Aubrey v. Zamam LLC et al
OPINION AND ORDER denying the 16 defendants' motion to dismiss. Signed by Judge J. Leon Holmes on 11/8/2017. (ljb)
Case 4:17-cv-00446-JLH Document 20 Filed 11/08/17 Page 1 of 7
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
No. 4:17CV00446 JLH
ZAMAM, LLC; and SYED HUSSAIN
OPINION AND ORDER
Vickie Aubrey brings this action against her former employers, Zamam, LLC, and Syed
Hussain, for violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., and the Arkansas
Minimum Wage Act, Ark. Code Ann. § 11-4-201, et. seq. Aubrey alleges that she was required to
work more than forty hours per week but was not paid a higher rate for those overtime hours. The
defendants have filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1),
12(b)(6), and 12(b)(7). For the following reasons, the motion is denied.
The first amended and substituted complaint alleges the following facts. Document #14.
The defendants operate a gas station retail business in Pope County, Arkansas. Zamam is a limited
liability company registered to conduct business in Arkansas. Hussain, Zamam’s registered agent,
controlled day-to-day operations. Zamam had at least four employees at all times, at least two of
whom were engaged in interstate commerce. Aubrey worked as a retail clerk at the gas station.
Aubrey was likewise employed by the defendants’ predecessor. The defendants took ownership of
the gas station from the predecessor on or about June 12, 2016. Aubrey’s compensation was not less
than $455 per week nor more than $100,000 per year. Her primary duties were to process consumer
transactions, stock shelves, and clean the store. These duties did not require knowledge gained from
any professional education. Aubrey did not manage the business, supervise other employees, or
train other employees. She was not involved in the hiring or firing of other employees.
Case 4:17-cv-00446-JLH Document 20 Filed 11/08/17 Page 2 of 7
The defendants knew that Aubrey “always or almost always” worked in excess of forty hours
per week because they required her to do so, but they did not pay her a higher rate for the excess
hours. Around February or March of 2017, the defendants presented Aubrey’s son with a receipt
for payment of back wages, liquidated damages, employment benefits, or other compensation from
the United States Department of Labor Wage and Hour Division. The defendants told Aubrey’s son
that he had to sign the receipt and receive the accompanying check on Aubrey’s behalf. Aubrey’s
son signed the receipt and received a check made out to Aubrey in the amount of $247.39. Aubrey’s
son gave the check to Aubrey and repeated to her the defendants’ statements.
First, the defendants argue that this action must be dismissed pursuant to Rule 12(b)(1),
which provides for dismissal based on a lack of subject-matter jurisdiction, because Aubrey’s claims
are mooted by a prior settlement. The defendants say that Aubrey voluntarily entered into a
settlement of her claims under the FLSA in exchange for monetary payment, the amount of which
was determined by the Department of Labor. Because Aubrey accepted the money and signed the
Department of Labor receipt, which included a waiver of the right to bring suit, the defendants argue
that her claims are moot and this Court lacks subject-matter jurisdiction. The FLSA provides in
pertinent part that an employee who agrees to accept a payment for overtime compensation
supervised by the Department of Labor waives her right, upon payment in full, to bring a private
cause of action in court. 29 U.S.C. § 216(c)
But when an employer has grounds to believe that an employee executed a valid waiver, it
should raise the waiver defense through a Rule 12(b)(6) motion or a Rule 56 motion, rather than a
Rule 12(b)(1) motion. See Flores v. ACT Event Servs., No. 3:14-CV-2412-G, 2015 WL 567960
(N.D. Tex. Feb. 11, 2015). Such a waiver “is a contract-based affirmative defense, and an
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affirmative defense does not strip a court of its subject-matter jurisdiction.” Downing v. Riceland
Foods, Inc., 298 F.R.D. 587, 590 (E.D. Mo. 2014). The defendants’ assertion that Aubrey’s FLSA
claims are barred under section 216(c) challenges the validity of the FLSA claims, rather than the
court’s jurisdiction over the subject matter. See Arbaugh v. Y & H Corp., 546 U.S. 500, 511, 126
S. Ct. 1235, 163 L. Ed. 2d 1097 (2006) (“[W]hen Congress does not rank a statutory limitation on
coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.”); see
also Min Fu v. Hunan of Morris Food Inc., Civ. No. 12-0587 (KM), 2013 WL 5970167, at *4
(D.N.J. Nov. 6, 2013) (applying the rule in Arbaugh to 29 U.S.C. § 216(c)). Therefore, there is no
basis for dismissal under Rule 12(b)(1).
Second, the defendants argue that the first amended and substituted complaint does not state
a claim under the FLSA or the Arkansas Minimum Wage Act. They argue that a complaint must
do more than allege that an employer failed to pay overtime. To survive a motion to dismiss under
Rule 12(b)(6), a complaint must contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although detailed factual allegations are not
required, the complaint must set forth “enough facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929
(2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). The Court
accepts as true all of the factual allegations contained in the complaint and draws all reasonable
inferences in favor of the nonmoving party. Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th Cir.
2014). The complaint must contain more than labels, conclusions, or a formulaic recitation of the
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elements of a cause of action, which means that the court is “not bound to accept as true a legal
conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1965.
The FLSA requires employers to pay non-exempt employees at overtime rates for time
worked in excess of forty hours per week. 29 U.S.C. § 207(a). The Eighth Circuit has not addressed
the level of detail required to plead a substantive cause of action for overtime violations under the
FLSA, but it has recognized that other circuits have arrived at “somewhat variable conclusions.”
See Ash v. Anderson Merch., LLC, 799 F.3d 957, 962 (8th Cir. 2015); Hall v. DIRECTV, LLC, 846
F.3d 757, 777 (4th Cir. 2017); cf. Davis v. Abington Mem. Hosp., 765 F.3d 236, 242-43 (3d Cir.
2014); Landers v. Quality Commc’n, Inc., 771 F.3d 638, 644-45 (9th Cir. 2014); DeJesus v. HF
Mgmt. Servs., 726 F.3d 85, 88 (2d Cir. 2013); Pruell v. Caritas Christi, 678 F.3d 10, 13-15 (1st Cir.
2012); Sec’y of Labor v. Labbe, 319 Fed. Appx. 761, 763-64 (11th Cir. 2008).
Aubrey alleges that the defendants qualify as employers under the FLSA; she alleges that
she was employed by the defendants; she alleges that her job duties involved interstate activity; she
describes her job duties; she alleges that she was not paid more than $455 a week nor more than
$100,000 a year; she alleges that she worked in excess of forty hours per week “always or almost
always”; she alleges that the defendants knew she was working overtime because they were the ones
requiring her to do so; and she alleges the defendants did not pay her at an overtime rate to
compensate her for the excess hours. These factual allegations are enough to overcome a motion
to dismiss claims under the FLSA. See Drake v. Steak N Shake Operations, Inc., No. 4:14-CV1535-JAR, 2015 WL 4425979 at *2 (E.D. Mo. July 17, 2015); Williams v. Cent. Transport Intern.,
Inc., No. 4:13-CV-2009 (CEJ), 2014 WL 1344513 at *3 (E.D. Mo. Apr. 4, 2014). Because the
FLSA and Arkansas Minimum Wage Act impose similar overtime requirements, and claims brought
under parallel provisions of the acts should be interpreted similarly, the complaint adequately alleges
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a claim under the Arkansas act as well. See Carter v. Primary Home Care of Hot Springs, Inc., 2015
WL 11120564 at *1 (W.D. Ark. May 14, 2015); Ark. Code Ann. § 11-4-218(f).
In addition, the defendants argue that Aubrey’s AMWA claim must be dismissed pursuant
to Rule 12(b)(6) because it is duplicative of her FLSA claim and therefore preempted. Document
#17 at 7-8. The Eighth Circuit has not addressed whether the FLSA provides an exclusive remedy
for violations of its provisions. See Montize v. Pittman Props. Ltd. P’ship, 719 F. Supp. 2d 1052,
1055-56 (W.D. Ark. 2010). “[T]he FLSA does not generally preempt state law claims in a given
case.” Bouaphakeo v. Tyson Foods, Inc., 564 F. Supp. 2d 870, 886 (N.D. Iowa 2008). Its savings
clause specifically permits states to provide employees greater protections. 29 U.S.C. § 218(a). The
AMWA provides no greater overtime protections than the FLSA; rather, the overtime protections
it affords are equal to those afforded under the FLSA. See Helmert v. Butterball, LLC, 805 F. Supp.
2d 655, 663 n.8 (E.D. Ark. 2011).
The Fourth Circuit and district courts outside this circuit have held that the FLSA preempts
state law claims when they are merely duplicative of FLSA claims. See Anderson v. Sara Lee Corp.,
508 F.3d 181, 193 (4th Cir. 2007) (collecting cases). Nevertheless, the State of Arkansas, mindful
of the FLSA’s status, has provided an additional remedy. Without a clear indication from Congress
of its intent to preempt state law, this Court will follow the other district courts in this circuit holding
that the FLSA does not provide an exclusive remedy for violations of its provisions. See Montize,
719 F. Supp. 2d at 1056 (holding that state law may offer an alternative legal basis for equal or more
generous relief for the same alleged wrongs); Cortez v. Nebraska Beef, Inc., 266 F.R.D. 275, 282-84
(D. Neb. 2010) (holding that FLSA did not preempt claim under Nebraska wage and hour laws);
Robertson v. LTS Mgmt. Servs. LLC, 642 F. Supp. 2d 922, 927-28 (W.D. Mo. 2008) (holding that
FLSA did not preempt claim under Missouri wage and hour laws); Bouaphakeo, 564 F. Supp. 2d
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at 886 (holding that preemption only occurs when the state law benefits are less than the FLSA
benefits). Aubrey’s AMWA claim is not preempted.
Third, the defendants argue that the complaint must be dismissed pursuant to Rule 12(b)(7)
for failure to join a party under Rule 19. Aubrey alleges that the defendants are liable for their
predecessor’s failure to compensate her for overtime under the theory of successor liability, but
Aubrey does not name the predecessor as a defendant. See Document #14 at 5, ¶¶ 29-35. Rule 19(a)
defines a required party and Rule 19(b) provides factors for the Court to consider in order to
determine whether dismissal is compulsory when it is not feasible to join a required party.
Rule 19(a)(1) provides that if feasible a party is required to be joined if:
(A) in that person’s absence, the court cannot accord complete relief among existing
(B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may:
(i) as a practical matter impair or impede the person’s ability to protect the
(ii) leave an existing party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of the interest.
Fed. R. Civ. P. 19(a). The defendants’ predecessor is not a required party because the first amended
and substituted complaint alleges that the defendants are liable for the predecessor’s conduct.
Ordinarily, when a corporation sells all of its assets to another, the purchasing corporation
is not responsible for the seller’s liabilities unless the purchaser expressly or impliedly agrees to
assume the obligations, the purchaser is a continuation of the selling corporation, or the transaction
is entered into so that the seller can escape liability. See, e.g., Grand Labs., Inc. v. Midcon Labs.,
32 F.3d 1277, 1281 (8th Cir. 1994). However, federal courts apply a federal common law
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successorship doctrine to the FLSA that broadens the scope of state-law successor liability. See
Teed v. Thomas & Betts Power Solutions, LLC, 711 F.3d 763, 767 (7th Cir. 2013); Paschal v. Child
Dev., Inc., No. 4:12-CV-0184 KGB, 2014 WL 55179 at *5 (E.D. Ark. Jan. 7, 2014).
Here, the complaint alleges successor liability. This doctrine applies to the FLSA and it is
clear that Aubrey intends to invoke the doctrine to hold the defendants liable for the unlawful
conduct of its predecessor. Aubrey filed this action on July 11, 2017, and amended the complaint
to include allegations of successor liability on September 28, 2017. Neither the joinder of the
predecessor nor dismissal pursuant to Rule 12(b)(7) is warranted at this stage in the litigation. See
Comer v. DIRECTV, LLC, No. 2:14-CV-1986, 2016 WL 852027 at *4 (S.D. Ohio March 4, 2016)
(declining to dismiss action pursuant to Rule 12(b)(7), even though plaintiffs failed to specifically
allege that employer should be liable for FLSA violations of its predecessor).
For the foregoing reasons, the defendants’ motion to dismiss is DENIED. Document #16.
IT IS SO ORDERED this 8th day of November, 2017.
J. LEON HOLMES
UNITED STATES DISTRICT JUDGE
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