Giuffre v. Marys Lake Lodge, LLC
Filing
151
ORDER denying defendants' 121 Motion to Dismiss Plaintiff's First Amended Class Action Complaint Pursuant to F.R.C.P. 12(b)(6) and 12(b)(1). By Judge Philip A. Brimmer on 2/25/13.(mnfsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 11-cv-00028-PAB-KLM
(consolidated with Civil Action No. 12-cv-00377-PAB)
DARREN GIUFFRE, on behalf of himself and all similarly situated persons,
Plaintiff,
v.
MARYS LAKE LODGE, LLC, a Colorado Limited Liability Company, and
RAMS HORN DEVELOPMENT COMPANY, LLC, doing business as
Marys Lake Lodge, a Colorado Limited Liability Company,
Defendants.
ORDER
This matter is before the Court on the Motion to Dismiss Plaintiff’s First Amended
Class Action Complaint Pursuant to F.R.C.P. 12(b)(6) and 12(b)(1) [Docket No. 121]
filed by defendants Marys Lake Lodge, LLC (“MLL”) and Ram’s Horn Development
Company, LLC (“Ram’s Horn”).
I. BACKGROUND
Plaintiff Darren Giuffre was employed as a server in a restaurant operated by
defendants in Estes Park, Colorado from August 18, 2008 to October 8, 2008 and from
May 22, 2009 to February 14, 2010. Docket No. 104 at 6, ¶ 19. On November 12,
2010, plaintiff filed this action against defendant MLL in Larimer County District Court,
alleging unlawful tip sharing in violation of state and federal wage laws. Docket No. 1 at
1. On January 5, 2011, defendant MLL removed the case to this Court. Docket No. 1.
On February 13, 2012, plaintiff moved [Docket No. 60] to amend his complaint to add
defendant Ram’s Horn, which motion the Court granted [Docket No. 136]. On April 23,
2012, plaintiff filed his First Amended Complaint, adding claims for underpayment of
overtime and breach of contract. Docket No. 104 at 8-10.
On September 28, 2012, the Court granted [Docket No. 144] defendant MLL’s
motion for summary judgment on plaintiff’s claims relating to tip-sharing requirements
and notice of the tip credits, but held that plaintiff’s claims for overtime and breach of
contract survived.
II. STANDARD OF REVIEW
The Court’s function on a Rule 12(b)(6) motion for failure to state a claim upon
which relief can be granted is not to weigh potential evidence that the parties might
present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient
to state a claim. FED . R. CIV. P. 12(b)(6); Dubbs v. Head Start, Inc., 336 F.3d 1194,
1201 (10th Cir. 2003) (citations omitted). In doing so, the Court “must accept all the
well-pleaded allegations of the complaint as true and must construe them in the light
most favorable to the plaintiff.” Alvarado v. KOB-TV, LLC, 493 F.3d 1210, 1215 (10th
Cir. 2007) (quotation marks and citation omitted). At the same time, however, a court
need not accept conclusory allegations. Moffett v. Halliburton Energy Servs., Inc., 291
F.3d 1227, 1232 (10th Cir. 2002).
Generally, “[s]pecific facts are not necessary; the statement need only ‘give the
defendant fair notice of what the claim is and the grounds upon which it rests.’”
Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). The “plausibility” standard requires that relief
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must plausibly follow from the facts alleged, not that the facts themselves be plausible.
Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008). However, “where the
well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged—but it has not shown—that the pleader is
entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation marks
and alteration marks omitted). Thus, even though modern rules of pleading are
somewhat forgiving, “a complaint still must contain either direct or inferential allegations
respecting all the material elements necessary to sustain a recovery under some viable
legal theory.” Bryson, 534 F.3d at 1286 (quotation marks and citation omitted).
III. DISCUSSION
Plaintiff alleges that defendants violated the Fair Labor Standards Act (“FLSA”),
29 U.S.C. § 201 et seq., and the Colorado Wage Claim Act (“CWCA”), Colo. Rev. Stat.
§ 8-4-101, et seq., by failing to pay him sufficient overtime. Docket No. 104 at 9-10. He
also alleges that defendants’ failure to pay overtime constituted a breach of contract.
Docket No. 104 at 8-9.
A. Fair Labor Standards Act
Under the FLSA, an employer may pay “tipped employees” less than the hourly
minimum wage so long as two conditions are met. 29 U.S.C. § 203(m). The first
condition is that the employees are “engaged in an occupation in which [they]
customarily and regularly receive[] more than $30 a month in tips.” 29 U.S.C. § 203(t).
The second condition is that the employer inform tipped employees that their hourly
rate is below minimum wage. 29 U.S.C. § 203(m); see Koellhoffer v. Plotke-Giordani,
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858 F. Supp. 2d 1181, 1191 (D. Colo. 2012) (“To be eligible for the tip credit, the
employer must first notify the employees of the requirements of the law regarding
minimum wages and of the employer’s intention to take the tip credit.”).
The FLSA requires that employers pay one-and-a-half times the regular rate of
pay for any hours in excess of forty that non-exempt employees work in a given week.1
29 U.S.C. § 207(a)(1). “[A] tipped employee’s regular rate of pay includes the amount
of tip credit taken by employer per hour . . . . Any tips received by the employee in
excess of the tip credit need not be included in the regular rate.” 29 C.F.R. § 531.60.
“The regular rate of pay at which the employee is employed may in no event be less
than the statutory minimum.” 29 C.F.R. § 778.107.
Plaintiff argues that defendants underpaid him by subtracting the tip credit from
the minimum wage before calculating his overtime instead of using the full minimum
wage as his regular rate of pay. Docket No. 104 at 4, ¶ 15.
1. Statute of Limitations
Defendants argue that plaintiff’s claim is barred by the FLSA’s two-year statute of
limitations because he first alleged underpayment of overtime in his first amended
complaint, which was filed on April 23, 2012, more than two years after he alleges that
his employment with defendants terminated. Docket No. 121 at 5-7; 29 U.S.C.
§ 255(a); Docket No. 104 at 6, ¶ 19 (“From . . . May 22, 2009 to February 14, 2010,
Defendants were Plaintiff’s ‘employers’”). In response, plaintiff argues that his overtime
1
Certain types of employees are exempt from the minimum wage and maximum
hours provisions of the FLSA, including individuals employed in an executive,
administrative, or professional capacity. 29 U.S.C. § 213(a). The parties do not dispute
that plaintiff was not exempt from overtime requirements.
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claim relates back to his first complaint, which he filed on January 5, 2011. Docket No.
127 at 9.
Under Federal Rule of Civil Procedure 15(c), amended pleadings relate back to
the initial filing date so long as the added claims arise from the same transaction or
occurrence originally at issue. FLSA claims arise out of an employment relationship
and thus all claims arising out of the same employment relationship, including
employment discrimination claims, arise out of the same occurrence. Wilkes v. Wyo.
Dep’t of Emp’t Div. of Labor Standards, 314 F.3d 501, 504 (10th Cir. 2002) (“all claims
arising from the same employment relationship constitute the same transaction or
series of transactions”) (quoting Mitchell v. City of Moore, 218 F.3d 1190, 1202 (10th
Cir. 2000)); see also Clark v. Haas Grp., Inc., 953 F.2d 1235, 1239 (10th Cir. 1992).
As plaintiff’s overtime claim arises out of the same employment relationship as
his initial minimum wage claim, it relates back to the date he filed his first complaint.
See Wilkes, 314 F.3d at 504. Thus, plaintiff’s claim for violation of the FLSA is not
time-barred.
2. Economic Loss Doctrine
Defendants contend that the economic loss doctrine bars plaintiff’s FLSA claim.
Docket No. 121 at 9-10; Docket No. 133 at 7-8. The economic loss doctrine is a
judicially-created rule under which “a party suffering only economic loss from the breach
of an express or implied contractual duty may not assert a tort claim for such a breach
absent an independent duty of care under tort law.” Haynes Trane Serv. Agency, Inc.
v. Am. Standard, Inc., 573 F.3d 947, 962 (10th Cir. 2009) (citing Town of Alma v. AZCO
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Constr., Inc., 10 P.3d 1256, 1259-62 (Colo. 2000)). Defendants argue that the duty
plaintiff is seeking to enforce–compliance with the FLSA–was “memorialized by his
alleged employment contract and is thereby subsumed.” Docket No. 121 at 10. They
then argue that plaintiff’s FLSA claim lies in tort because plaintiff requests
“compensatory damages” and “seeks to recover ‘more than the FLSA allows’ on his
claim,” including pre-judgment, post-judgment, and moratory interest. Docket No. 133
at 7-8. Thus, they argue, permitting plaintiff’s FLSA claim to proceed would allow him to
recover tort damages for breach of a contractual duty. Docket No. 133 at 7-8. Plaintiff
counters that he is not seeking compensatory damages “beyond those authorized by
the FLSA.” Docket No. 127 at 11.
Plaintiff requests that the Court award relief as follows:
1. Determining that the action is properly maintained as a class
action, certifying Plaintiff as the class representative, and appointing
Plaintiff’s counsel as counsel for Class Members;
2. Ordering prompt notice of this litigation to all potential Class
Members;
3. Awarding Plaintiff and Class Members their compensatory
damages, attorneys’ fees and litigation expenses as provided by law;
4. Awarding Plaintiff and Class Members their pre-judgment,
post-judgment and moratory interest as provided by law; and
5. Awarding Plaintiff and Class Members liquidated damages as
provided by law.
Docket No. 104 at 11, ¶¶ 1-5. Under the FLSA, a plaintiff who prevails on a claim for
underpayment of wages may recover unpaid wages, “an additional equal amount as
liquidated damages,” reasonable attorney’s fees, and costs. 29 U.S.C. § 216(b).
Interest is available on an FLSA claim in federal court so long as no liquidated damages
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are awarded, Pabst v. Okla. Gas & Elec. Co., 228 F.3d 1128, 1136 (10th Cir. 2000);
Doty v. Elias, 733 F.2d 720, 726 (10th Cir. 1984); Garcia v. Tyson Foods, --- F. Supp.
2d ----, 2012 WL 3594212, at *19 (D. Kan. Aug. 21, 2012), and therefore plaintiff’s
request for interest does not push his claim beyond the bounds of the statute. In
addition, although plaintiff uses the term “compensatory damages” in his complaint, he
explicitly disclaims that he is seeking damages in excess of what the FLSA allows.2
Docket No. 127 at 11. Plaintiff’s complaint confirms this disclaimer as he sets forth no
facts that would support an award compensating him for personal injuries or losses,
apart from the underpayment of wages. See generally Docket No. 104. Moreover,
plaintiff’s requests for compensatory damages, attorney’s fees, interest, and liquidated
damages are qualified by the phrase “as provided by law,” further supporting the
conclusion that plaintiff is seeking only relief provided for in the statute. Docket No. 104
at 11, ¶ 3.
In sum, the wording of plaintiff’s request for relief does not transform his FLSA
claim into a tort claim subject to the economic loss doctrine and defendants’ motion to
dismiss on this basis will be denied.
2
It appears that courts use the phrase “compensatory damages” in the context
of FLSA claims to refer to unpaid wages and not to the types of compensatory
damages traditionally available in tort. See, e.g., Mumby v. Pure Energy Servs. (USA),
Inc., 636 F.3d 1266, 1272 (10th Cir. 2011) (“Generally, an employer in violation of the
FLSA is liable for both compensatory damages as well as ‘an additional equal amount
as liquidated damages,’ essentially doubling the plaintiffs’ damage award. 29 U.S.C.
§ 216(b).”). Accordingly, plaintiff’s use of the term “compensatory damages” does not
automatically transform his statutory claim into a tort claim.
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B. State Law Claims
1. Breach of Contract
Defendants seek to dismiss plaintiff’s breach of contract claim against Ram’s
Horn on the grounds that it is barred by the statute of limitations. Docket No. 121 at 1213. Plaintiff argues that his “‘at will’ employment relationship with Defendants gave rise
to a unilateral contract” under which defendants agreed to abide by applicable wage
laws and thus that defendants’ failure to pay overtime constituted a breach of contract.
Docket No. 127 at 4. He further asserts that the statute of limitations on his claim is six
years because he is seeking to recover a liquidated debt. Docket No. 127 at 6-7.
Defendants argue that the alleged debt is not liquidated because the parties did not
have a written agreement. Docket No. 133 at 4-5. Thus, they argue that plaintiff’s
contract claim is time-barred with respect to defendant Ram’s Horn because the alleged
breach would have occurred in August 2008, more than three years before plaintiff
moved to amend his complaint to include Ram’s Horn on February 13, 2012. Docket
No. 133 at 4-5, 8-9.
Under Colorado law, a claim for breach of contract must be brought within three
years after the cause of action accrues. Colo. Rev. Stat. § 13-80-101(1)(a). A contract
claim accrues “on the date the breach is discovered or should have been discovered by
the exercise of reasonable diligence.” Colo. Rev. Stat. § 13-80-108(6). The limitations
period on a claim to recover a liquidated debt or “an unliquidated determinable amount
of money” is six years. Colo. Rev. Stat. § 13-80-103.5(1)(a).
In Portercare Adventist Health System v. Lego, the Colorado Supreme Court
8
held that a “liquidated debt” is one that “may be ascertained either by reference to the
agreement, or by simple computation using extrinsic evidence if necessary.” 286 P.3d
525, 528 (Colo. 2012) (citing Rotenberg v. Richards, 899 P.2d 365, 367 (Colo. App.
1995) (“if the amount of a claim is readily calculable or ascertainable, a debtor’s dispute
of or defenses against such claim, or any setoff or counterclaim interposed to such
claim, does not affect the character and classification of that claim as being
liquidated”)).
In Farley v. Family Dollar Stores, Inc., 12-cv-00325-RBJ-MJW, 2013 WL 500446,
at *7-8 (D. Colo. Feb. 11, 2013), another court in this district held that an alleged debt
for unpaid overtime pursuant to an implied unilateral contract was not liquidated
because the parties disputed the proper way of calculating any overtime that might be
due. Defendants cited Department of Labor regulations under which an employer and
employee may agree that work will be compensated at a fixed weekly rate, regardless
of the number of hours worked. 29 C.F.R. § 778.114(a). Such an arrangement is
permissible so long as the salary compensates the employee at no less than minimum
wage “for every hour worked in those workweeks in which the number of hours he
works is greatest, and if he receives extra compensation, in addition to such salary, for
all overtime hours worked at a rate not less than one-half his regular rate of pay.” Id.;
see also Clements v. Serco, Inc., 530 F.3d 1224, 1230-31 (10th Cir. 2008) (finding that
parties had a clear mutual understanding that employees would be paid a weekly salary
and thus upholding an award of overtime based on half-time method of computation).
Defendants argued that, because there was no agreement regarding the method by
which any overtime owed should be calculated, the alleged debt was not liquidated.
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Farley, 2013 WL 500446, at *8.
Unlike in Farley, defendants here do not argue that the parties had agreed to a
flat weekly salary as opposed to an hourly wage, nor do they otherwise dispute that, if
overtime wages are owed, they must be calculated according to the wage-and-a-half
method. See generally, Docket Nos. 121, 133. This case is akin to Portercare insofar
as the alleged debt may be calculated “by simple computation using extrinsic evidence.”
286 P.3d at 528. Even if plaintiff’s contract claim accrued “upon receiving his first
paycheck on or around August 18, 2008,” Docket No. 121 at 12-13, the statute of
limitations for this claim will not run until August 18, 2014.
Accordingly, plaintiff’s breach of contract claim against Ram’s Horn is not timebarred.
2. Colorado Wage Claim Act
Defendants argue that plaintiff’s claim under the Colorado Wage Claim Act
(“CWCA”), Colo. Rev. Stat. § 8-4-101 et seq., should be dismissed because plaintiff
failed to make a written demand for payment. Docket No. 121 at 4-5. Plaintiff claims
that defendants violated the CWCA by failing to pay him sufficient overtime wages.
Docket No. 127 at 7-8.
Colorado’s Minimum Wage Order Number 29 provides that “employees shall be
paid time and one-half of the regular rate of pay for any work in excess of (1) forty (40)
hours per workweek; (2) twelve (12) hours per workday, or (3) twelve (12) consecutive
hours without regard to the starting and ending time of the workday.” 7 Colo. Code.
Regs. § 1103-1:4. “The regular rate of pay shall include all compensation paid to
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employees including . . . minimum wage tip credit.” 7 Colo. Code. Regs. § 1103-1:2.
In the event that an employer refuses to pay wages owed, “the employee . . .
shall make a written demand for the payment within sixty days after the date of
separation and shall state in the demand where such payment can be received.” Colo.
Rev. Stat. § 8-4-109(3)(a). If wages owed to the employee are not mailed to the place
specified in the demand, the employer is liable for statutory penalties in addition to the
amount of wages owed. Colo. Rev. Stat. § 8-4-109(b). Penalties are not available to
an employee who fails to make a written demand within sixty days of separation. Colo.
Rev. Stat. § 8-4-109(d); see also Voller v. Gertz, 107 P.3d 1129, 1132-33 (Colo. App.
2004) (plaintiff’s failure to make timely written demand on employer for alleged unpaid
wages precluded her claim for a statutory penalty under the CWCA) (superseded by
statute).
There is no dispute that plaintiff did not make a timely written demand to
defendants for payment of wages owed. Defendants assert that this failure bars
plaintiff’s claim under the CWCA. Docket No. 121 at 4. However, plaintiff’s omission
bars only his ability to recover penalties under the CWCA and not his ability to recover
unpaid overtime wages. See Voller, 107 P.3d at 1132-33. Defendants argue, without
support, that plaintiff’s interpretation would undermine the protection afforded by Colo.
Rev. Stat. § 8-4-109(3)(a.5), which provides:
If the employer disputes the amount of wages or compensation claimed by
an employee under this article and if, within fourteen days after the
employee’s demand, the employer makes a legal tender of the amount that
the employer in good faith believes is due, the employer shall not be liable
for any penalty unless, in a legal action, the employee recovers a greater
sum than the amount so tendered.
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However, this provision protects an employer only from the imposition of penalties; it
does not state that, by making a tender within fourteen days, the employer shall be
insulated from paying the wages determined to be owed. Here, plaintiff does not seek
penalties under the CWCA. Rather, he makes a general request for “compensatory
damages, attorneys’ fees and litigation expenses as provided by law.” Docket No. 104
at 11, ¶ 3; see also Docket No. 104 at 10, ¶ 36 (“Plaintiff hereby demands payment on
behalf of himself and all Class Members in an amount sufficient to refund all tip credits
taken against their hourly wages.”).
As plaintiff is not seeking statutory penalties, his CWCA claim is not barred by
his failure to made a demand.
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that defendants’ Motion to Dismiss Plaintiff’s First Amended Class
Action Complaint Pursuant to F.R.C.P. 12(b)(6) and 12(b)(1) [Docket No. 121] is
DENIED.
DATED February 25, 2013.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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