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Ricks v. Handi-House Mfg. Co.

United States District Court, S.D. Georgia, Statesboro Division

March 25, 2019

HAROLD H. RICKS; ROGER SMITH; SHON BUTLER; and MALIK BRANTLEY, Administrator of the Estate of Leroy Brantley, Jr., Plaintiffs,
v.
HANDI-HOUSE MFG. CO.; and DONALD FLANDERS, Defendants.

          ORDER

          R. STAN BAKER UNITED STATES DISTRICT JUDGE SOUTHERN DISTRICT OF GEORGIA

         This matter comes before the Court on Defendants HandiHouse Manufacturing Company and Donald Flanders' Motions for Summary Judgment. (Docs. 87, 88.) The Court has reviewed the parties' briefs and supporting materials regarding Defendants' Motions. During that review, the Court resolved all factual disputes to Plaintiffs' benefit and construed the facts in Plaintiffs' favor. Even when affording Plaintiff those benefits, the Court finds that Defendants are entitled to judgment as a matter of law. To be clear, the Court does not condone the payday loan scheme at the core of Plaintiff's claims. However, no rational juror could find that HandiHouse Manufacturing Company or Donald Flanders participated in or profited from that scheme. Consequently, the Court GRANTS Defendants' Motions for Summary Judgment, (docs. 87, 88), and DIRECTS the Clerk of Court to ENTER a final judgment in favor of Defendants and to CLOSE this case.

         PROCEDURAL BACKGROUND

         On June 29, 2017, Plaintiffs filed a putative class action against Handi-House Mfg. Co., Handi-House Financial Corporation, Handi-House Rent to Own, LLC, and employees Donald Flanders, James Akridge, John Wilkerson, Stephanie Flanders, and Brenda Williamson. (Doc. 1.) Alleging an illegal payday lending scheme within the manufacturing facility of Handi-House Mfg. Co., Plaintiffs initially asserted the following twelve causes of action: (1) a claim pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, against all Handi-House entities for paying wages below the federal statutory minimum; (2) a claim pursuant to the Georgia Minimum Wage Law, O.C.G.A. § 34-4-6, against all Handi-House entities for paying wages below the state statutory minimum; (3) a claim pursuant to the Georgia Industrial Loan Act, O.C.G.A. §§ 7-3-1 to -29, against all Defendants for making payday loans of an amount under $3, 000.00 without a license; (4) a claim pursuant to the Georgia Payday Lending Act, O.C.G.A. §§ 16-17-1 to -10, against all Defendants for making payday loans; (5) a common law conversion claim against all Defendants; (6) a claim pursuant to O.C.G.A. § 7-4-1 against all Defendants for making usurious loans; (7) a claim pursuant to 18 U.S.C. §§ 1581, 1593A, and 1595 against all Defendants for holding Plaintiffs in debt servitude; (8) a claim pursuant to the Federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c), (d), against all individual defendants for conspiring and participating in the unlawful collection of debt; (9) a claim pursuant to the Georgia RICO Act, O.C.G.A. § 16-14-1, against all individual defendants for conspiring and participating in racketeering activities; (10) a claim pursuant to 42 U.S.C. § 1981 against all Handi-House entities for civil rights violations and racial discrimination; (11) a claim pursuant to O.C.G.A. § 41-2-1 against all Defendants for creating a public nuisance; and (12) a claim for punitive damages under O.C.G.A. § 51-12-5.1. (Id.)

         On July 27, 2018, the Court denied Plaintiffs' motion for a collective action class under FLSA because Plaintiffs failed to show there are employees similarly situated to Plaintiffs who wish to opt into a class action. (Doc. 109.) The Court denied Plaintiffs' motion to certify a class under Federal Rule of Civil Procedure 23 because Plaintiffs did not identify an administratively feasible method for identifying class members. (Id.)

         On February 19, 2018, Plaintiffs moved for sanctions, arguing James Akridge and John Wilkerson, as agents of Handi-House, perpetrated the loan scheme and intentionally destroyed lists of employee loans. (Docs. 65, 65-1.) On May 15, 2018, pursuant to stipulation of the parties, the Court dismissed without prejudice all defendants except Mr. Flanders and Handi-House Mfg. Co. (“Handi-House”) as well as the following two causes of action: (1) the claim in count seven, brought pursuant to 18 U.S.C. §§ 1581, 1593A, and 1595, alleging conditions of debt servitude; and (2) the claim in count ten brought pursuant to 42 U.S.C. § 1981. (Doc. 85.)

         On July 11, 2018, the Court denied Plaintiffs' Motion for Sanctions because Plaintiffs failed to carry their burden of proving Mr. Flanders and Handi-House destroyed any loan lists. (Docs. 106.) On July 28, 2018, Plaintiffs requested reconsideration, and the Court conducted an evidentiary hearing on October 30, 2018. (Docs. 108, 126, 132.) On November 28, 2018, the Court again denied the sanctions Motion, even though the testimony established intentional destruction of at least one loan list by Messrs. Akridge and Wilkerson, because Messrs. Akridge and Wilkerson were no longer Defendants and there was no evidence of any involvement in the loan scheme or spoliation by Handi-House and Mr. Flanders. (Doc. 131.)

         FACTUAL BACKGROUND

         The Court gleans the following facts from Defendants' Statements of Material Facts, Plaintiffs' response, and the evidentiary record. Handi-House manufactures portable storage buildings in Swainsboro, Georgia, employing approximately 150 workers, and sells them to retailers throughout the Southeast. (Flanders Aff., doc. 87-3, ¶¶ 3, 8; Handi-House Dep., doc. 87-14, pp. 11-13.) Defendant Don Flanders purchased Handi-House in 1979 and is Chief Executive Officer (“CEO”). (Flanders Dep., doc. 87-8, p. 7.) Two former Defendants are related Handi-House companies. Formed in 1987, Handi-House Financial Corporation issues consumer loans to purchasers of Handi-House portable storage buildings. (Flanders Aff. ¶¶ 4, 5.) Formed in 2009, Handi-House Rent-To-Own, LLC, sells consumer goods on a rent-to-own basis in retail sales lots throughout the Southeast. (Id. at ¶¶ 6, 7.) Plaintiffs are current and former employees of Handi-House who earned hourly wages at the manufacturing facility within the range of $7.25 to $9.00 during the period of approximately 2013 to 2018. (Butler Dep., doc. 87-6, pp. 20-21, 31; Williamson Aff., doc. 87-15, ¶ 3; Smith Dep., doc. 87-5, p. 18; Ricks Dep., doc. 87-7, p. 24; Brantley Dep., doc. 87-4, p. 87; Brantley Aff., doc. 96-2, ¶ 7.)

         It is undisputed Messrs. Akridge and Wilkerson issued payday loans to Plaintiffs and other employees at the manufacturing facility, typically charging an exorbitant fee of six dollars for every twenty dollars borrowed. (Wilkerson Dep., pp. 37-38; Brantley Aff. ¶ 4; Ricks Aff., doc. 96-3, ¶ 4.; Smith Aff., doc. 96-4, ¶ 4; Butler Dep., p. 50.) James Akridge has worked at Handi-House for forty years and is currently a sales and general manager with an annual salary of $59, 020.00. (Akridge Dep., doc. 87-10, p. 7; doc. 103-2, p. 2; Handi-House Dep., p. 18; doc. 87-13, ¶ 5.) John Wilkerson, now deceased, worked at Handi-House for thirty-three years and last served as Plant Manager with an annual salary of $39, 100.00. (Wilkerson Dep., doc. 87-11, pp. 9-10; Thompson Economic Report, doc. 63, p. 1.) Messrs. Akridge and Wilkerson used their own money to fund their loan scheme[1] and split all profits. (Akridge Dep., p. 37; Wilkerson Dep., pp. 37-38, 44; Ricks Dep., p. 81.) As Plaintiffs' counsel conceded at the sanctions hearing, the loan scheme was a side venture by Messrs. Akridge and Wilkerson, and neither Handi-House nor Mr. Flanders participated in nor profited from it. (Sanctions Hr'g Tr., doc. 132, pp. 19-20.)

         Messrs. Akridge and Wilkerson collected loan payments on payday. (Butler Dep., pp. 39-40.) Brenda Williamson, the payroll clerk, typically asked Mr. Akridge to sign paychecks because he was always at the plant and Mr. Flanders was frequently on Handi-House business trips. (Williamson Dep., p. 19; Handi-House Dep., pp. 19-20.) Ms. Williamson distributed the signed paychecks to department heads, and they distributed the checks to their employees. (Williamson Dep., pp. 19-20.) However, when Ms. Williamson separated the checks by department, she made a separate pile for employees listed on a sheet of paper given to her by Mr. Wilkerson. (Doc. 58-2, p. 10; Wilkerson Dep., pp. 45-46; Williamson Dep., pp. 23-29.)

         The list contained the names of employees who owed Messrs. Akridge and Wilkerson money, but Ms. Williamson did not understand this or know why Mr. Wilkerson asked her to separate the checks of these employees. (Wilkerson Dep., pp. 45-46; Williamson Dep., pp. 23-29.) Messrs. Akridge and Wilkerson delivered the segregated checks to their debtor employees for endorsement, cashed the endorsed checks at the bank, paid themselves the loan balances, and remitted the remaining cash, minus any change, to the debtor employees. (Butler Dep., pp. 39-40; Akridge Dep., pp. 23-24; Smith Dep., pp. 127-28; Brantley Dep., p. 64.)

         Mr. Flanders was generally aware Messrs. Akridge and Wilkerson issued loans to Handi- House employees but testified he did not know the loan terms, i.e., the six-dollar fee for every twenty dollars borrowed, until the filing of this lawsuit. (Flanders Dep., pp. 37-45, 58; Williamson Dep., p. 23.) He did not inquire because he believed it was not his business. (Id. at 40, 45.) Immediately upon receipt of the lawsuit, Mr. Flanders “instructed Akridge and Wilkerson that they were to discontinue all lending activities on [Handi-House] property.” (Flanders Aff. ¶¶ 26-28.)

         Plaintiffs contend Mr. Flanders knew about the exorbitant fees charged by Messrs. Akridge and Wilkerson. (Doc. 95, pp. 4-9.) The only evidence Mr. Flanders knew about loan terms is the testimony of Mr. Leroy Brantley, who testified he complained to Mr. Flanders a long time ago, in the 1990s, about the high loan fees Mr. Akridge charged him. (Brantley Dep., pp. 52-55.) Mr. Flanders purportedly responded, “he didn't have nothing to do with it.” (Id. at 53.) Notably, Mr. Harold Ricks testified he told Mr. Flanders on an unknown date Mr. Akridge was taking his money and was “wrong for it.” (Ricks Dep., pp. 97, 109-10.) In response, Mr. Flanders issued Mr. Ricks an interest-free loan and advised him to leave Messrs. Akridge and Wilkerson alone. (Id. at 110.)

         Prior to the lawsuit, Mr. Flanders recalled two or three occasions when employees complained to him they needed their paychecks to pay bills but owed Messrs. Akridge and Wilkerson too much money. (Flanders Dep., p. 39.) On each such occasion when an employee complained, Mr. Flanders informed the employee he or she should always receive their paycheck, and he instructed Messrs. Akdrige and Wilkerson any employee who “wants their check[, ] they get the check.” (Id. at 39-42.) Any time this issue was presented to Mr. Flanders, he instructed Messrs. Akridge and Wilkerson “at no time do you hold this person's check.” (Id. at 40.) This is consistent with the testimony of Plaintiff Roger Smith, who recalled one occasion when Mr. Flanders observed employees lining up in front of Messrs. Akridge and Wilkerson on payday. (Smith Dep., pp. 106-07.) Mr. Smith overheard Mr. Flanders instruct Messrs. Akridge and Wilkerson to “cut that out, clear that out” because “I don't want this in my plant.” (Id. at 106.) Mr. Smith believes the conversation concerned the loan scheme. (Id. at 107.)

         In stark contrast to Messrs. Akridge and Wilkerson, Mr. Flanders has personally loaned money to Handi-House employees without charging interest or fees, and “in most instances, [he] never required them to pay . . . back the principal . . . .” (Flanders Aff. ¶ 23.) In addition, Mr. Flanders operates a zero-interest, no-fee loan program at Handi-House whereby employees can borrow $100 or $200, depending on seniority, that is repaid “by payroll deductions upon repayment terms decided by the borrowing employee.” (Id. ¶ 24; Fluellen Dep., doc. 78-2, pp. 25-27.)

         Messrs. Ricks and Brantley testified Messrs. Akridge and Wilkerson sometimes pressured them to borrow money. Mr. Ricks testified Mr. Wilkerson might, for example, assign him work in the hot sun if he did not borrow money. (Ricks Dep., pp. 29-30.) Mr. Brantley testified he was not forced to take loans, but that it “would be put in a way that you have to sometimes.” (Brantley Dep., p. 63.) Messrs. Smith and Shon Butler testified Messrs. Akridge and Wilkerson never pressured or forced them to borrow money. (Smith Dep., pp. 122-24; Butler Dep., p. 53.) Mr. Ricks also testified Mr. Akridge suspended him for one week, then terminated his employment, because of an argument that occurred when Mr. Ricks refused to surrender his paycheck to Mr. Akridge for repayment of a loan. (Ricks Dep., pp. 23-24.)

         Plaintiffs generally allege they received loans from Messrs. Akridge and Wilkerson on a weekly basis during their employment. (Smith Dep., p. 61.; Butler Dep., pp. 96-97; Ricks Dep., pp. 146-47; Smith Aff. ¶ 6.; Ricks Aff. ¶ 6; Smith and Ricks Paystubs, doc. 40-20, pp. 41-109.) While the loan scheme did not involve any formal loan documentation, Handi-House and its bank have produced paychecks confirming Plaintiffs endorsed paychecks to Mr. Akridge for him to cash. (Brantley Dep., p. 47; Smith Dep., p. 35; doc. 87-9, pp. 9, 22; Peil Aff., doc. 96-5 (summarizing Plaintiffs' pay stubs and dual endorsed payroll checks).) Plaintiffs' counsel reviewed the paychecks and determined Messrs. Akridge and Wilkerson cashed 102 checks for Mr. Butler totaling $25, 432.44, seventy-nine checks for Mr. Ricks totaling $16, 949.47, and 121 checks for Mr. Smith totaling $22, 186.07. (Peil Aff., pp. 22-29.) There is no documentation showing how much money each Plaintiff borrowed. Mr. Ricks testified he borrowed roughly $50 to $70 per week, Mr. Smith testified he borrowed $20 to $180 per week, and Mr. Butler testified he borrowed roughly sixty to $100 per week. (Ricks Dep., pp. 88-89; Smith Aff. ¶ 6; Butler Dep., p. 49.)

         STANDARD OF REVIEW

         Summary judgment “shall” be granted if “the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it “might affect the outcome of the suit under the governing law.” FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute is “genuine” if the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The moving party bears the burden of establishing that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law. See Williamson Oil Co. v. Philip Morris USA, 346 F.3d 1287, 1298 (11th Cir. 2003). Specifically, the moving party must identify the portions of the record which establish that there are no “genuine dispute[s] as to any material fact and the movant is entitled to judgment as a matter of law.” Moton v. Cowart, 631 F.3d 1337, 1341 (11th Cir. 2011). When the nonmoving party would have the burden of proof at trial, the moving party may discharge his burden by showing that the record lacks evidence to support the nonmoving party's case or that the nonmoving party would be unable to prove his case at trial. See id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). If the moving party discharges this burden, the burden shifts to the nonmovant to go beyond the pleadings and present affirmative evidence to show that a genuine issue of fact does exist. Anderson, 477 U.S. at 257.

         In determining whether a summary judgment motion should be granted, a court must view the record and all reasonable inferences that can be drawn from the record in a light most favorable to the nonmoving party. Peek-A-Boo Lounge of Bradenton, Inc. v. Manatee County, 630 F.3d 1346, 1353 (11th Cir. 2011) (citing Rodriguez v. Sec'y for Dep't of Corr., 508 F.3d 611, 616 (11th Cir. 2007)). However, “facts must be viewed in the light most favorable to the non-moving party only if there is a ‘genuine' dispute as to those facts.” Scott v. Harris, 550 U.S. 372, 380 (2007). “[T]he mere existence of some alleged factual dispute between the parties will ...


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