of Appeals for the Third Circuit for proceedings consistent with its opinion of February 6, 2004. After the Court issued its opinion vacating this court's judgment of September 5, 2002 the parties filed the following presently pending motions: (1) Defendants' Motion for Summary Judgment; (2) Plaintiff's Response and Counter Motion for Summary Judgment; and (3) Defendants' Sur-Reply. For the foregoing reasons, both Defendants' Motion for Summary Judgment and Plaintiff's Counter Motion for Summary Judgment will be denied.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff was employed by About Your Smile, P.C, and Dr. Glenn A. Brown, a dentist and the principal shareholder of About Your Smile, P.C. ("Defendants"). On November 13, 2000 Plaintiff entered into a written Professional Services Agreement with Defendants to work as a dentist for $40.00 per hour. In December 2000 Plaintiff notified Defendants of her intent to resign. During the final two weeks of her employment Plaintiff failed to report to work as scheduled and worked 50.83 hours instead of 80 hours. Pursuant to the agreement entered into with Defendants, Plaintiff earned $2,033.20 in gross wages during her final pay period. Defendants issued Plaintiff a final paystub for the last pay period reflecting gross wages in the amount of $2,033.20, of which a total of $866.66 in taxes and health insurance was noted as deducted or held. On her final payday, however, Defendants withheld her wages completely; Plaintiff did not receive any monies in the form of either a check or cash. Plaintiff made several requests to be paid. Defendants refused to pay Plaintiff and instead instituted an action against Plaintiff in the Pennsylvania Court of Common Pleas, Philadelphia County. Defendants explanation for withholding the $1,166.54 was that the monies were being withheld as a possible set-off against a judgment being entered in Defendants favor in the Pennsylvania state court case.
Plaintiff subsequently filed suit in this court against Defendants for injunctive, declaratory and monetary relief, alleging that Defendants unlawfully withheld her final paycheck in violation of the minimum pay provisions of the Fair Labor Standards Act ("FLSA" or the "Act"), 29 U.S.C. § 201 et seq., (Count I) and the Pennsylvania Wage and Collection Law, 43 Pa. Cons. Stat. § 260.1 et seq. (Count II). Plaintiff also filed a common law breach of contract claim (Count III). By Memorandum and Order of August 13, 2002, this Court granted partial summary judgment in Plaintiff's favor on her FLSA claim. A hearing was held on September 5, 2002 to determine the amount of compensatory and liquidated damages to be awarded Plaintiff on all of her claims. At the hearing this court dismissed, without prejudice, Plaintiffs breach of contract and Pennsylvania Wage and Collection Law claims. At the conclusion of the hearing this court entered judgment in Plaintiff's favor in the amount of $2,333.08 which included unpaid wages in the amount of $1,164.54 and liquidated damages in the amount of $1,164.54.
Defendants appealed the judgment to the Court of Appeals for the Third Circuit. On appeal, the Third Circuit held that the FLSA had no impact on the professional services agreement entered into by the parties; but rather that the FLSA only guaranteed Plaintiff payment of the statutory minimum wage of $5.15 per hour, or $261.77, for the 50.83 hours she worked during her final pay period. Because this court dismissed Plaintiff's breach of contract and Pennsylvania Wage and Collection Law claims, the Third Circuit limited its review solely to the issue of whether Plaintiff was paid $261.77 in accordance with the FLSA. The Court concluded that taxes are deemed collected or withheld upon an employer's payment of net wages to the employee. Plaintiff did not receive any wages on her final payday. The Court also noted that payment of a health insurance premium on or before the pay day could arguably be deemed payment of net wages. Because it stated that the District Court record was devoid of any evidence that Defendants paid the health insurance premium on Plaintiff's behalf on or before payday, the Court of Appeals for the Third Circuit stated that it was unable to determine Defendants' liability under the FLSA. The Third Circuit therefore vacated the judgment of this court and remanded the matter for further proceedings.
II. MOTIONS FOR SUMMARY JUDGMENT
Defendants now move for summary judgment asserting that only $261.77 could be due to Plaintiff under the FLSA. Defendant further argues that because an amount greater than $261.77 was lawfully deducted from monies due her in accordance with the FLSA — $207.40, presumably in health benefits, and $509.54 in an alleged constructive trust for withholding taxes — no payment is due Plaintiff. Defendants conclude that because no monies are actually obliged to be paid to Plaintiff in accordance with the FLSA, she has failed to establish a cause of action upon which relief may be granted.
Plaintiff responds that Defendants' motion is premature because no discovery took place in this matter. Plaintiff notes that the Court of Appeals for the Third Circuit stated that it could not decide whether a violation of the FLSA occurred since the record was devoid of any evidence concerning Defendants' payment of health insurance premiums or taxes on Plaintiff's behalf. Plaintiff also seeks to reinstate her state law claims for breach of contract and for violation of the Pennsylvania Wage Payment and Collection Law. Finally, she asserts that summary judgment is warranted on both her breach of contract claim and on the Pennsylvania Wage Payment and Collection Law claim. In support Plaintiff argues that the record clearly establishes that Defendants breached the Professional Services Agreement, and also supports a conclusion that Defendants violated the Pennsylvania Wage Payment and Collection Law by failing to timely pay the wages due in accordance with the agreement.
III. LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." Fed.R.Civ.P. 56(c). The party moving for summary judgment has the initial burden of showing the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548 (1986). Once the movant adequately supports its motion pursuant to Rule 56(c), the burden shifts to the nonmoving party to go beyond the mere pleadings and present evidence through affidavits, depositions, or admissions on file to show that there is a genuine issue for trial. See id. 477 U.S. at 324, 106 S.Ct. 2553. A genuine issue is one in which 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, 106 S.Ct. 2505 (1986). The court must draw all reasonable inferences in the light most favorable to the nonmovant. See, American Flint Glass Workers, AFL-CIO v. Beaumont Glass Company, 62 F.3d 574, 578 (3d Cir. 1995). However, a party opposing summary judgment must do more than just rest upon mere allegations, general denials or vague statements. Trap Rock Indus. Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992).
IV. DISCUSSION
A. Fair Labor Standards Act
The Court of Appeals for the Third Circuit has established that Plaintiff is only owed the minimum wage of $261.77 for the 50.83 hours worked under the provisions of the FLSA. Defendants liability for payment of this amount may only be offset by lawful authorized deductions. Defendants have failed to provide this court with any evidence that it paid health insurance premiums to a third party assignee nor have Defendants provided the court with evidence that it remitted withholding taxes on Plaintiff's behalf. Notably, Defendants — having failed to present evidence that payment to a medical insurer was made — now argue that the alleged medical insurance payments in question are immaterial and moot. Contrary to Defendants arguments on this issue, the Third Circuit clearly stated that evidence regarding such payments is necessary to ascertain Defendants' liability on the FLSA claim. In their Sur-Reply, Defendants also argue, without evidence, that a constructive trust was created for the payment of taxes. Again, Defendants have failed to provide the court with evidence that such a trust was established or that the withholding taxes were ever paid to the appropriate taxing authorities. Moreover, Plaintiff argues that because discovery has never been conducted Defendants' motion is premature. Defendants, in moving for summary judgment cannot rest on the pleadings or arguments, but must support their motion with evidence. Having failed to do so, Defendants' motion for summary judgment on this issue will be denied.
B. Breach of Contract
Plaintiff moves both for reinstatement of her breach of contract claim and for summary judgment thereon. The court will grant Plaintiff's motion for reinstatement of this claim. Defendants respond that the breach of contract claim is not properly before this court. The court notes that in the prior proceedings in this matter the focus was on the FLSA claims due to the pendency of the state court action Defendants filed against Plaintiff. In Defendants' Sur-Reply, they state that the state court action has been dismissed. (Defs.' Sur-Reply at 7). Despite Defendants' opposition to the reinstatement of Plaintiff's state law claims, It is within this court's power to exercise supplemental jurisdiction over related claims. See, 28 U.S.C. § 1367. Plaintiff has made a proper request and because Plaintiff's state law claims derive from the same set of operative facts as Plaintiff's FLSA claim, the claims are related and the court will exercise supplemental jurisdiction over them. Plaintiff's state law claims will be reinstated.
At the conclusion of the hearing held on September 5, 2002, the court noted that dismissal of Counts II and III of Plaintiff's Complaint was without prejudice. (N.T. of 9/5/2002, p. 54).
In support of her motion for summary judgment on the breach of contract claim, Plaintiff offers the Professional Services Agreement entered into between her and Defendant About Your Smile. (Pl.'s Counter Mot. Summ. J., Exh. 3). The agreement clearly and unambiguously provides that Plaintiff was to be compensated at a rate of $40.00 per hour in exchange for the provision of dental services to Defendants' patients. Id. It is undisputed that Plaintiff did not receive any cash or a check as compensation for the 50.83 hours she worked during her final pay period. However, Defendants now claim that Plaintiff materially breached the Professional Services Agreement by failing to report to work and see patients as scheduled. Plaintiff has requested, and the court will permit, time to conduct discovery on this claim. There is a genuine issue of material fact regarding which party breached the contract, and whether Plaintiff materially breached the contract. Because there is a genuine issue of material fact, Plaintiff's motion for summary judgment on this claim will be denied.
C. Wage Payment and Collection Law
It has not yet been established whether payment is due to Plaintiff pursuant to either the provisions of the FLSA or the terms of the Professional Services Agreement. Therefore, the Court cannot yet determine whether Defendant failed to pay the wages in a timely fashion in violation of the Pennsylvania Wage Payment and Collection Law. 43 P.S. 260.3(a). Because there is a factual dispute as to what, if any, payments were timely made summary judgment cannot be entered for Plaintiff.
IV. CONCLUSION
On summary judgment Defendants have not supported their motion for summary judgment on the FLSA claim by providing the court with any evidence that they complied with the FLSA by paying Plaintiff's tax obligations and health benefits. In addition genuine issues of material fact exist regarding Plaintiff's state law breach of contract and Pennsylvania Wage Collection Law claims will be denied; therefore all motions for summary judgment will be denied.
An appropriate order follows.
ORDER
AND NOW, this ____ day of September 2004, upon consideration of Defendants' Motion for Summary Judgment and Plaintiff's Counter Motion for Summary Judgment, IT IS HEREBY ORDERED that:1. Defendants' Motion for Summary Judgment is DENIED;
2. Plaintiff's Counter Motion for Summary Judgment is DENIED;
3. Plaintiff's Motion (Docket No. 26) for Enlargement of Time to File Answer to Defendants' Motion for Summary Judgment is dismissed as moot.
4. Plaintiff's claims under Pennsylvania State Law are reinstated.
5. The parties are granted 60 days from the date of this Order to conduct discovery on Plaintiff's claims.
6. The Deputy Clerk shall schedule this matter for trial after 60 days from the date of this Order.