Delgado v. Castellino Corporation et al

Filing 49

OPINION AND ORDER OVERRULING OBJECTIONS, ADOPTING RECOMMENDATION, AND DENYING MOTION TO DISMISS: The Court OVERRULES the Defendants' Objections (#36) and ADOPTS the Magistrate Judge's Recommendation 35 , albeit on slightly different grounds. The Defendants' Motion to Dismiss 16 is DENIED by Chief Judge Marcia S. Krieger on 9/2/14.(msksec, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Marcia S. Krieger
Civil Action No. 13-cv-03379-MSK-MJW
ANDREW DELGADO, on behalf of himself and all similarly situated persons,
Plaintiff,
v.
CASTELLINO CORPORATION, d/b/a Via Toscana; and
ROBIN CASTELLINO,
Defendants.
______________________________________________________________________________
OPINION AND ORDER OVERRULING OBJECTIONS, ADOPTING
RECOMMENDATION, AND DENYING MOTION TO DISMISS
______________________________________________________________________________
THIS MATTER comes before the Court pursuant to Mr. Delgado’s Objections (# 36) to
the Magistrate Judge’s May 20, 2014 Recommendation (# 35) that the Defendants’ Motion to
Dismiss (# 16) be denied, the Defendants’ response (# 38), and Mr. Delgado’s reply (# 40).
The issue before the Court is primarily a legal one, and thus, only a minimal factual
recitation is necessary. Mr. Delgado, a former employee of a business owned by the Defendants,
commenced this action alleging that the Defendants failed to pay him the minimum wage
required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and related claims
arising under Colorado’s Wage Claim Act, C.R.S. § 8-4-101, and common-law breach of
contract. Pursuant to 29 U.S.C. § 216(b), Mr. Delgado seeks to bring his FLSA claim as a
“collective action”1 on behalf of all similarly-situated employees who ultimately opt-in to such
an action.
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A “collective action” under § 216(b) differs from the traditional class action under Fed.
R. Civ. P. 23, in that Rule 23 class actions are generally “opt-out,” such that class members are
1

Shortly after Mr. Delgado commenced this action, the Defendants tendered an Offer of
Judgment under Fed. R. Civ. P. 68, offering Mr. Delgado what the Defendants contend was the
full amount of potential unpaid wages he could recover, an equal amount as liquidated damages
permitted under the FLSA, costs of the action, and a reasonable attorney fee to be determined by
the Court. Mr. Delgado did not accept the offer, and it eventually lapsed by its own terms.
The Defendants now move to dismiss (# 16) Mr. Delgado’s FLSA claims (including the
putative collective action claims) for lack of standing, arguing that their Offer of Judgment for
the maximum amount recoverable by Mr. Delgado on his individual claim, whether accepted or
not, operates to moot both his own individual claim and any as-yet-unadjudicated putative
collective action claim.
The Court referred the Defendants’ motion to the Magistrate Judge for a
recommendation, and the Magistrate Judge recommended (# 35) that the motion be denied,
citing to prior decisions by this Court and others on the same or similar legal questions, as
discussed in greater detail below. The Defendants filed timely Objections (# 36) to the
Recommendation, arguing that the Magistrate Judge misconstrued recent Supreme Court
precedent allegedly on-point. This Court reviews the objected-to portions of the
Recommendation de novo. Fed. R. Civ. P. 72(b).
As will be explained in more detail below, this matter presents two separate legal
questions, one embedded within the other: (i) does a defendant’s tender of an Offer of Judgment
for the full amount of a plaintiff’s possible recovery, if unaccepted by the plaintiff, operate to
render the plaintiff’s claim moot and thus deprive the plaintiff of standing to pursue that claim?;

presumptively treated as remaining in the litigation class unless they affirmatively request to be
excluded. A collective action under § 216(b) results in notice of the action being sent to all
potential “class” members, but only those members who affirmatively “opt in” to the action by
filing a consent form become joined in the litigation.
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and (ii) if it does, does that mootness further preclude the plaintiff from pursuing putative classor collective action allegations in the complaint?
In recent decisions, this Court has answered the first question in the affirmative, and the
second question in the conditional negative. In Miranda v. Receivables Performance
Management, LLC, 2013 WL 3958367 (D.Colo. Aug. 1, 2013) (slip op.), this Court addressed
the question of whether an unaccepted Rule 68 Offer of Judgment for the full amount of a
plaintiff’s claim operated to render that claim moot. This Court turned to Lucero v. Bureau of
Collection Recovery, Inc., 639 F.3d 1239, 1243 (10th Cir. 2011), for guidance. In Lucero, the
plaintiff brought a putative class action claims against the defendant under the Fair Debt
Collection Practices Act. The defendant made an Offer of Judgment in the full amount of the
plaintiff’s potential recovery, and then moved to dismiss the plaintiff’s claim as moot. On appeal
from the trial court’s dismissal of the action as a whole, the 10th Circuit first acknowledged the
general rule that “if an offer is made for a plaintiff’s maximum recovery, his action may be
rendered moot.” 639 F.3d at 1243. It then noted that “[w]hile we have yet to address the
question squarely, other circuits have concluded that if a defendant makes an offer of judgment
in complete satisfaction of a plaintiff’s claims in a non-class action, the plaintiff’s claims are
rendered moot because he lacks a remaining interest in the outcome of the case.” Id., citing
Sandoz v. Cingular Wireless, LLC, 553 F.3d 913, 915 (5th Cir. 2008) and Rand v. Monsanto Co.,
926 F.2d 596, 598 (7th Cir. 1991). Based on this authority, the Court reformed the somewhat
ambiguous offer tendered by the defendant, deemed Ms. Miranda to have accepted it, and
entered judgment in favor of Ms. Miranda consistent with the terms of the reformed offer.
Implicitly, then, this Court recognized that an Offer of Judgment for the full amount of a
plaintiff’s claim would operate to moot that claim, even if unaccepted by the plaintiff.

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This Court faced the second portion of the question above – whether the mooting of a
plaintiff’s individual claim by an Offer of Judgment affects putative collective action allegations
– in Perez v. Pinon Management, Inc., 2013 WL 1149567 (D.Colo. Mar. 19, 2013) (slip op.).
There, the plaintiff brought an FLSA overtime claim on behalf of herself and a putative “class,”
and the defendant made an Offer of Judgment in the full amount of the plaintiff’s individual
claim and sought dismissal of the entire action, including the putative collective action
allegations, as moot. Again, this Court took its cue from Lucero. There, after a careful and
thorough analysis, the 10th Circuit held that “a named plaintiff in a proposed [Rule 23] class
action . . . may proceed to seek timely class certification where an unaccepted offer of judgment
is tendered in full satisfaction of the plaintiff’s individual claim before the court can reasonably
be expected to rule on the class certification motion.” 639 F.3d at 1250. In Perez, this Court
concluded that Lucero’s reasoning would apply equally strongly to FLSA collective actions, and
thus, held that Ms. Perez’s diligent pursuit of a class certification motion prevented the
defendant’s Offer of Judgment from completely mooting the action.2
Both of these holdings were called into question by the Supreme Court’s recent decision
in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013). Genesis presents the same
basic factual scenario as Perez and this case: the plaintiff asserts FLSA claims on behalf of
him/herself, along with putative collective action allegations, and the employer tenders an Offer
of Judgment in full satisfaction of the plaintiff’s individual claim, then seeks to dismiss the entire
action as moot. The majority of the sharply-divided Court began by assuming that the tender of
the unaccepted offer operated to moot the plaintiff’s individual claim. 133 S.Ct at 1528-29.
(The majority stated that the trial court and Third Circuit found as much, and the plaintiff had not
2

Perez did not address the effect of the Offer of Judgment on Ms. Perez’s individual

claims.
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sought certiorari on that question. Id. at 1529.) From that assumption, the Court concluded that
the mooting of the individual claim further operated to moot any putative collective action claims
by the plaintiff as a representative as well, thus requiring dismissal of the entire suit for lack of
subject-matter jurisdiction. 133 S.Ct. at 1532.
In a dissent joined by three other Justices, Justice Kagan emphatically protested the
outcome. She asserted that the error in the majority’s ruling arose when the majority made the
assumption that the unaccepted offer acted to moot the plaintiff’s individual claim. She stated
that such a conclusion was “wrong, wrong, and wrong again.” Id. at 1533. Insisting that an
unaccepted Offer of Judgment, regardless of the terms, was a “legal nullity,” Justice Kagan
offered “a friendly suggestion to the Third Circuit: Rethink your mootness-by-unaccepted-offer
theory,” and further punctuated it with “a note to all other courts of appeals: Don’t try this at
home.” Id. at 1534. Although Justice Kagan contended that this error made it such that the
majority’s opinion thus addressed a situation that could no longer arise, she further explained the
dissenting justices’ position that an Offer of Judgment in full satisfaction of an individual claim
would not operate to moot collective action allegations in any event, as such an offer “does not
give a plaintiff . . ., exercising her right to sue on behalf of other employees, all that she has
requested in the complaint (i.e. relief for the class).” 133 S.Ct. at 1536.
Here, the Magistrate Judge acknowledged the decision in Genesis, but found it
distinguishable from cases like Perez and Lucero, in that the plaintiff in Genesis “never filed for
condition certification of the putative class and remained the sole plaintiff throughout the
proceedings.” Docket # 35 at 3. However, this appears to be an incorrect assessment of the case.
The Supreme Court opinion does contain text to the effect that the plaintiff “remained the sole
plaintiff throughout these proceedings,” 133 S.Ct. at 1527, but the underlying Third Circuit

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opinion, Symczyk v. Genesis HealthCare Corp., 656 F.3d 189, 190-91 (3d Cir. 2011), clarifies
the matter. It explains that the plaintiff commenced the action on December 4, 2009; the
defendant filed and Answer and accompanying Offer of Judgment on February 18, 2010; the
District Court, “unaware of the offer of judgment,” held a Scheduling Conference on March 8,
2010; and subsequently issued a Scheduling Order providing for a 90-day preliminary discovery
period, by the end of which the plaintiff “will move for conditional certification.” Id. at 191.
The deadline for class certification never came to pass, as the defendant moved to dismiss the
action on March 23, 2010, and the District Court granted that motion on May 19, 2010. Id.
Thus, by all appearances, the plaintiff in Genesis was diligently pursuing her class
certification motion at the time the trial court dismissed those claims. This is precisely the
factual scenario presented in this case: although the Defendants have already made their Offer of
Judgment, the Scheduling Order in this case does not require Mr. Delgado to file a motion for
certification until August 31, 2014 (and the Court will assume that, barring dismissal of his
action, Mr. Delgado intends to comply). This Court therefore disagrees with the Magistrate
Judge that Genesis is in any way factually distinguishable from the instant case. Moreover, this
Court sees nothing in the Supreme Court majority’s opinion in Genesis that suggests that the
outcome of the case turned on how diligently the plaintiff was pursuing the class certification
motion at the time of the Offer of Judgment or dismissal.
This, then, leaves the question of how to resolve this action in light of Genesis. That
question is complicated. On the one hand, four members of the dissent have indicated, in stark
and unflinching terms, that they absolutely reject the notion that an unaccepted Offer of
Judgment can operate to moot a plaintiff’s claim. On the other hand, the majority’s opinion
carefully and deliberately avoids that question, acknowledging a Circuit split on the issue but

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expressly stating that “we do not reach this question, or resolve the split, because the issue is not
properly before us.” 133 S.Ct. at 1528-29. Rather, the majority merely assumes the applicability
of a doctrine that the dissent so vigorously rejects, never actually endorsing it. The question is
further complicated by the failure of the 10th Circuit to conclusively address the matter; even
Lucero expresses only lukewarm enthusiasm for the doctrine, acknowledging only that “other
circuits have concluded” that a sufficient offer activates the mootness doctrine. 639 F.3d at
1243.
Ultimately, this Court elects to err on the side of caution, allowing Mr. Delgado’s claims
to proceed. Four Justices of the Supreme Court emphatically reject the notion that an unaccepted
Offer of Judgment can render a claim moot. If the majority in Genesis had affirmed that
doctrine, or even expressed some support for it, this Court might be inclined to concede the
doctrine’s continuing vitality. But they did not – beyond acknowledging the existing Circuit
split on the question and carefully construing the grant of certiorari to avoid reaching that matter,
the majority gave no signal that it viewed the “mootness-by-unaccepted-offer theory” with any
degree of favor. Similarly, the 10th Circuit has itself chosen to carefully avoid deciding the
question. As between extremely vocal opponents of the doctrine on one side, and an absence of
any vocal proponents for it on the other, this Court is compelled to conclude that the doctrine is
waning in power.
Moreover, the Court finds certain aspects of Justice Kagan’s dissent in Genesis
persuasive. An Offer of Judgment that addresses only the relief attainable by an FLSA plaintiff
in an individual capacity does not grant that plaintiff all of the relief that the FLSA permits, such
that dismissal on mootness grounds is appropriate. The ability to bring a collective action under
§ 216(b) is part of the bundle of rights conferred on employees by the statute, and is not

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addressed by an Offer of Judgment that concedes only individual relief. Genesis, 133 S.Ct. at
1536. Thus, there is reason to doubt that the Defendants’ offer here is, on its face, complete,3
much less that its rejection may invoke doctrines of mootness. Accordingly, and Miranda
notwithstanding, this Court shares the Genesis dissent’s doubt that an unaccepted Offer of
Judgment, even affording full relief, can operate to render an individual’s claim moot. Genesis
conclusively establishes that, if mootness follows from the offer, that mootness encompasses
unadjudicated class allegations as well, but it offers no guidance or resolution on the predicate
question.
Ultimately, the issue is not of great practical consequence here. The Defendants go to
some length in their Objections to contend that Mr. Delgado is “a lone, disgruntled, former
employee” alleging “frivolous” FLSA claims. If this is truly the case, and Mr. Delgado’s
concerns over the Defendants’ pay policies are not shared by other current and former
employees, there is little to fear: the Defendants can avoid incurring additional fees or expenses
by conceding any motion seeking preliminary class certification and wait for Mr. Delgado to fail
to secure the requisite opt-in notices from other employees. At that point, the Defendants can
reinstate their Offer of Judgment with regard to Mr. Delgado’s individual FLSA claim with all
sides secure in the knowledge that such an offer will conclusively resolve those claims –
certainly, Mr. Delgado would not resist a complete Offer of Judgment on his individual FLSA
claims once his class allegations have been shown to be quixotic. If the Defendants are wrong,
however, and other employees wish to join Mr. Delgado’s FLSA action, the Defendants’
strategic attempt to dismiss Mr. Delgado’s claims at this early stage seems to be opportunistic.

3

The Court is compelled to note that Mr. Delgado disputes that the Defendants’ Offer of
Judgment fully compensates him for all monetary damages and declaratory relief recoverable
under his FLSA claim, much less his other claims.
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Accordingly, the Court OVERRULES the Defendants’ Objections (# 36) and ADOPTS
the Magistrate Judge’s Recommendation (# 35), albeit on slightly different grounds. The
Defendants’ Motion to Dismiss (# 16) is DENIED.
Dated this 2nd day of September, 2014.
BY THE COURT:

Marcia S. Krieger
Chief United States District Judge

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