Feds take car-wash king to the cleaners

David Delrahim Acornfile photo

David Delrahim Acorn file photo

Agoura Hills car-wash magnate David Delrahim stands in the middle of a two-year court battle facing charges that he has failed to pay minimum wage and overtime to more than 700 employees who work at his Southland enterprises.

The United States Department of Labor charged Delrahim, 58, and his managers with cheating workers out of their wages at a dozen car washes in Los Angeles, Ventura, San Bernardino and Orange counties— including the Agoura Hills Car Wash and Lavaggio detailing center at the intersection of Reyes Adobe Road and Canwood Street in Agoura and the Las Posas Car Wash on Las Posas Road in Camarillo.

The government is seeking at least $4 million in back pay and damages.

Documents filed in Los Angeles federal court state that Delrahim’s mostly Latino employees were required to report to work at a certain time but directed not to clock in until customers arrived. And when business slowed down they were required to clock out but remain on the job, the complaint said. The charges go back to 2013.

Delrahim’s lawyers provided a written statement to The Acorn that said the company doesn’t comment on client litigation. The Department of Labor also declined to comment, saying in a statement, “We will let the court documents speak for themselves.”

Rebecca Aragon, Delrahim’s attorney, claimed in court documents that the unpaid work hours cited in the complaint are too trivial to qualify for compensation. Aragon called the charges “frivolous, vexatious and unreasonable” and said Delrahim was “without sufficient knowledge . . . to admit or deny the allegations.”

Aragon works for Los Angeles based Littler Mendelson, a law firm that represents companies involved in labor disputes. Aragon specializes in defending companies that have a mostly Spanish-speaking workforce.

The attorney said the employees suffered no harm or damage as a result of the alleged nonpayment and that workers have no claim to the back pay if they are still employed by Delrahim’s companies.

Delrahim is the owner and president of three Agoura Hills-based businesses that have been listed as defendants as well: Southwest Fuel Management, Goldenwest Solutions Group and California Payroll. Southwest Fuel operates two gas stations and a car wash. Goldenwest Solutions Group handles administrative matters for Southwest Fuel and operates a dozen car washes. California Payroll is the payroll administrator for both companies.

Delrahim’s daughter, Shannon Delrahim, is also listed as a defendant for her role in overseeing the human resources departments in her father’s companies—including pay rates, terms of employment and schedules.

Denis Weber, a six-time mayor who helped oversee the planning of Delrahim’s two Agoura Hills car washes, called Delrahim an astute businessman and city partner.

“ He has been a friend to the city for many years and we’ve been the beneficiary of his vision to build wonderful businesses in beautiful settings that continue to generate taxes to our local economy and assist us in meeting our fiscal needs,” Weber said.

“I have known him for over 25 years and have found him to be a man who is faithful, generous and charitable,” he said.

Destroying evidence?

The initial complaint was filed in June 2016.

In August that year, the Department of Labor requested that Delrahim produce evidence such as surveillance footage, text messages and emails that related to employee work hours, wages, schedules, guidelines and gross business income. The defendants failed to provide the requested material.

Court documents show that Delrahim and his company manager, Martin Lizarraga, admitted they deleted emails and texts— and that surveillance footage was not stored beyond 30 days

They testified that the deletions were a regular occurrence and not a deliberate attempt to rebuff the Department of Labor’s request. Their lawyers stated that the video footage was “too burdensome and expensive to retain.”

Retired judge Rosalyn Chapman was appointed by the court to evaluate the claims. She ruled that Delrahim had purposely destroyed video evidence and that Littler Mendelson was “deliberately and willfully stonewalling on discovery.”

Employee statements

Last November, Delrahim’s lawyers submitted signed declarations from 37 car-wash employees who stated they had never worked off the clock.

Prosecutors, however, accused Delrahim’s attorneys of using intimidation tactics and poor ethics by coercing the employees to sign the documents in the fear they might lost their jobs.

The government called for sanctions against Delrahim and his associates and a judgment against the employers for a “failure to follow even the most basic rules” of legal practice and a “wanton destruction” of evidence.

The signatures were later thrown out by the presiding judge, Fernando Olguin, who said the manner of their collection was improper. None of the employees were provided copies of the documents they signed, and many of them could not read English, the language in which the documents were written.

Littler Mendelson was ordered to send a notice in English and Spanish to each of Delrahim’s 700 workers to inform them that they can refuse to talk to Delrahim’s lawyers without repercussion and that by talking to the lawyers they could hurt their ability to collect the wages.

The case is set to go to trial July 17.

John Loesing contributed to this article.