Herman v. Hospital Staffing Services, Inc.
The Secretary of Labor sought an injunction against Kenneth A. Welt (Bankruptcy Trustee for HSSI), Capital Factors, Inc., and Ron Lusk (President of HSSI) to prevent violations of the Fair Labor Standards Act's 'hot goods' provision. HSSI failed to pay statutory wages to employees, leading to the shipment of 'hot goods' (patient reports and billing documents) in interstate commerce. Defendants moved to dismiss for lack of subject matter jurisdiction, failure to state a claim (arguing documents were not 'goods' and employees were local), and requesting the court to abstain due to ongoing bankruptcy proceedings. The court denied all motions, affirming its jurisdiction under the police power exception to the automatic bankruptcy stay, confirming the documents as 'goods' under FLSA, and ruling the action was not duplicative. The court also held Ron Lusk personally liable as an 'employer' under FLSA.