US Labor files countersuit vs Dynasty

U.S. Department of Labor Secretary Thomas E. Perez and other federal labor officials have filed a counterclaim in federal court against the owner of Tinian Dynasty Hotel & Casino and its president, Kwan Man.

Perez, Labor Wage and Hour Division administrator David Weil, Labor Wage and Hour Western Region regional administrator Ruben Rosalez, and Labor Wage and Hour Division district director Terrence Trotter filed the counterclaim on Monday against Hong Kong Entertainment (Overseas) Investments Ltd. and Man.

In their counterclaim, the federal officials asked the U.S. District Court for the NMI to issue a judgment affirming the U.S. Labor Administrative Review Board’s final decision that ordered HKE and Man to pay a civil penalty totaling $191,400 “for willful and repeat violations” of the overtime provisions of the Fair Labor Standards Act.

The Administrative Review Board issued its final decision and order on Nov. 25, 2014, affirming the administrative law judge’s finding that HKE violated the FLSA’s overtime provisions.

According to assistant U.S. attorneys Jessica F. Cruz and Mikel W. Schwab, representing the four federal officials, the review board also affirmed the administrative law judge’s imposition of civil monetary penalty of $191,400 for the violations.

“The ARB’s final decision is supported by substantial evidence and is not arbitrary, capricious, or an abuse of discretion or otherwise contrary to law under the Administrative Procedures Act standard of review,” Cruz and Schwab said.

HKE and Man sued the four officials in federal court in December 2014 for allegedly violating their due process right over their assessment of civil penalties of $191,400.

HKE and Man, through counsel Bruce Berline, insist that the compliance agreement HKE signed with a Labor investigator prevent Perez and his co-defendants from assessing a civil money penalty against HKE and/or Man.

HKE and Man asked the U.S. District Court for the NMI to set aside the decision that found HKE in violation of the FLSA’s overtime provisions and the administrative law judge’s imposition of civil penalties of $191,400.

They also asked the court to remand the matter back to a labor administrative law judge for a hearing on the propriety of the monetary penalty assessed against HKE and Man.

HKE and Man also wants the court to declare that the portion of the law that allows the Labor Wage and Hour administrator to determine and assess a civil monetary penalty violates due process.

According to Berline in the complaint, at the time of the investigation, the federal minimum wage provisions had not been extended to the CNMI and federal authority under the FLSA was limited to overtime pay.

Berline said the manner by which Labor Wage and Hour Division determines and assesses a civil monetary penalty violates the due process rights of HKE and Man as guaranteed by the 5th Amendment of the U.S. Constitution.

In their counterclaim, Cruz and Schwab said the Wage and Hour administrator investigated HKE in 2001 for overtime violations that occurred from February 1999 to February 2001 involving over 400 employees.

Cruz and Schwab said the administrator filed an action against HKE and Man and a consent judgment was entered in 2002.

Under the consent judgment, the lawyers said, HKE and Man agreed to pay over $591,000 in unpaid overtime and comply with the FLSA in the future.

In 2007, the administrator again investigated HKE and found overtime violations. The administrator and HKE entered a settlement deal, in which HKE agreed to compensate 348 employees over $309,000 for unpaid overtime.

Cruz and Schwab said the issue of civil money penalties was not resolved by the settlement agreement.

Cruz and Schwab said the administrator determined that civil money penalties should be assessed, totaling $191,400 against HKE for willful and repeat violations of the FLSA’s overtime provisions.

HKE requested a hearing and on Nov. 30, 2012, an administrative law judge affirmed the imposition of civil money penalties and the amount assessed.

Cruz and Schwab said the administrative law judge concluded that the 2007 settlement agreement for back wages did not waive civil monetary penalties.

Cruz and Schwab said the administrative law judge also concluded that the violations were willful and repeated, thus warranting the penalties.

The lawyers said HKE appealed to the Administrative Review Board and that, on Nov. 25, 2014, the ARB issued the final decision that affirmed the administrative law judge’s decision.