Camp et al v. Bimbo Bakeries USA, Inc., et al

Filing 78

///ORDER granting 52 Motion to Dismiss for Failure to State a Claim, Bimbo Bakeries counterclaim for unjust enrichment is hereby dismissed; denying 56 Motion for Miscellaneous Relief Regarding Court-Authorized Notice; denying 63 Motion for Reconsideration re: 54 Order on Motion to Certify Class. So Ordered by Judge Steven J. McAuliffe.(lml)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE

David Camp and Keith Hadmack,
on behalf of themselves and all
others similarly situated,
Plaintiffs
v.

Case No. 18-cv-378-SM
Opinion No. 2019 DNH 063

Bimbo Bakeries USA, Inc. and Bimbo
Foods Bakeries Distribution, LLC,
Defendants

O R D E R

Pending before the court are several motions for both
substantive and procedural relief.

The court will address each

in turn.

I.

Plaintiffs’ Motion to Dismiss Counterclaim.
In response to plaintiffs’ claims that defendants

(collectively “Bimbo Bakeries”) improperly classified them as
independent contractors, Bimbo Bakeries filed a counterclaim
seeking damages for “unjust enrichment.”

In it, Bimbo Bakeries

assert that:

if the Court finds that Counterclaim Defendants were
employees of BFBD or its affiliates (which it should
not), it should find that Counterclaim Defendants were
enriched as a result of their status as independent
contractors, including but not limited to, the revenue
they generated and retained by selling certain

products to their customers, the profits generated
from the sale and/or partial sale of their
distribution rights to other IBPs, the revenue
generated pursuant to the Advertising Agreements they
entered into with BFBD or its predecessor, and the tax
deductions they took for the costs of operating their
businesses.

Answer and Counterclaim (document no. 48) at 30 (emphasis
supplied).

In their memorandum of law (document no. 53),

defendants more specifically identify the ways by which they
claim plaintiffs were enriched (presumably, unjustly) by virtue
of their relationships with Bimbo Bakeries.

Plaintiffs profited from their sales of bakery
products that they purchased from BFBD or its
affiliates and then sold to their customers at a
higher price.
Plaintiffs entered into commercial Advertising
Agreements pursuant to which they were paid to
advertise brands of certain products created by BFBD
or its affiliates on their clothing and vehicles.
Plaintiffs profited by selling portions of their
distribution rights, as Plaintiff Camp did on
two occasions for a total of nearly $36,000.
Plaintiffs were able to take tax deductions for costs
associated with running their businesses by virtue of
their independent contractor status.

Defendants’ Objection (document no. 53) at 3.

That is likely an accurate summary of the benefits
plaintiffs realized as a consequence of their relationships with

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Bimbo Bakeries.

Plaintiffs were “enriched” as a result of their

efforts to sell Bimbo Bakeries’ products.

Plaintiffs were also

“enriched” as a result of their agreements to perform various
advertising services on behalf of Bimbo Bakeries.

And,

plaintiffs likely were able to avail themselves of various tax
deductions available to independent contractors.
that inured to Bimbo Bakeries’ detriment.

But, none of

Indeed, Bimbo

Bakeries were also “enriched” as a result of their relationships
with plaintiffs and benefited financially from plaintiffs’
efforts to both advertise and sell Bimbo Bakeries’ products.
And, by classifying plaintiffs as independent contractors Bimbo
Bakeries no doubt avoided substantial employer tax (and perhaps
insurance) obligations.

That’s typically how business

relationships work - each side receives some benefit.

The problem with Bimbo Bakeries’ counterclaim is that it
fails to plausibly allege how plaintiffs (if properly viewed as
employees) were unjustly enriched, at the expense of Bimbo
Bakeries.

Nor does it plausibly allege that plaintiffs obtained

some benefit from Bimbo Bakeries that would be unjust or
inequitable for them to retain if they are deemed to have been
employees.

See generally, Estate of Mortner v. Thompson, 170

N.H. 625, 631-32 (2018); Clapp v. Goffstown Sch. Dist., 159 N.H.

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206, 210, 977 A.2d 1021, 1025 (2009); Kowalski v. Cedars of
Portsmouth Condo. Ass’n, 146 N.H. 130, 133 (2001).

Many of the cases upon which Bimbo Bakeries rely in support
of their unjust enrichment claim are readily distinguishable and
of minimal persuasive value.

For example, in Parham v. Wendy’s

Co., 2015 WL 1243535, at *1 (D. Mass. Mar. 17, 2015), the court
noted that the employer’s counterclaim for unjust enrichment
arose “from an allegation that [the plaintiff] recorded work
hours when he was not actually performing work for Wendy’s,
causing Wendy’s to pay him for time when he was not working.”
There is no similar claim in this case.

In a case somewhat analogous to this one (and upon which
Bimbo Bakeries rely), exotic dancers claimed they were
improperly treated as independent contractors rather than
employees.

The employer filed a counterclaim, asserting that if

the dancers are properly viewed as employees, they should not be
permitted to retain “private and semi-private performance fees.”
Ruffin v. Entm’t of the E. Panhandle, 845 F. Supp. 2d 762, 766
(N.D. W. Va. 2011).

Specifically, if the dancers were employees

entitled to an hourly wage, the performance fees they charged
customers (which were characterized as “service fees,” rather
than “tips”) should have gone to their employer.

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Thus, when

calculating damages, the court concluded that those performance
fees would be treated as an “offset” against the dancers’
entitlements as employees.

Id. at 769.

See also McFeeley v.

Jackson St. Entm’t, LLC, 2012 WL 5928769, at *4 (D. Md. Nov. 26,
2012).

The persuasive value of cases like those involving the
exotic dancers is, however, limited.

The law is well-

established that employees are entitled to retain “tips,” while
employer’s are entitled to retain “service fees” when they are
entered into the employer’s gross receipts.

It was also

established in those cases (or at least assumed at the dismissal
stage) that the performance fees the dancers charged customers
of their employer were “service fees.”

Consequently, if the

dancers were properly viewed as employees, they would not, as a
matter of law, be entitled to retain their performance fees.
See generally 29 C.F.R. § 531.55 (distinguishing between “tips”
and “service charges”).

See also McFeeley v. Jackson St.

Entm’t, LLC, supra; Doe v. Cin-Lan, Inc., 2010 WL 726710, at *6
(E.D. Mich. Feb. 24, 2010).

Here, however, there is no established principle of
employment law that provides employees are not entitled to
retain sums paid to them by their employer to advertise the

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employer’s goods and/or services.

Nor is there any established

principle of employment law precluding employees from retaining
any profits made when they purchase an employer’s products and
re-sell them at a profit.

Nor, of course, is there a principle

of law establishing that an employer is entitled to an amount
equal to any tax deductions that an employee may have
erroneously taken.

“Unjust enrichment” is simply a poor fit to the facts
alleged in this case.

Nevertheless, the same principle of

“offset” discussed in Ruffin will apply in this case should
plaintiffs ultimately prevail.

If it is determined that

plaintiffs were employees of Bimbo Bakeries, and not independent
contractors, their final recovery (if any) will take into
account compensation they actually received from Bimbo Bakeries
for their labor, as well as sums they should have received had
they been properly treated as employees.

Their recovery (if

any) will likely amount to the difference between the two, and
obviously not the total of the two.

In the simplest of terms,

suppose it is ultimately determined that, for all his labor on
behalf of Bimbo Bakeries (advertising, selling, and delivering
products) a plaintiff actually received $1,400 in a particular
workweek.

If it is also determined that, had he been

compensated in accordance with the law, he would have received

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$1,500 in wages and overtime, he will be entitled to recover
$100 in damages.

But, that there will likely be various offsets when
calculating the total damages to which plaintiffs are entitled
(should they ultimately prevail) does not compel the conclusion
that Bimbo Bakeries have stated a viable common law claim for
“unjust enrichment.”

They have not.

Bimbo Bakeries’ counterclaim fails to plausibly allege the
essential elements of a viable common law claim for unjust
enrichment against plaintiffs.

Accordingly, Bimbo Bakeries’

unjust enrichment claim must be dismissed.

II.

Defendants’ Motion to Reconsider.
Bimbo Bakeries move for “partial reconsideration” of a

“narrow aspect” of the court’s order granting plaintiffs’ motion
for conditional certification.

Specifically, Bimbo Bakeries

assert that it would be inappropriate to send notice of a
pending collective action under the FLSA to individuals who are
subject to arbitration agreements.

In support of that view,

Bimbo Bakeries rely upon an opinion of the Court of Appeals for
the Fifth Circuit that was issued approximately two weeks after
this court’s order of conditional certification.

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See In Re

JPMorgan Chase & Co., 916 F.3d 494 (5th Cir. 2019).

According

to Bimbo Bakeries, the Fifth Circuit’s opinion “is the first
decision by an appellate court interpreting the text of the FLSA
and the Supreme Court’s controlling precedent in HoffmannLaRoche as it relates to the propriety of sending notice to
individuals with binding arbitration agreements.”
Memorandum (document no. 63-1) at 4.

Defendants’

Thus, Bimbo Bakeries

implicitly suggest that opinion is entitled to substantial
deference.

In JPMorgan Chase, the collective of potential plaintiffs
consisted of approximately 42,000 current and former JPMorgan
Chase employees.

But, the parties did not dispute that

approximately 35,000 (or 85%) of those potential members of the
collective were subject to binding arbitration agreements (and
were thus precluded from participating in the collective
action).

Id. at 498.

Given the absence of any disagreement

about the existence or enforceability of those arbitration
agreements, it is not surprising that the court held that
“[w]here a preponderance of the evidence shows that the employee
has entered into a valid arbitration agreement, it is error for
a district court to order notice to be sent to that employee as
part of any sort of certification.”

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Id. at 503.

Here, however, the plaintiffs contest both the existence
and the enforceability of any arbitration agreements.

As the

Court of Appeals for the Fifth Circuit noted, “if there is a
genuine dispute as to the existence or validity of an
arbitration agreement, an employer that seeks to avoid a
collective action, as to a particular employee, has the burden
to show, by a preponderance of the evidence, the existence of a
valid arbitration agreement for that employee.”

In re JPMorgan

Chase & Co., 916 F.3d at 502–03 (emphasis supplied).

Bimbo

Bakeries have not carried their burden.

Despite having had two opportunities to introduce evidence
suggesting that at least some potential members of the
collective are subject to enforceable arbitration agreements first, in opposition to preliminary certification and, more
recently, in their efforts to obtain reconsideration - Bimbo
Bakeries have balked.

According to Bimbo Bakeries, the

potential collective could include as many as 500 people.

Yet,

Bimbo Bakeries have not produced even a single executed
arbitration agreement signed by a potential member of the
collective.

Instead, they have merely proffered an untethered

“Exemplar Distribution Agreement” (document no. 67), which
consists of a few isolated pages extracted from what Bimbo
Bakeries say (in their memorandum, and not by way of affidavit)

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is a Distribution Agreement executed by “many” potential members
of the collective.

Defendants’ Memorandum (document no. 63-1)

at 3. 1

Extended discussion of the point is not warranted.

Even if

the court were to assume that Bimbo Bakeries have established
the predicate elements of a motion to reconsider, see generally
Local Rule 7.2(d); Fed. R. Civ. P. 59, they have failed to
demonstrate that they are entitled to the relief they seek.

III. Motion for Miscellaneous Relief.
In its order granting plaintiffs’ request for conditional
certification, the court approved the form of the notice
plaintiffs proposed to send to potential members of the
collective.
at 13.

See Order dated February 4, 2019 (document no. 54)

Nevertheless, in what plaintiffs describe as a

continuation of defendants’ “scorched earth litigation
strategy,” Bimbo Bakeries move the court for “miscellaneous

1

Parenthetically, the court notes that in its opposition to
preliminary certification, Bimbo Bakeries represented that
potential members of the collective are “bound by at least 10
different forms of the [Distribution Agreement] with materially
varying terms (e.g., arbitration agreements).” Opposition
Memorandum (document no. 33-1) at 2. If there are, indeed,
multiple versions of the Distribution Agreement, with materially
different terms, the persuasive value of the single, partial,
unsigned, “exemplar agreement” is diminished to an even greater
extent.
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relief” in the form of an order that disregards its earlier
order approving plaintiffs’ proposed notice and directs the
parties “to meet and confer and submit a [new] proposed joint
notice and stipulation regarding the procedure for issuance.”
Motion for Miscellaneous Relief (document no. 56) at 1.
Alternatively, Bimbo Bakeries move the court to simply approve a
different proposed notice - one more to Bimbo Bakeries’ liking and “enter an order directing that (1) the Notice should be
distributed by a claims administrator at Defendants’ expense, or
(2) Plaintiffs and their counsel (as well as others acting at
their direction) are prohibited from using any names or contact
information produced by Defendants for any purpose other than
mailing the Court-approved Notice.”

Id. at 1-2. 2

Neither alternative proposed by Bimbo Bakeries is, at least
as submitted, reasonable or warranted.

First, given Bimbo

Bakeries’ short history before the court, it would seem that
forcing the parties to meet in an effort to negotiate a mutually
acceptable form of notice would likely be a time-consuming,
expensive, and futile gesture.

2

As plaintiffs point out, Bimbo Bakeries already raised many
of those issues in its memoranda in opposition to conditional
certification. Consequently, their “Motion for Miscellaneous
Relief” is more properly viewed as yet another motion to
reconsider the relief awarded in this court’s order granting
conditional certification (document no. 54).
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The alternative suggested by Bimbo Bakeries is no more
appealing.

The proposed notice they have submitted is decidedly

one-sided and crafted in a manner seemingly designed to
intimidate potential members of the collective.

See Defendants’

Proposed Notice of Collective Action (document no. 56-2)
(dedicating a substantial portion of that document to a detailed
discussion of defendants’ asserted defenses; containing an
equally lengthy discussion of defendants’ (now-dismissed)
counterclaim and the potential liability faced by anyone who
might choose to join the collective; noting Bimbo Bakeries’
“right to seek to recover certain litigation costs from you and
other Distributors” who join the collective; and warning
potential collective members who are subject to an arbitration
provision with a liquidated damages clause, “you will be liable
to Bimbo Bakeries for $10,000 in liquidated damages if you join
a collective action like this case instead of arbitrating your
claim.”) (emphasis supplied).

As noted earlier, plaintiffs assert that even if some
members of the collective have Distribution Agreements that
contain mandatory arbitration provisions, those provisions are
not enforceable.

Defendants’ proposed notice implicitly assumes

such provisions (as well as the $10,000 liquidated damages

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clauses) are enforceable.

The court has not yet resolved those

potential disputed issues.

Conclusion
For the foregoing reasons, as well as those set forth in
plaintiffs’ various legal memoranda:

(1) Plaintiffs’ motion to dismiss Bimbo Bakeries’
counterclaim (document no. 52) is granted and Bimbo
Bakeries counterclaim for unjust enrichment is hereby
dismissed;
(2) Bimbo Bakeries’ Motion for Partial Reconsideration
(document no. 63) is denied; and
(3) Bimbo Bakeries’ Motion for Miscellaneous Relief
(document no. 56) is denied.

On or before May 15, 2019, Bimbo Bakeries shall provide
plaintiffs’ counsel with the names of all potential members of
the collective.

They shall also provide plaintiffs’ counsel

with complete examples of each one of the various Distribution
Agreements they say are implicated in this case and they shall
indicate which one of those various Distribution Agreements was
signed by each potential member of the collective.

Once all potential members of the collective are
identified, and it is clear which of those potential members may
be subject to enforceable arbitration agreements, plaintiffs may

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(if they choose) file an appropriate motion and supporting
memorandum of law challenging the enforceability of those
arbitration agreements (and, if standing is an issue, plaintiffs
may seek leave to amend their complaint to add additional
plaintiffs as necessary).

SO ORDERED.
____________________________
Steven J. McAuliffe
United States District Judge
April 3, 2019
cc:

Harold L. Lichten, Esq.
Matthew Thomson, Esq.
Christopher B. Coughlin, Esq.
William D. Pandolph, Esq.
Michael J. Puma, Esq.
Siobhan E. Mee, Esq.

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