Hugler v. Cilantros Mexican Bar & Grill, LLC, et al

Filing 26

MEMORANDUM AND ORDER that Plaintiff's motion for leave to amend the complaint, Filing No. 20, is granted and Plaintiff shall file the amended complaint within three (3) days of the date of this order. Defendants' motions to dismiss, Filing No. 9, Filing No. 10, Filing No. 11, are denied. Ordered by Senior Judge Joseph F. Bataillon. (ADB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

EDWARD C. HUGLER,
Acting Secretary of Labor,
United States Department of Labor,

8:17CV74

Plaintiff,
MEMORANDUM AND ORDER
v.
CILANTROS MEXICAN BAR & GRILL,
LLC, MANAGUA, LLC, and ALEGRIA LLC,
Defendants.

This matter is before the Court on the defendants’ motions to dismiss pursuant to
Fed. R. Civ. Pro. 12(b)(6). Filing No. 9; Filing No. 10; Filing No. 11. Plaintiff alleges that
defendants violated sections of the Fair Labor Standards Act of 1938 (“FLSA”). 29
U.S.C. § 201 et seq. Specifically, plaintiff alleges that defendants are an enterprise
engaged in commerce under the meaning of the Act, that defendants failed to pay at
least the minimum wage to certain employees, that defendants failed to pay overtime
compensation to certain employees, and that defendants failed to make, keep, and
preserve records required under the Act. Filing No. 20, Exhibit 1, Amended Complaint.
Background
Plaintiff, who is the Acting Secretary of Labor, filed a complaint against Cilantros
Mexican Bar & Grill, LLC, Managua LLC, and Alegria, LLC. Plaintiff alleges that
defendants are an enterprise under the FLSA. Plaintiff alleges defendants violated the
FLSA by failing to pay certain employees at least the minimum wage, by failing to pay
overtime compensation, and by failing to make, keep, and preserve required records.

Plaintiff names these employees in Appendix A. Defendants then each filed a motion to
dismiss alleging that plaintiff’s complaint fails to state a claim upon which relief may be
granted. Filing No. 9, Filing No. 10., Filing No. 11. The three motions to dismiss appear
to be identical and raise the same issues. As such, the motions to dismiss will be
considered together.
Defendants allege plaintiff failed to plead any facts, and that the complaint did not
give defendants notice of what the claims are and which defendant must defend against
which claims. Defendants also allege that a portion of the claim is time-barred by the
statute of limitations. Plaintiff filed a motion for leave to file an amended complaint and
included the amended complaint as Exhibit 1. Filing No. 20. Plaintiff argues the
amended complaint fixes the prior deficiencies. Defendant argues leave to amend the
complaint would be futile because the amended complaint still fails to state a claim upon
which relief may be granted.
In the amended complaint, Plaintiff provides further allegations. Plaintiff alleges
defendants failed to pay at least the minimum wage by not compensating employees for
all hours worked including mandatory staff meetings and by paying salaried nonexempt
employees less than minimum wage for all hours worked. Plaintiff alleges defendants
failed to pay overtime compensation by paying straight time for overtime hours, not
compensating employees for all hours worked, not combining hours of employees who
worked at more than one Cilantro’s Mexican Bar and Grill restaurant location for
calculating overtime, and not paying overtime to salaried nonexempt employees.
Plaintiffs allege defendants did not make, keep, and preserve records of the hours

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employees actually worked each workday and workweek, of wages paid in cash, and of
deductions in wages for uniform costs.
Standard of Review
Under the Federal Rules, 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). The
rules require a “‘showing,’ rather than a blanket assertion, of entitlement to relief.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n.3. (2007) (quoting Fed. R. Civ. P.
8(a)(2)). “Specific 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) (quoting Twombly, 550 U.S. at 555). In order to survive
a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the plaintiff's obligation to provide the
grounds for his entitlement to relief necessitates that the complaint contain “more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Twombly, 550 U.S. at 555.
The factual allegations of a complaint are assumed true and construed in favor of
the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable
and ‘that a recovery is very remote and unlikely.’”

Id. at 556 (quoting Scheuer v.

Rhodes, 416 U.S. 232, 236 (1974)). “[O]n the assumption that all the allegations in the
complaint are true (even if doubtful in fact),” the allegations in the complaint must “raise
a right to relief above the speculative level.” Id. at 555-56. In other words, the complaint
must plead “enough facts to state a claim for relief that is plausible on its face.” Id. at
547. “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

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misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (stating that the

plausibility standard does not require a probability, but asks for more than a sheer
possibility that a defendant has acted unlawfully.).
Twombly is based on the principles that (1) the tenet that a court must accept as
true all of the allegations contained in a complaint is inapplicable to legal conclusions
and (2) only a complaint that states a plausible claim for relief survives a motion to
dismiss. Id. at 678-79. Determining whether a complaint states a plausible claim for
relief is “a context-specific task” that requires the court “to draw on its judicial
experience and common sense.” Id. at 679. Accordingly, under Twombly, a court
considering a motion to dismiss may begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the assumption of truth. Id. Although
legal conclusions “can provide the framework of a complaint, they must be supported by
factual allegations.” Id. When there are well-pleaded factual allegations, a court should
assume their veracity and then determine whether they plausibly give rise to an
entitlement to relief. Id.
Thus, the court must find “enough factual matter (taken as true) to suggest” that
“discovery will reveal evidence” of the elements of the claim. Twombly, 550 U.S. at 556;
Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 347 (2005) (explaining that something
beyond a faint hope that the discovery process might lead eventually to some plausible
cause of action must be alleged). When the allegations in a complaint, however true,
could not raise a claim of entitlement to relief, the complaint should be dismissed for
failure to state a claim under Fed. R. Civ. P. 12(b)(6). Twombly, 550 U.S. at 558; Iqbal,
556 U.S. at 679.

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Discussion
Plaintiff alleges defendants are covered employers under FLSA minimum wage
and overtime compensation requirements as an enterprise engaged in commerce or in
the production of goods for commerce. 29 U.S.C. §§ 206-207 (2016 & 2010). An
enterprise is defined in the Act and the plaintiff must allege defendants have related
activities performed, through unified operation or common control, for a common
business purpose. 29 U.S.C. § 203 (2014). Plaintiff alleges defendants operate the
same type of business under the same name in the same geographic area. Plaintiff also
alleges that the defendant companies are owned by the same people in the same
percentages for each company. In order to be an enterprise engaged in commerce or
the production of goods for commerce, the plaintiff must also allege: (1) employees
either engaged in commerce, the production of goods for commerce, or that employees
handle, sell, or work on good or materials that have been moved or produced for
commerce, and (2) their annual gross volume of sales made or business done is not
less than $500,000. Plaintiff alleges defendants meet both these requirements. Plaintiff
alleges defendants violated the FLSA by failing to pay at least minimum wage for
certain employees, failing to pay overtime compensation to certain employees, and
failing to make, maintain, and preserve records required by the Act.
The Court finds that plaintiff has sufficiently pled these allegations. Plaintiff
alleges defendants are covered employers under the FLSA as an enterprise engaged in
commerce or in the production of goods for commerce. Alleging these requirements is
sufficient to survive a motion to dismiss. Duby v. Shirley May’s Place, LLC, No. 1611443, 2017 WL 1021062, at *3 (E.D. Mich., March 16, 2017). Several cases have held

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that it is sufficient to plead coverage, that the employee worked more than 40 hours in
one workweek, and that the employee was not paid overtime compensation. Sec’y of
Labor v. Labbe, 319 Fed. Appx. 761, 763-4 (11th Cir. 2008); McDonald v. Kellogg Co.,
No. 08-2473-JWL, 2009 WL 1125830, at *1 (D. Kan., Apr. 27, 2009); See Kehler v.
Albert Anderson, Inc., No. 16-5318 (JBS/KMW), 2017 WL 1399628, at *7 (D. N.J., Apr.
18, 2017). Similarly, cases have held similar liberal pleading standards for alleging
failure to pay minimum wage, and for alleging failure to make, keep, and preserve
records. See Sec’y of Labor v. Labbe, 319 Fed. Appx. 761, 763-4 (11th Cir. 2008);
Schmidt v. DIRECTV, LLC, No. 14-3000 (JRT/JSM), 2016 WL 519654, at *18 (D. Minn.,
Jan. 22, 2016); Kemp v. Frank Fletcher Cos., Ltd., No. 4:10CV01122JLH, 2010 WL
4096564, at *2 (E.D. Ark., Oct. 18, 2010). Plaintiff also alleges the actions that led to the
wrongful compensation (e.g. not combining hours of employees who worked at more
than one Cilantro’s Mexican Bar and Grill restaurant location). Further, the amended
complaint gives defendants notice of the claims against it- willful failure to pay minimum
wage and overtime, and keep, make, and preserve certain records, as well as who was
paid wrongfully- employees listed in Appendix A, and the timeframe for when the
employees were paid wrongfully.
Some circuit courts have held the plaintiff must allege facts demonstrating that
there was at least one week in which the plaintiff worked over forty hours and was not
compensated for overtime. Hall v. DIRECTV, LLC, 846 F.3d 757, 777 (4th Cir. 2017);
Landers v. Quality Commc’ns, Inc., 771 F.3d 638, 644-45 (9th Cir. 2014); Davis v.
Abington Mem’l Hosp., 765 F.3d 236, 242-43 (3d Cir. 2014) (stating allegations that
plaintiffs typically worked 40 hours a week and frequently worked extra time is not

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sufficient because plaintiffs did not allege a single workweek in which they worked 40
hours and extra time); Dejesus v. HF Mgmt. Servs., LLC, 726 F.3d 85, 89-90 (2d Cir.
2013). However, plaintiffs are not required to allege a particular week in which they
worked over forty hours and were not compensated for overtime. Hall v. DIRECTV,
LLC, 846 F.3d 757, 777 (4th Cir. 2017); Davis v. Abington Mem’l Hosp., 765 F.3d 236,
243 (3d Cir. 2014).
Plaintiff alleges that employees worked over 40 hours in one or more work weeks
and were not properly compensated overtime. Plaintiff alleges reasons why overtime
was not properly calculated, including failing to combine hours of employees who
worked at more than one location and failing to pay for all hours worked such as time in
mandatory staff meetings. Plaintiff has plausibly stated weeks in which employees
would have worked more than 40 hours that week and not been properly compensated,
e.g. weeks where more than 40 hours were worked by an employee by working at more
than one location. The Court finds these allegations are sufficient on a motion to
dismiss.
Lastly, defendants allege part of the time claimed by plaintiff is time-barred by the
statute of limitations. The statute of limitations is an affirmative defense, which is
generally not considered on a motion to dismiss for failure to state a claim upon which
relief may be granted. Couzens v. Donohue, 854 F.3d 508, 516 (8th Cir. 2017) (“As a
general rule, ‘the possible existence of a statute of limitations defense is not ordinarily a
ground for Rule12(b)(6) dismissal unless the complaint itself establishes the defense.’”)
(quoting Joyce v. Armstrong Teasdale, LLP, 635 F.3d 364, 367 (8th Cir. 2011)); Jessie
v. Potter, 516 F.3d 709, 716 n.2 (8th Cir. 2008) (“[T]herefore the possible existence of a

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statute of limitations defense is not ordinarily a ground for Rule 12(b)(6) dismissal
unless the complaint itself establishes the defense.“) (citing Varner v. Peterson Farms,
371 F.3d 1011, 1017 (8th Cir. 2004)). The general statute of limitations for an FLSA
claim is two years; however, it may be extended to three years if the violation was
willful. 29 U.S.C. § 2617(c) (2008). Willful violations of the FLSA have a three year
statute of limitations. Plaintiff pleads willfulness in his complaint. Pleading willfulness is
sufficient to survive a motion to dismiss. Svoboda v. Tri-Con Indus., Ltd., No.
4:08CV3124, 2008 WL 4754647, at *2 (D. Neb., Oct. 27, 2008) (finding a general
allegation that the employer’s violation was willful was sufficient to extend the statute of
limitations to three years on a motion to dismiss).
The Court finds that plaintiff has alleged sufficient facts to meet the Iqbal and
Twombly requirements. Clearly, defendants are on notice of the charges against it.
There are sufficient facts to proceed to discovery. Accordingly, the Court will grant the
motion for leave to amend the complaint and deny the motions to dismiss.
THEREFORE IT IS ORDERED THAT:
1. Plaintiff’s motion for leave to amend the complaint, Filing No. 20, is granted
and Plaintiff shall file the amended complaint within three (3) days of the date of this
order.
2. Defendants’ motions to dismiss, Filing No. 9, Filing No. 10, Filing No. 11, are
denied.
Dated this 8th day of September, 2017.
BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge
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