Kuntze v. Josh Enterprises, Inc.
Filing
23
OPINION AND ORDER: Defendant's motion to dismiss Plaintiff's overtime claim for lack of subject matter jurisdiction is DENIED. Defendant's motion to dismiss Plaintiff's regular time claim for failure to state a claim is GRANTED, a nd Plaintiff is PROVIDED leave to amend her complaint to state an FLSA claim for unpaid regular hours within twenty-one days (21) days of the date of this Opinion and Order, if she can do so in good faith. Signed by Chief District Judge Mark S. Davis on 2/27/2019. (dcou, )
FEB 2 7 2019
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
Norfolk Division
SUZANNE KUNTZE,
Plaintiff,
Case No.: 2:18cv38
V.
JOSH ENTERPRISES, INC., d/b/a,
JACKSON HEWITT TAX SERVICE,
Defendant.
OPINION AND ORDER
This matter is before the Court on a motion to dismiss, for
lack of s\ibject matter jurisdiction and for failure to state a
claim, filed by defendant Josh Enterprises, Inc. (''Defendant")
pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of
Civil Procedure.
("Plaintiff")
Standards
Def. Mot., ECF No. 9.
claims
Act
that
("FLSA")
by
Defendant
Plaintiff Suzanne Kuntze
violated
purposefully
the
Fair
misclassifying
Labor
her
as
exempt from overtime, failing to pay her overtime, and failing to
pay
her
at
her
regular
rate
for
mandatory
training
hours.
Defendant contends that (1) it already paid Plaintiff the money to
which she is entitled under the "fluctuating workweek" calculation
for overtime pay,
thus
mooting Plaintiff's overtime claim and
depriving the Court of jurisdiction; (2) Plaintiff failed to state
a claim for unpaid regular time; and (3) even if Plaintiff amends
her claim for unpaid regular time, the claim would be moot because
Defendant already paid more than full relief.
Plaintiff responds
that (1) the fluctuating workweek method does not apply to the
overtime claim advanced in this case and, therefore, her claim for
overtime is not moot; and (2) she adequately alleged a violation
of the FLSA for unpaid regular hours.
Alternatively, Plaintiff
requests that she be granted leave to amend the record, or that
the
Court permit the parties to conduct discovery, and that
Plaintiff be granted leave to amend her complaint after discovery.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
Plaintiff began working for Defendant, a tax service company,
in 2015 after Defendant acquired ownership of Plaintiff's previous
employer.
since 2005.
Plaintiff worked for her previous employer year-round
Compl. K 9, EOF No. 1.
In 2015, after taking over
the company. Defendant gave Plaintiff the title of "Manager" and
had her sign a new employment agreement.
Compl. H 10-11.
Under
the new agreement. Plaintiff worked as a seasonal employee making
a bi-weekly salary of $1,280.00 during "tax season."
PI.'s Ex. B, ECF No. 1-2.
Compl. H 13;
During the off season, she worked
reduced hours at an hourly wage.
Compl. H 14-15.
Plaintiff
alleges that, notwithstanding her title as "Manager," Defendant
took away her managerial job duties such as the ability to hire,
fire,
schedule,
and
supervise
employees,
reducing
her
responsibilities
preparer."
to
that
of
a
^^regular
customer
service
tax
Compl, % 12.
At the end of 2015, Plaintiff was required to sign a new
employment agreement to keep her position.
Compl. H 16.
The
agreement kept Plaintiff on a bi-weekly salary of $1,280.00 during
the tax season and changed her title to ''Shift Supervisor." Compl.
H 16; Pl.'s Ex. C, ECF No. 1-3.
At the end of 2016, Defendant
required Plaintiff to sign a new employment agreement which set
her bi-weekly salary at $1,330.00 for the tax season.
20; Pl.'s Ex. D, ECF No. 1-4.
Compl. H
None of the agreements capped
Plaintiff's tax season hours, but all three required Plaintiff to
clock-in and out.
that
Defendant
Pl.'s Exs. B, C, D.
would
schedule
The agreements also noted
Plaintiff's
hours
"to
meet
[Defendant's] customer demands because customer demand fluctuates
throughout Tax Season." Pl.'s Exs. B, C, D.
In a letter dated August 11, 2017, Plaintiff requested a
$60,000 payment from Defendant to compensate her for unpaid
overtime and regular time.
Def.'s Ex. A, ECF No. 10-1.
Defendant
responded via counsel on November 18, 2017, with a letter stating
that, while Defendant maintained that Plaintiff was exempt from
overtime, it would nonetheless compensate Plaintiff for overtime
based on the fluctuating workweek methodology.
Def.'s Ex. C, ECF
No. 10-3. With the letter. Defendant issued two checks purportedly
"in full satisfaction of
[Plaintiff's]
claims against
[her]
employer." Def.'s Ex. C.
The letter explained that one check, in
the amount of $5,977.72, was for uncompensated overtime calculated
based on half of her regular hourly rate under the fluctuating
workweek method, plus an additional, equal amount, for liquidated
damages.
Def.'s Ex. C.
The second check, which was in the amount
of $267.78, was intended to compensate Plaintiff at her regular
hourly rate for the sixteen and a half regular hours that she spent
completing mandatory training.
Def.'s Ex. C.
Plaintiff did not
cash the two checks and instead filed her complaint in this case
on January 19, 2018.
Mem. in Support of Def.'s Mot. to Dismiss,
ECF No. 10; Compl., ECF No. 1.
The day before Plaintiff filed her complaint, counsel for
Defendant sent a letter to Plaintiff's counsel highlighting issues
raised during an earlier phone conversation.
No. 10-4.
Def.'s Ex. D, ECF
The letter again emphasized that Defendant believed
Plaintiff was exempt from overtime pay, but claimed that even if
she was not. Defendant had already given Plaintiff every dollar to
which she was entitled under the proper calculation method in this
jurisdiction.
Def.'s Ex. D.
Counsel for Plaintiff replied to
Defense counsel's letter on January 19, 2018.
No. 10-5.
Defendant
Def.'s Ex. E, ECF
The letter from Plaintiff's counsel alleged that
willfully misclassified
Plaintiff
as "exempt" from
overtime payment, argued that the fluctuating workweek method was
not applicable in this case, and demanded that Plaintiff be paid
based on a time-and-a-half calculation of overtime.
Def.'s Ex. E.
The letter claimed Plaintiff sought a total of $29,298.90 as a
settlement payment, which covered overtime calculated at the time-
and-a-half
rate,
unpaid
training
time
liquidated damages, and attorney's fees.
at
her
regular
rate,
Def.'s Ex. E.
On April 12, 2018, counsel for Defendant sent Plaintiff's
counsel two cashier's checks, one for $267.78 as payment for
training hours at Plaintiff's regular hourly rate, and one for
$5,980.10
as
payment
liquidated damages.^
for
Plaintiff's
overtime
Def.'s Ex. F, ECF No. 10-6.
hours
plus
The facts in
the record do not state whether Plaintiff cashed or deposited the
cashier's checks.
B. Procedural Backgroiind
Defendant filed the instant motion to dismiss on April 16,
2018.
Def.'s Mot., ECF No. 9.
On July 11, 2018, the Court issued
an order directing the parties to schedule oral argument on the
motion to dismiss and to address controlling case law of the United
States Court of Appeals for the Fourth Circuit that applied the
half-time
calculation
of
misclassification cases.
the
fluctuating
workweek
Order, ECF No. 17.
The
method
to
Court also
directed Plaintiff to be prepared to address how discovery could
alter the amoimt of damages recoverable,
and
whether willful
^ Defendant's counsel explained that the slight difference in compensation from
the first two checks is based on a different method of roiinding used to calculate
the amount owed.
misrepresentations of entitlement to overtime have any relevance
to civil damages, in light of the FLSA's provision regarding
criminal prosecution for willful violations.
Order, ECF No. 17.
The Court then held a hearing on the motion to dismiss on September
25, 2018.
II. LEGAL STANDARD
A. 12(b)(1) Motion to Dismiss
1. Facial v. Factual Challenge
A motion to dismiss pursuant to Rule 12(b)(1) of the Federal
Rules of Civil Procedure for lack of subject matter jurisdiction
may attack a complaint on its face, insofar as the complaint fails
to allege facts upon which the court can base jurisdiction, or, as
is the case here, it may attack the truth of any underlying
jurisdictional allegations contained in the complaint.
Beck v.
McDonald, 848 F.3d 262, 270 (4th Cir. 2017); Adams v. Bain, 697
F.2d 1213, 1219 (4th Cir. 1982).
In the former situation, known
as a facial challenge, the court is required to accept all of the
complaint's factual allegations as true, ''and the plaintiff, in
effect, is afforded the same procedural protection as he would
receive under a 12(b)(6) consideration." Adams, 697 F.2d at 1219.
In the latter situation, known as a factual challenge, "the
district court may regard the pleadings as mere evidence^ on the
2 "Mere evidence" is evidence used to establish an ultimate fact, also knovm as
probative facts. See Belcher v. Tenn. Cent. Ry. Co., 377 S.W.2d 928, 931 (Tenn.
1964).
issue and may consider evidence outside the pleadings."
Velasco
V. Gov^t of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004) (citing
Adams, 697 F.2d at 1219). In explaining how district courts should
evaluate evidence presented in a factual challenge, the United
States Court of Appeals for the Fourth Circuit has indicated that
it depends on whether the jurisdictional facts are intertwined
with the merits facts.
(4th Cir. 2009).
Kerns v. United States, 585 F.3d 187, 196
Both scenarios are discussed below.
2. Facts Not Intertwined
When
jurisdictional
facts
are
not
intertwined
with
the
merits, the trial court may weigh evidence and resolve factual
disputes to determine its jurisdiction.^ See Arbaugh v. Y&H Corp.,
546 U.S. 500, 514 (2006); Adams, 697 F.2d at 1219; 2 Milton I.
Shador & Mary P. Squiers, Moore's Federal Practice - Civil § 12.30
(2018); 5B Charles Alan Wright &
Arthur R. Miller, Federal
Practice and Procedure § 1350 (3d ed. 2004).
But see Richmond,
Fredericksburq & Potomac R.R. Co. v. United States, 945 F.2d 765,
768 (4th Cir. 1991) (applying a summary judgment standard in a
case where jurisdictional facts were not intertwined with merits
facts, rather than weighing the evidence and resolving factual
3 Jurisdictional facts are not intertwined when they are "wholly unrelated to
the basis for liability." Kerns, 585 F.3d at 196; accord Brooks v. Shope, 430
F. App'x 220, 221 (4th Cir. 2011) (unpublished) (resolving a factual question
about citizenship because it was not related to proving the merits of the tort
claim).
disputes)
When such jurisdictional and merits facts are not
intertwined,
the
plaintiff
bears
the
burden
of
proving
jurisdiction by a preponderance of the evidence and may present
''affidavit[s], depositions or live testimony" to meet its burden.
Adams, 697 F.2d at 1219; accord United States ex rel. Vuyyuru v.
Jadhav, 555 F.3d 337, 437-48 {4th Cir. 2009).
As footnote 3 notes, there are published Fourth Circuit cases
that
apply
a
summary
judgment
standard
in
non-intertwined
scenarios, and in doing so, make no reference to a district court's
authority to weigh evidence, as previously established in Adams.
However, in those cases, it does not appear that the issue of a
district
judge's
authority
to
presented to the Fourth Circuit.^
weigh
evidence
was
squarely
Moreover, in at least two of
A line of Fourth Circuit cases following the decision in Richmond,
Fredericksburg & Potomac Railroad has broadly applied a summary judgment
standard, where the issue of the proper 12(b)(1) standard was not specifically
raised, without regard to whether the facts were "intertwined" and without
reference to a district court's ability to act as fact-finder and weigh evidence
in a factual 12(b)(1) challenge. See Balfour Beatty Infrastructure, Inc. v.
Mayor of Baltimore, 855 F.3d 247, 251 (4th Cir. 2017); AtlantiGas Corp. v.
Columbia Gas Transmission Corp., 210 F. App'x 244, 247 (4th Cir. 2006)
(unpublished); Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999).
It appears, however, that the Ninth Circuit decision, from which Richmond,
Fredericksburg Se Potomac Railroad draws the summary judgment standard, limits
the application of such standard to intertwined cases. Trentacosta v. Frontier
Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1558 (9th Cir. 1987). Presumably,
the Fourth Circuit would do the same if the issue was squarely presented.
5 Of the cases cited in footnote 3, the issue was most closely presented to the
Fourth Circuit in Evans. In Evans, the appellant argued that, even though the
district court said it dismissed the claims under Rule 12(b)(1), the court
actually dismissed the claims under Rule 12(b)(6). Brief of Appellant at 7-9,
Evans, 166 F.3d 642 (No. 98-1002). Additionally, the appellant argued that,
because the
case
was dismissed under Rule
12(b)(6), the district court's
consideration of evidence outside the pleadings converted it to a motion for
summary judgment. Id. In response, the appellees argued that the district
court dismissed the claims under Rule 12(b)(1) and, therefore, was permitted to
8
the cases, there were not material disputes of fact, and thus,
there
was
no
need
to
"weigh"
the
evidence.
Balfour
Beatty
Infrastructure, Inc., 855 F.3d at 251; Richmond, Fredericksburg &
Potomac R.R. Co., 945 F.2d at 769.
Accordingly, it appears that
the Richmond line of cases should not be interpreted as directly
"conflicting"
with
Adams
and
its
progeny,
and
this
Court,
therefore, may follow the well-established standard set forth in
Adams.
Alternatively, to the extent that there is a direct conflict
between the cases permitting district courts to weigh evidence and
resolve disputed jurisdictional facts (Adams and progeny), and
those applying a summary judgment standard (Richmond and progeny),
this Court must follow Adams as it is the earlier-in-time decision.
See McMellon v. United States, 387 F.3d 329, 333 (4th Cir. 2004).
Moreover, the decision in Adams is consistent with more recent
Supreme Court precedent and respected Civil Procedure treatises.
See, e.g., Bolivarian Republic of Venez. v. Helmerich & Payne Int^l
Drilling Co., 137 S. Ct. 1312, 1316 (2017) ("[W]here jurisdictional
questions turn upon further factual development, the trial judge
consider and weigh evidence beyond the pleadings without converting it to a
motion for summary judgment.
Joint Brief for Appellees at 11-15, Eva^, 166
F.3d 642 (No. 98-1002). Although the appellees brief mentioned a district
court's ability to weigh evidence, the issue squarely before the Fourth Circuit
was whether the district court decided the motion under Rule 12(b)(6) or under
Rule 12(b)(1) to determine if it properly considered evidence outside the
pleadings without converting the motion to one for summary judgment, not whether
the court had the power to weigh evidence in a 12(b)(1) factual challenge. See
Evans, 166 F.3d at 647 & n.3.
may
take
evidence
and
resolve
relevant
factual
disputes
Arbaugh, 546 U.S. at 514 (noting that "in some instances, if
subject-matter jurisdiction turns on contested facts, the trial
judge may be authorized to review the evidence and resolve the
dispute on her own") (citing 2 Moore's Federal Practice § 12.30
(3d ed. 2005);
5B Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1350 (3d ed. 2004)).
Though those recent
Supreme Court cases have not clearly defined the limitations on a
trial court's authority to weigh evidence in the 12(b)(1) context,
a review of case law from multiple circuits, including the Fourth
Circuit, indicates that district courts may typically resolve
factual disputes in 12(b)(1) motions unless the jurisdictional and
merits facts are intertwined.
See, e.g.. Kerns, 585 F.3d at 192-
93; Trentacosta, 813 F.2d at 1558; Williamson v. Tucker, 645 F.2d
404, 415 (5th Cir. 1981).
The propriety of such procedural rule is further bolstered by
the fact that "courts . . . have an independent obligation to
determine whether subject-matter jurisdiction exists, even in the
absence of a challenge from any party."
Arbaugh, 546 U.S. at 514.
It is necessary for federal courts to have the ability to determine
their own jurisdiction as soon as possible because "^federal courts
are courts of limited jurisdiction'" and they must be cautious not
to overstep the power authorized by the Constitution and federal
statute.
Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting
10
Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377
(1994)).
in
the
Accordingly, regardless of whether a "conflict'' exists
law,
the
Court
concludes
that,
consistent
with
Adams,
district courts are typically permitted to weigh evidence and
resolve factual disputes to determine jurisdiction when such facts
are not intertwined with the merits.
Adams, 697 F.2d at 1219.
3. Facts Intertwined
The analysis in an intertwined case is more nuanced than the
approach explained above for non-intertwined cases.
When facts
are said to be "intertwined," it means that facts necessary to
prove jurisdiction overlap with facts necessary to prove the merits
of
the
case
such
that a 12(b)(1)
motion
is,
essentially,
indirect attack on the plaintiff's alleged factual merits.
585 F.3d at 193.
facing
a
Kerns,
In such a scenario, the plaintiff is not only
jurisdictional
challenge,
validity of h[er] claim.'"
415).
an
but "'a
challenge
to
the
Id. (quoting Williamson, 645 F.2d at
Thus, when jurisdictional and merits facts are intertwined,
"[i]t is the better view that . . . the entire factual dispute is
appropriately resolved only by a proceeding on the merits," which
entails either denying the 12(b)(1) motion and proceeding with the
case, or converting the 12(b)(1) motion into a motion for summary
11
judgment on the merits, as explained in detail below.®
Adams, 697
F.2d at 1219 (emphasis added); accord Kerns, 585 F.3d at 193, 196.
Of course, a trial court must first assume jurisdiction before
it can deny the 12(b)(1) motion or convert it to a motion for
summary judgment on the merits.
See Kerns, 585 F.3d at 193.
Therefore, to assume jurisdiction, the trial court should engage
in a threshold analysis to ensure that the plaintiff's allegations
are sufficient to confer jurisdiction.
F.3d 140, 145 (4th Cir. 2015).
Rich v. United States, 811
This step is, essentially, a facial
analysis where "'a presumption of truthfulness should attach to
the plaintiff's allegations'" to determine if they state facts
that plausibly confer jurisdiction."^ Id. (quoting Kerns, 585 F.3d
at 193).
® Recent Supreme Court case law suggests that, in some intertwined cases, rather
than proceeding to determine the intertwined jurisdictional and merits facts at
the merits/trial stage, the better course is to conduct a proceeding addressing
jurisdiction "as near the outset of the case as is reasonably possible," even
if it "must inevitably decide some, or all, of the merits issues." Bolivarian,
137 S. Ct. at 1316-17, 1319.
The Supreme Court in Bolivarian was primarily
concerned with the need to protect a foreign sovereign from suit and used that
objective to justify its decision. Id. Further, in a Foreign Sovereign Immunity
Act case, such as Bolivarian, there is no right to a jury trial, so allowing a
district court to decide jurisdictional issues at an early stage would not
deprive the parties of the right to a jury on the overlapping merits issues.
See 28 U.S.C. § 1330(a); see also Houston v. Murmansk Shipping Co., 667 F.2d
1151, 1152 (4th Cir. 1982). Therefore, a district court may be able to weigh
evidence and decide intertwined factual issues without proceeding to the merits
in cases such as Bolivarian where there are overriding concerns about protecting
foreign sovereign immunity and where there is no risk of depriving the parties
of the right to a trial by jury on the merits. However, such scenario is not
before the Court in this case, and this Court, therefore, does not fully explore
the parameters of a potential exception to the general rule that factual
disputes in intertwined cases should be resolved in a proceeding on the merits.
■' As noted earlier, a facial analysis borrows from the 12(b) (6) standard.
the elements of the claim are also the basis for jurisdiction,
Where
conducting a
facial analysis may also decide whether plaintiff has stated a claim for relief
12
Assuming the allegations pass the threshold analysis required
in such intertwined jurisdictional/merits facts cases, then the
trial court may either (1) deny the 12(b)(1) motion and proceed
with discovery, with the understanding that a party will file a
motion for summary judgment after discovery (if doing so would not
be frivolous); or (2) treat the 12(b)(1) motion as one for summary
judgment and take it under advisement until the parties have
conducted adequate discovery - this is what courts have referred
to as simply ''proceeding on the merits," which is not to be
confused
with
disputes.
weighing
the
evidence
and
resolving
factual
Compare Carter v. United States, 694 F. App'x 918, 924
(4th Cir. 2017) (unpublished) (stating that a court should deny
the 12(b)(1) motion before proceeding to the merits) with Lutfi v.
United
States,
527
F.
App'x
236,
241-42
(4th
Cir.
2013)
(unpiiblished) (holding that the district court should have assumed
jurisdiction and proceeded as if the defendant filed a motion for
summary judgment).s
Either way, the plaintiff must be afforded
the same procedural safeguards "that would apply were the plaintiff
facing a direct attack on the merits," specifically the ability to
on the merits under Rule 12(b)(6).
See Kerns, 585 F.3d at 193 (citing
Williamson, 645 F.2d at 415) (emphasis added).
® It is not clear which approach is preferred in the Fourth Circuit. Though
these approaches are technically procedurally different, ultimately, under
either approach, the trial court is no longer making a jurisdictional decision
under Rule 12(b)(1) and, instead, is making a decision on the merits under the
summary judgment standard in Federal Rule of Civil Procedure 56.
13
conduct discovery.
Kerns /
585
F.3d
at 193.
At a
minimum,
discovery should be adequate to "resolve the relevant factual
disputes."
Kerns, 585 F.3d at 193, 196.^
B. Mootness Standard
Defendant's motion to dismiss for lack of subject matter
jurisdiction asserts that the case is moot because Defendant paid
Plaintiff all that she is legally entitled to receive, and she
has,
therefore,
received
"complete
relief."
jurisdiction over a case when it becomes moot.
716 F.3d 801, 809 (4th Cir. 2013).
A
court
loses
Williams v. Ozmit,
The mootness doctrine arises
from the "case and controversy" requirement of the United States
Constitution.
U.S. Const, art. Ill, § 2.
"[A] case is moot when
the issues presented are no longer 'live' or the parties lack a
legally cognizable interest in the outcome."
Simmons v. United
Mortg. And Loan Inv., LLC, 634 F.3d 754, 763 (4th Cir. 2011)
(quoting United States v. Hardy, 545 F.3d 280, 283 (4th Cir. 2008))
® Kerns essentially held that the district court could limit discovery to the
intertwined issue when it stated that the plaintiff "should be afforded an
opportunity - at a minimum - to conduct discovery on the intertwined . . .
issue," but the court did not specify whether the district court has discretion
to limit discovery in both scenarios; when denying the 12(b)(1) motion or when
treating the motion as one for summary judgment. Kerns, 585 F.3d at 196.
Subsequent Fourth Circuit cases discussing the standard in intertwined cases
only reference the need for "appropriate" discovery.
See Carter, 694 F. App'x
at 924; Rich, 811 F.3d at 148. Because such case law appears to allow limited
discovery and because district courts generally have the discretion to control
the scope of discovery, it logically follows that a district court may limit
discovery to the intertwined issue whether it chooses to deny the 12(b)(1)
motion or treat it like a motion for summary judgment. See Fed. R. Civ. P.
26(b); Columbus-America Discovery Group v. Atlantic Mut. Ins. Co., 56 F.3d 556,
568 n.l6 (4th Cir. 1995) ("The scope and conduct of discovery are within the
sound discretion of the district court.") (citing Erdmann v. Preferred Research,
Inc., 852 F.2d 788, 792 (4th Cir. 1988)).
14
(internal quotation marks omitted) (alterations in original).
In
other words, a case is moot when it is impossible for the court to
grant relief to the prevailing party, such as when ''complete
relief"
has
been
secured
by
a
plaintiff.
United
States
v.
Springer, 715 F.3d 535, 540 (6th Cir. 2013); Simmons, 634 F.3d at
763.
1. Supreme Court Standard from Campbell-Ewald
The United States Supreme Court recently addressed mootness
in the context of a defendant's offer of judgment under Federal
Rule of Civil Procedure 68.
Campbell-Ewald Co. v. Gomez, 136 S.
Ct. 663, 672 (2016). The Supreme Court held that a rejected offer,
even when it provides the plaintiff the relief he or she seeks,
does not moot a claim as it is considered an unaccepted settlement
offer that does not divest the plaintiff of his or her interest in
the case.
Id.
However, the Court expressly reserved decision on
the hypothetical question of "whether the result would be different
if
a defendant deposits
the
full
amount of
the
plaintiff's
individual claim in an account payable to the plaintiff, and the
court then enters judgment for the plaintiff in that amount." Id.
Comparing the offer of judgment in the case before it to railroad
tax cases in which the parties actually received payment that fully
satisfied their tax claims, the Supreme Court suggested that an
offer of judgment or settlement is legally different than actual
payment because, in the former situation, the plaintiff has not
15
received the money.
Id. at 671 (citing California v. San Pablo &
Tulare R.R. Co., 149 U.S. 308 (1893); Little v. Bowers, 134 U.S.
547 (1890); San Mateo Co\mty v. Southern Pacific R.R. Co., 116
U.S. 138 (1885)).
dissenting
Additionally, both the concurring and the
opinions
in
Campbe11-Ewa1d
suggested
that
actual
payment would moot a case because the plaintiff received full
relief.
See
Campbell-Ewald
id.
at
676
only offered
(Thomas,
to
J.,
concurring)
pay Gomez's
claim
("Because
but took
no
further steps, the court was not deprived of jurisdiction."); id.
at
679
(Roberts,
C.J.,
dissenting);
id.
at
683
(Alito,
J.,
dissenting)
2. Decisions Post-Campbell-Ewald
After the decision in Campbe11-Ewald, courts have split on
whether actual payment of full relief moots an individual's claim,
with multiple decisions turning on whether the case was a class
action.
Compare Leyse v. Lifetime Entm't Servs., LLC, 679 F. App'x
44, 48 (2d Cir. 2017) (affirming the lower court's ruling that
class certification was not warranted and that a deposit by the
defendant of a full settlement and consent to judgment permits the
court to enter judgment and moot the individual claim), S. Orange
Chiropractic Ctr., LLC v. Cayan LLC, Civil No. 15-13069-PBS, 2016
U.S. Dist. LEXIS 49067, at *12-13 (D. Mass. Apr. 12, 2016) (holding
that, even though the individual plaintiff's claims were moot, the
class action may proceed), and Price v. Berman's Auto, Inc., No.
16
14-763-JMC, 2016 U.S. Dist. LEXIS 35807, at *7-10, *8-9 n.3 (D.
Md. Mar. 21, 2016) (holding that an unconditional tender of full
relief by cashier's check was sufficient to moot a claim in a case
where there were no class action concerns), with Fulton Dental,
LLC V. Bisco, Inc., 860 F.3d 541, 545-46 (7th Cir. 2017) (holding
a deposit into an accoimt with the court in the plaintiff's name
before the plaintiff moved to certify the class was insufficient
to
moot
Allstate
the
individual
Ins.
(deciding,
in
Co.,
the
819
class
and
potential
F.3d
1136,
action
class
1146-48
context,
plaintiff's claims were not moot), and
claims),
(9th
that
the
Chen
Cir.
v.
2016)
individual
Ung v. Universal Acceptance
Corp., 190 F. Supp. 3d 855, 860-63 (D. Minn. 2016) (declaring, in
the class action context, that "there is no principled difference
between a plaintiff rejecting a tender of payment and an offer of
payment")
The Supreme Court has not yet resolved the split, and
commentators disagree on how the Court will ultimately decide the
unresolved hypothetical question.
Compare Justiciability-Class
Action Mootness-Campbell-Ewald Co. v. Gomez, 130 Harvard L. Rev.
427, 432 (2016)("If at some point, a defendant actually delivers
The majority of the cases cited deal with class actions. As noted in Campbell-
Ewald, in class action cases there are unique policy concerns about denying a
class representative the opportunity to certify a class.
Campbell-Ewald, 136
S. Ct. at 672 (majority opinion). Courts are more cautious when impacting rights
of a large class of people, which leads them to be more cautious about mooting
individual claims of class representatives. See, e.g., Chen, 819 F.3d at 114446 (refusing to deny an individual's claim as moot because the plaintiff had
not yet had a chance to certify the class).
17
a payment constituting complete relief to a named plaintiff, it
would
be
difficult
to
avoid
the
conclusion
that
the
named
plaintiff's claim has been mooted"), and Thomas D. Rowe, Jr., 13
Moore's Federal Practice § 68.04 (2018) ("In a case comprising
only the plaintiff's individual claim, the sounder view is that
the unconditional deposit of an amount that provides full relief
moots the case."), with Katrina Christakis, et al., "So You're
Telling Me There's a Chancel"; The I^ost-Campbell-Ewald Possibility
of Mooting a Class Action by "Tender" of Complete Relief, 71
Consumer Fin. L. Q. Rep. 237, 253 (2018) (arguing that only a few
defendants have succeeded in mooting individual and class claims
by tendering complete relief because of the "suspicion or outright
hostility" of courts toward allowing defendants to moot claims).
3. Fourth Circuit Standard Post-Campbell-Ewald
An unpxiblished Fourth Circuit decision after Campbe11-Ewald
briefly addressed the impact of attempted payment of complete
relief, holding that the case was not moot when the plaintiff
returned a check^i for the full amount of relief because the act
of returning the check made the payment an unaccepted settlement
offer.
Bennett v. Office of Fed. Emp.'s Grp. Life Ins., 683 F.
App'x 186, 188-89 (4th Cir. 2017) (unpublished). The court did not
The Fourth Circuit's opinion, as well as the parties' briefs in that case,
describe the financial instrument as a "check," not a cashier's check.
See
Bennett v. Office of Fed. Emp.'s Grp. Life Ins., 683 F. App'x 186, 188-89 (4th
Cir. 2017) (unpublished); Informal Response Brief of Appellees at 13-14,
Bennett, 683 F. App'x 186 (No. 16-1306), 2016 WL 2772693, at *11-14.
18
address the hypothetical question in Campbell-Ewald as to whether
actual payment of full relief moots a claim, nor did it analyze
case
law
from
other
jurisdictions
addressing
such
question.
Additionally, it did not comment on what would happen if the check
were not returned or if the defendant had made a more guaranteed
form of payment, such as a cashier's check or a deposit in an
account payable to the plaintiff.
Therefore, the hypothetical
question
remains
raised
in
Campbe11-Ewald
unanswered
in
this
Circuit.
Although there is no controlling precedent on this issue, at
least
two
district
court
cases
from
within
the
Fourth
Circuit
support the proposition that payment of complete relief can moot
a claim.
a
First, in Price, the defendant provided the plaintiffs
cashier's
check
for
the
full
plaintiffs subsequently returned.
35807, at *4-5.
amount
of
relief,
which
the
Price, 2016 U.S. Dist. LEXIS
The Maryland district court held that, because
the plaintiffs returned the cashier's check, the claim was not
moot at that time; however, if the defendant reissued the cashier's
check to the plaintiffs and renewed its motion, the court would
grant the motion to dismiss as moot.
Id. *8-10.
The Price court
reasoned that a cashier's check would be adequate to moot a claim
because the plaintiffs would possess all the money they would be
entitled to had they prevailed through litigation.
Id. at *7.
Second, another District of Maryland case, citing to the dissents
19
in Campbe11-Ewald, also decided that actual payment of complete
relief would moot a claim.
Gray v. Kern, 143 F. Supp. 3d 363,
366-67 (D. Md. 2016), rev'd on other grounds, 702 F. App'x 132,
143 (4th Cir. 2017) (unpublished).
Finding such cases persuasive,
this Court concludes that, when an individual plaintiff receives
complete relief for her claims, that plaintiff no longer has a
live case or controversy because there is no additional relief
that she can hope to obtain through further litigation.
Gray, 143
F. Supp. 3d at 366-67; Price, 2016 U.S. Dist. LEXIS 35807, at *810.
4. Whether Judgment is Necessary for Complete Relief
Even if a defendant purports to pay a plaintiff the full
amount of his or her claim, a judgment may be necessary to afford
the
plaintiff
"complete
relief"
in
some
circumstances.
See
Simmons, 634 F.3d at 765-66 (holding that payment that purportedly
satisfied the entire claim did not moot the case because it was
conditional
and
did
not
include
the
force
of
an
offer
for
judgment); Winston v. Stewart Title and Guar. Co., 920 F. Supp. 2d
631, 635 (D. Md. 2013) (reasoning that payment of a check without
consenting to an entry of judgment would not give the plaintiff
full relief because of the possibility that the defendant's check
would be defective).
Importantly, part of the reason the offer of
judgment in Campbe11-Ewald was insufficient to moot the case was
because there was no guarantee that the defendant would actually
20
pay plaintiff the full amoimt necessary to satisfy her claim.
Campbe11-Ewald, 136 S. Ct. at 672.
While a judgment may be
necessary to moot a claim in some scenarios, a judgment may be
unnecessary to moot a claim if payment is assured in another way,
such as through a duly issued cashier's check which, unlike a
personal check, is guaranteed by a bank.
See Price, 2016 U.S.
Dist. LEXIS 35807, at *8-9.
5. Proper Calculation of Complete Relief for Overtime
Under the FLSA
In order to determine whether a defendant's proffer of a
cashier's
check
to
a
plaintiff
for
an
FLSA
overtime
claim
effectuates complete relief, a court must determine whether the
amount of the cashier's check was properly calculated to cover
unpaid overtime wages.
Under the FLSA, employees are entitled to
receive additional payment for their overtime hours unless they
can be classified as "exempt" from overtime payment.
213
(listing
Employees
the
types
of
employees
classified
29 U.S.C. §
as
exempt).
may bring suit against their employers for unpaid
overtime if they believe they have been either willfully or
mistakenly misclassified as exempt employees.
See, e.g., Desmond
V. PNGI Charles Town Gaming, LLC, 630 F.3d 351, 353-54 (4th Cir.
2011).
If an employer alleges that an employee's overtime claim
has been rendered moot by sufficient payment effectuating complete
21
relief, the trial court must determine whether the payment was
calculated at the proper overtime rate.
Generally, under the FLSA, overtime is paid to non-exempt
employees at the rate of time and a half, which means that an
employee is paid for each hour at their normal hourly rate plus an
additional amount equal to half of the employee's hourly rate.
U.S.C.
§ 207;
United
States
Dep't of
Labor
v.
Fire
29
& Safety
Investigation Consulting Servs., LLC, No. 18-1632, 2019 U.S. App.
LEXIS 3971, at *6-7 (4th Cir. Feb. 8, 2019) (explaining how to
determine the proper rate for a time-and-a-half calculation).
fluctuating
workweek
method
is
an
alternative
method
The
of
calculating overtime for non-exempt employees that are paid a set
salary even if their hours change week to week.
778.114(a).
workweek
29 C.F.R. §
There are four requirements to apply the fluctuating
method:
(1)
the
employee's
hours fluctuate;
(2)
the
employee receives a fixed salary that does not vaiy with the number
of hours worked; (3) the employee's salary is sufficiently high
that he or she does not make less than minimum wage in any given
week; and (4) the employee and the employer have a clear and mutual
understanding that the fixed salary will be paid regardless of the
number of hours worked.
29 C.F.R. § 778.114(a); see Baclawski v.
Fioretti, Civil No. 3:15-CV-417-DCK, 2017 U.S. Dist. LEXIS 111317,
at *12-13 (W.D.N.C. July 18, 2017).
22
If the employee meets these criteria, the employee is paid
for overtime hours at a rate of half of their average hourly salary
each week instead of the standard time-and-a-half calculation.
C.F.R. § 778.114.
29
The theory behind the fluctuating workweek
method for calculating overtime is that a salaried employee who
meets the criteria has already received compensation for the
regular and overtime hours worked because there are no set hours
each workweek.
Therefore, the ''time" portion of time-and-a-half
pay is already compensated, and the employer need only pay the
employee the additional "half." 29 C.F.R. § 778.114; see Desmond,
630 F.3d at 357 (explaining that, because the employees agreed to
a straight time salary for all their hours, their only loss was a
fifty percent premium for overtime hours).
In other words, the
employee has bargained to be paid the same rate whether he or she
works under or over forty hours (the "time" portion of time and
half), and in exchange for the employer's promise to pay the same
rate every week, the employee only receives the "half" portion of
time and a half if he or she works over forty hours per week.^^
^2 Although courts in other jurisdictions disagree, the Fourth Circuit has held
that the half-time calculation of the fluctuating workweek method can apply to
calculate overtime damages in misclassification cases. Compare Desmond, 630
F.3d at 354 (citing Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 579-
80 (1942)) (holding that the half-time calculation of the fluctuating workweek
method could apply to calculate damages in misclassification cases) with Boyce
V. Indep. Brewers United Corp., 223 F. Supp. 3d 942, 948-49 (N.D. Cal. 2015)
(holding
that
the
fluctuating
workweek
misclassification case).
23
method
cannot
apply
in
a
For example,
consider an hourly employee who works for $10
an hour and works thirty hours in week one making $300 for the
week, forty hours in week two making $400, and fifty hours in week
three making $550.
The $550 is calculated by adding $400 for the
forty hours and $150 for the ten hours of overtime at a rate of
$15 per hour (one and a half times the employee's normal $10 rate).
On the other hand, consider a salaried employee who makes $400 per
week, qualifies under the fluctuating workweek method, works the
same number of hours as the hourly employee each week, and gets
$400 in week one, $400 in week two, and $440 in week three.
The
$440 is calculated by dividing the guaranteed $400 weekly salary
by the total number of hours worked that week to get the average
hourly salary for the week ($400 ^ 50 hours = $8.00 per hour).
The eight dollars are then divided in half ($8.00 -s- 2 = $4.00 per
hour) and multiplied by the number of hours worked overtime that
week ($4.00 x 10 hours = $40).
That number is then added to the
weekly salary ($400 + $40 = $440).
As shown by this example, the
employee essentially bargained away the time-and-a-half rate he or
she would have received as an hourly employee in order to receive
a guaranteed $400 per week, even if the employee works less than
forty hours.
The Department of Labor provides additional examples of how to calculate
overtime pay on its website. Handy Reference Guide to the Fair Labor Standards
Act, Computing Overtime Pay, U.S. Dep't of Labor, https://www.dol.gov/whd/
regs/compliance/hrg.htm#14 (September 2016).
24
C. 12(b)(6) Motion to Dismiss Standard
A motion to dismiss under Rule 12(b)(6) should be granted if
a complaint fails to "allege facts to state a claim to relief that
is plausible on its face."
U.S. 544, 570 (2007).
Bell Atlantic Corp. v. Twombly, 550
The facts alleged must "allow[] the court
to draw the reasonable inference that the defendant is liable for
the misconduct alleged."
(2009).
Ashcroft v. Iqbal, 556 U.S. 662, 663
A Rule 12(b)(6) motion "tests the sufficiency of a
complaint and ^does not resolve contests surrounding the facts,
the merits of a claim, or the applicability of defenses.'" Johnson
V. Portfolio Recovery Assocs., LLC, 682 F. Supp. 2d 560, 567 (E.D.
Va. 2009) (quoting Republican Party of N.C. v. Martin, 980 F.2d
943, 952 (4th Cir. 1992)). As such, the district court must accept
all factual allegations contained in the complaint as true and
draw all reasonable inferences in favor of the plaintiff.
Id.
III. ANALYSIS
A. 12(b)(1) Motion
This case is before the Court on a 12(b)(1) motion for lack
of subject matter jurisdiction because Defendant claims that when
it paid Plaintiff for her overtime hours, using the fluctuating
workweek
calculation
method,
it
eliminated
the
"case
and
controversy" over this portion of her case. For clarity, the Court
begins its analysis of Defendant's mootness argument by briefly
reviewing the 12(b)(1) framework utilized in this case.
25
When presented with a 12(b)(1) motion, a trial court must
first
determine
if
the
jurisdictional
challenge
is
facial
(attacking the adequacy of jurisdictional allegations on the face
of the complaint) or factual (attacking the truthfulness of the
jurisdictional claims).
Beck, 848 F.3d at 270.
If presented with
a facial challenge, the Court must look only to the face of the
complaint and accept its jurisdictional allegations as true to
determine if jurisdiction has been sufficiently pled.
F.2d at 1219.
Adams, 697
If the challenge is factual, however, the trial
court may consider evidence beyond the pleadings to determine if
it can exercise jurisdiction.
Velasco, 370 F.3d at 398.
Whether
or not courts can weigh such evidence and make findings of fact
depends on whether the facts necessary to prove jurisdiction are
intertwined with the facts necessary to prove the merits of the
case.
Kerns, 585 F.3d at 196.
When
necessary
the
to
facts
prove
are
not
intertwined
jurisdiction
are
(meaning
unrelated
to
the
facts
the
facts
necessary to prove the merits of the plaintiff's claim), the trial
court may weigh evidence and make findings of fact to resolve the
jurisdictional dispute.
F.2d at 1219.
See Arbaugh, 546 U.S. at 514; Adams, 697
In such a case, the plaintiff bears the burden of
proving jurisdiction by a preponderance of the evidence.
697 F.2d at 1219.
26
Adams,
In contrast, when facts are intertwined (meaning that the
facts necessary to prove jurisdiction overlap
with the facts
necessary to prove the merits of the claims), a trial court should
not weigh evidence and make findings of fact at the 12(b)(1) stage
because doing so would deprive the parties of discovery and the
right to a jury that parties are afforded in proceedings on the
merits.
the
Arbaugh, 546 U.S. at 514; Kerns, 585 F.3d at 193.
trial
court
jurisdictional
should
allegations
assume
are
jurisdiction
sufficient
on
exists
their
Instead,
(if
the
face)
and
proceed with limited or full discovery after either (1) denying
the 12(b)(1) motion, or (2) converting the 12(b)(1) motion into a
motion for summary judgment on the merits and taking it under
advisement until discovery is completed and it is ripe for summary
judgment - a process that courts have referred to as ''proceeding
on the merits."
140.
See Carter, 694 F. App'x at 924; Rich, 811 F.3d
Below, the Court applies this framework to the facts of this
case.
1. Facial or Factual Challenge
Defendant makes a factual jurisdictional challenge because it
challenges the accuracy of jurisdictional allegations based on a
change in factual circumstances after the complaint was filed.
Defendant does not make a facial challenge because it is not
challenging the adequacy of Plaintiff's allegations on the face of
27
her complaint.
Therefore, the Court may consider evidence beyond
the pleadings.
See Velasco, 370 F.3d at 398.
2. Intertwined or Not Intertwined
To determine the manner in which the Court may consider the
evidence
presented,
the
Court
must
evaluate
whether
the
jurisdictional facts are intertwined with the merits facts. Kerns,
585 F.3d at 196.
This, of course, requires the Court to consider
if the merits facts necessary for Plaintiff to succeed on her claim
overlap
with
the
jurisdictional
facts
raised
by
Defendant's
assertion of mootness.
First,
Plaintiff's
the
Court
looks
to
claim for overtime
the
essential
under the
FLSA.^^
elements
of
In order to
succeed on the merits of her claim. Plaintiff must prove (1) that
she was an employee of the Defendant, (2) that she worked overtime
hours and the "amount and extent" of such work, (3) that Defendant
failed to pay her the requisite overtime premium under the FLSA
for
those
hours,
and
uncompensated time.
(4)
that
Defendant
knew
of
Plaintiff's
See Hall v. DIRECTV, LLC, 846 F.3d 757, 111
(4th Cir. 2017); Talton v. I.H. Caffey Distrib. Co., 124 F. App'x
Plaintiff claims that she is entitled to overtime because Defendant willfully
misclassified her as exempt from overtime by intentionally giving her the titles
of ''Manager" and "Shift Supervisor" despite taking away her managerial and
supervisory duties. Employees with primarily managerial or supervisory jobs
can qualify \mder the "executive" exemption if they (1) are paid a salary at a
certain rate, (2) have the primary duty of management, (3) "customarily and
regularly direct the work of two or more other employees," and (4) have the
authority to hire and fire. 29 C.F.R. § 541.100; accord 29 U.S.C. § 213(a)(1);
Grace v. Family Dollar Stores, Inc., 637 F.3d 508, 513 (4th Cir. 2011).
28
760, 763 (4th Cir. 2005) (unpublished); Pforr v. Food Lion, Inc.,
851 F.2d 106, 108-09 (4th Cir. 1988); see also Seagram v. David^s
Towing & Recovery, Inc., 62 F. Supp. 3d 467, 474 (E.D. Va. 2014);
Kevin
F.
O'Malley,
et
al.,
3C
Federal
Instructions; Civil § 175:20 (6th ed. 2014).
Jury
Practice
and
The disputed element
here is whether Defendant failed to pay Plaintiff the requisite
overtime premium as required by the FLSA.
Resolving such dispute necessarily depends on what method
applies to calculate the overtime premium: the time-and-a-half
method or the fluctuating workweek method.
While time and a half
is the default method under the FLSA, the fluctuating workweek
method is a product of case law and regulation that require proof
of four elements: (1) the employee's hours fluctuate each week,
(2) the employee receives a fixed salary that does not vary when
hours fluctuate, (3) the employee's pay did not fall below minimum
wage, and (4) the employer and employee have a clear and mutual
understanding that fixed payment will be made for fluctuating
hours.
29 C.F.R. 778.114(a); Baclawski, 2017 U.S. Dist. LEXIS
111317, at *12-13.
Critical to the inquiry in this case is a
question of fact about whether the parties had a clear and mutual
understanding.
Second, having reviewed the merits facts necessary to succeed
on Plaintiff's claim, the Court looks to the facts necessary to
establish jurisdiction in order to determine whether the merits
29
facts and jurisdictional facts overlap.
The jurisdictional issue
of mootness in this case turns on whether the Defendant's payment
for overtime under the fluctuating workweek method constituted
''complete relief."
at *8-10.
The
See, e.g.. Price, 2016 U.S. Dist. LEXIS 35807,
resolution of such issue, of course, turns on
whether the fluctuating workweek method is even applicable in this
case.
Plaintiff advances two arguments against application of the
fluctuating
workweek
method:
(1)
a
legal
argument
that
the
fluctuating workweek method can never apply in cases where an
employer
willfully
misclassifies
an
employee
as
exempt
from
overtime, and (2) a factual argument that the fluctuating workweek
method cannot apply in this case because there was not a clear and
mutual understanding between the parties that Plaintiff's salary
was intended to cover fluctuating hours.
a. Legal Argioment
The
first
jurisdictional
argument
(that
the
fluctuating
workweek method cannot apply in willful misclassification cases),
though predicated on the assumption that Plaintiff can establish
willfulness, is presented to this Court as a legal issue that the
Court can resolve without any discussion of the facts of this case.
Further, there are no relevant facts that Plaintiff can discover
that would change the outcome of the Court's decision on such legal
issue.
did
Cf. Rich, 811 F.3d at 146 (holding that a district court
not
abuse
its
discretion
30
in
denying
discovery
on
a
jurisdictional
plaintiff]
issue
could
because
have
there
uncovered
establish jurisdiction").
were
in
''no
facts
discovery
that
[that]
[the
would
Therefore, this issue, as presented to
the Court, is not intertwined with the facts necessary to prove
the
merits of Plaintiff's case and
the
Court can resolve it at
this stage of the proceeding without allowing discovery.
Because controlling precedent in the Fourth Circuit clearly
applies the
half-time
calculation of the fluctuating
workweek
method in non-willful misclassification cases, Plaintiff attempts
to
draw
a
distinction
misclassification.
between
willful
and
See Desmond, 630 F.3d at 357-59.
non-willful
Relying on
the reasoning in district court cases from other jurisdictions.
Plaintiff argues that the fluctuating workweek method cannot apply
in willful misclassification cases because there can be no clear
and mutual understanding that a fixed salary covers fluctuating
hours when an employer misleads an employee into believing the
employee is exempt from overtime. See, e.g., Boyce, 223 F. Supp.
3d at 948-49 {holding that the fluctuating workweek method cannot
apply
in
any
misclassification
case,
without
regard
to
willfulness, because a clear and mutual understanding "cannot
exist where the agreement is based on the false premise that the
employee is not entitled to any overtime"); Costello v. Home Depot,
944 F. Supp. 2d 199, 207-08 (D. Conn. 2013) (same).
Defendant
argues that such distinction is not recognized in the Fourth
31
Circuit, rendering the fluctuating workweek method applicable in
both
willful
and
non-willful
misclassification
cases.
See
Desmond, 630 F.3d at 357-59.
In the Fourth Circuit's Desmond case, the district court ruled
in the plaintiffs' favor, finding that the defendant willfully
misclassified the plaintiffs as "exempt," yet also ruled in the
defendant's favor, finding that the fluctuating workweek method
applied.
Id. at 352.
The issues directly before the Fourth
Circuit on cross appeals were (1) whether the half-time rate of
the fluctuating workweek calculation method applied to calculate
damages in misclassification cases and (2) the proper standard for
determining whether the employer acted willfully, a finding that
impacted the number of years that the plaintiffs could recover
overtime wages.
Id. at 352, 357-58; Brief of Appellee/Cross
Appellant at 1, Desmond, 630 F.3d 351 (No. 09-2189).
The Fourth
Circuit affirmed the district court's application of the half-time
rate of the fluctuating workweek calculation method on the facts
before it, but remanded on the issue of willfulness, finding that
a genuine issue of material fact existed as to whether the employer
acted
willfully,
without
any
suggestion
that
a
finding
of
willfulness on remand would undercut the application of the
fluctuating workweek method.
Id. at 359.
Logically, it seems
clear that the Fourth Circuit anticipated that the lower court
would apply the fluctuating workweek method, whether or not it
32
found that the employer willfully misclassifled the employees,
otherwise, why would they remand.
Thus, while Desmond may not be
directly on point because the Fourth Circuit did not expressly
decide the issue of whether the fluctuating workweek method could
be
applied
in
willful
misclassification
cases,
the
logical
implication of the decision is that the fluctuating workweek method
can apply in such cases.
Id. at 352.
Therefore, this Court
relies on Desmond as Circuit authority standing for the proposition
that the half-time calculation of the fluctuating workweek method
can apply to calculate damages in willful misclassification cases
if all requirements for its application are satisfied.^®
b. Factual Argument
The second jurisdictional argument advanced by Plaintiff is
a factual argument contending that Defendant's payment did not
Though
application
of
the
fluctuating
workweek
method
in
willful
misclassification cases was not directly presented to the court in Desmond, the
Appellants did present a policy argument that applying the fluctuating workweek
method would be inappropriate because it would encourage employers to willfully
misclassify their employees so that they would only have to pay half time
instead of time and a half for overtime. Brief of Appellants at 6-7, Desmond,
630 F.3d 351 (No. 09-2189). Such argument did not appear to impact the court's
decision to apply the fluctuating workweek method even though the case before
the court alleged willful misclassification.
16 The Court observes that the
defendant's violation of
the
FLSA provides for criminal penalties if a
FLSA
was
willful.
29 U.S.C.
§ 216(a).
This
provides further context for the decision not to differentiate between willful
and non-willful violations when applying the fluctuating workweek method to
civil misclassification cases, as the statutory scheme already provides for a
mechanism to deter willful violations of the FLSA. Cf. Lanza v. Sugarland Run
Homeowners Ass'n, 97 F. Supp. 2d 737, 740 (E.D. Va. 2000) (declining to impose
civil punitive damages for willful violations of the FLSA because they would be
"inconsistent with the statute's remedial scheme" and are unnecessary because
criminal penalties existed).
33
render this case moot and deprive the Court of jurisdiction because
Defendant calculated the payment using the fluctuating workweek
method, and the fluctuating workweek method does not apply in this
case because the parties lacked a clear and mutual understanding
that Plaintiff's salary was intended to cover fluctuating hours.
Like
Plaintiff's
merits-based
argument,
this
jurisdictional
argument requires proof of facts necessary to determine which
overtime calculation method was applicable.
Accordingly, there
is clearly substantial overlap in the facts necessary to prove the
merits of Plaintiff's overtime claim and the facts necessary to
resolve this jurisdictional issue. As discussed above, both issues
turn on whether the parties had a clear and mutual understanding
that Plaintiff's salary was intended to cover fluctuating hours.
Because
facts
necessary
to
determine
jurisdiction
are
intertwined with the facts necessary to determine the merits, it
would be improper for the Court to resolve such factual disputes
at this stage of the case as it would deprive the parties of their
right to a jury trial on the merits issues.
Arbaugh, 546 U.S. at
514 ("If satisfaction of an essential element of a claim for relief
is at issue, however, the jury is the proper trier of contested
facts."); Baclawski, 2017 U.S. Dist. LEXIS 111317, at *15 ("Under
the circumstances, the undersigned finds that this matter should
go to a jury to weigh the parties' evidence, or lack thereof, that
there was a clear and mutual understanding about a fixed payment
34
for fluctuating hours."); see also Seymour v. PPG Indus., 891 F.
Supp. 2d 721, 736-37 (W.D. Pa. 2012) (holding that the court could
not moot a case in which there was a dispute about the proper
calculation of damages for an overtime violation because ''the facts
are facts which would normally be resolved by the jury").
the
Court
should
assume
jurisdiction,
if
the
Thus,
jurisdictional
allegations are sufficient, and proceed to the merits by either
denying the 12(b)(1) motion and permitting discovery to proceed,
or converting it to a motion for summary judgment on the merits
and permitting discovery to proceed. See Rich, 811 F.3d at 145;
see also Kerns, 585 F.3d at 193.
3. Ass\jming Jurisdiction to Reach the Merits
In order for the Court to assume jurisdiction, the Court must
engage in the threshold analysis, described herein as being similar
to a "facial" analysis, and ask whether Plaintiff states facts in
her complaint that plausibly confer jurisdiction.
See Carter, 694
F. App'x at 924; Rich, 811 F.3d at 145; see also infra Part II.A.3.
Plaintiff has adequately alleged, and Defendant does not contest,
that this Court had federal subject matter jurisdiction under 28
U.S.C. § 1331 when suit was filed because her claim for overtime
arises under the FLSA, which is a federal law. Compl. H 6.
Furthermore,
purportedly
Plaintiff
to
changed
filed
the
because
suit,
the
extent
that
Defendant
continued
35
circumstances
tendered
exercise
payment
of
have
after
jurisdiction
remains proper because there is a "live" controversy over the
proper overtime calculation method.
See Simmons/ 634 F.3d at 763
(stating that a case is moot and a court no longer has jurisdiction
when the issues are no longer "live").
Plaintiff directly asserts
in her complaint that she is owed damages calculated at the timeand-a-half rate and advances facts in support of her overtime
claim.
Compl. K 27.
For example, the language of the employment
contracts attached to her complaint,i'' and the facts alleged in the
complaint about the lack of any discussion between the parties
about
what hours the salary was intended to cover,
plausibly
support her ongoing request for damages at the time-and-a-half
rate.
existence
Pl.'s Ex. B, ECF No. 1-2; Compl. Ht 13, 18.
of
the
open
question,
about
the
proper
The
overtime
calculation method, is sufficient for the Court to assume that
jurisdiction continues to exist.
4. Proceeding on the Merits
Because
a
continued
assumption
of
jurisdiction
is
appropriate, in order to protect the Plaintiff's right to discovery
and a jury trial on the merits, the Court must either deny the
12(b)(1) motion and permit discovery to proceed, or convert it to
a motion for summary judgment on the merits and permit discovery
Federal Rule of Civil Procedure 10(c) allows the Court to consider documents
attached to the pleadings.
Fed. R. Civ. P. 10(c) ("A copy of a written
instrument that is an exhibit to a pleading is a part of the pleading for all
purposes").
36
to proceed.
See Arbaugh, 546 U.S. at 514 (discussing the need to
protect the right to a trial by jury on the merits); Kerns, 585
F.3d at 193, 196 (discussing the need to allow for procedural
protections, such as discovery, when the jurisdictional and merits
facts are intertwined, before proceeding on the merits).
Here,
for the following reasons, the Court finds that the better course
is to deny the 12(b)(1) motion to dismiss and proceed with full
discovery, as requested by Plaintiff.
This is not a large, complex
case with numerous claims, such that isolating the intertwined
issue, taking the motion under advisement, and proceeding with
limited discovery would provide for a more effective and efficient
resolution of the case.
Rather, this case is limited to two FLSA
claims between an individual Plaintiff and a single employer.
The
intertwined factual issue, of whether there was a clear and mutual
understanding such that payment was sufficient, is the main issue
in the case.
Taking the motion under advisement and attempting to
address it after limited discovery will cause unnecessary delay.
Accordingly, the Court DENIES the 12(b)(1) motion to dismiss.
after discovery.
Defendant believes
that no
genuine
issue
If,
of
material facts exists as to this issue, then Defendant may file a
motion for summary judgment on the merits.
37
B. 12(b)(6) Motion
In addition to Defendant's 12(b)(1) motion to dismiss the
overtime claim for lack of subject matter jurisdiction, also before
the Court is Defendant's 12(b)(6) motion to dismiss Plaintiff's
claim for unpaid regular time.
Plaintiff claims that she is owed
her average hourly rate, plus full liquidated damages, for sixteen
and a half hours of "uncompensated regular time" she spent in
training.
Compl. ^ 24. Defendant argues that, because Plaintiff's
complaint does not allege that Defendant's failure to pay her for
this time caused her weekly payment to fall below the statutory
minimum wage, she has not stated a claim for unpaid wages under
the FLSA.
1. Stating a Claim for Regular Time Wages
The
FLSA
does not protect
against all improper payment
practices for regular hours that are actionable in a civil lawsuit,
but, rather, protects against minimum wage violations for failure
to pay for regular hours.
29 U.S.C. § 206.
employer
the
does
not
violate
FLSA
unless
Accordingly, an
the
total
weekly
compensation divided by the number of hours worked yields an hourly
rate below ''minimum wage."
Blankenship v. Thurston Motor Lines,
Inc., 415 F.2d 1193, 1198 n.6 (4th Cir. 1969).
Therefore, to state
a plausible claim for unpaid wages for regular time (as opposed to
overtime) under the FLSA, Plaintiff must allege enough facts for
the Court to infer that her weekly hourly wage rate fell below the
38
federal minimum wage of $7.25 per hour.
See Gregory v. FedEx
Ground Package Sys., No. 2:10cv630, 2012 U.S. Dist, LEXIS 87798,
at *24-25 (E.D. Va. May 9, 2012), report and recommendation adopted
by Gregory v. FedEx Ground Packaging Sys., No. 2:10cv630, 2012
U.S. Dist. LEXIS 87830, at *4 (E.D. Va. June 22, 2012) ("[A]n
employer's failure to pay an employee for each hour worked is not
a violation of § 206.
Rather, an employer violates the FLSA only
when an employee's compensation for the week falls below the
statutory minimum . . . ."); Avery v. Chariots for Hire, 748 F.
Supp. 2d 492, 501 (D. Md. 2010) (^^Plaintiffs have alleged that
they were unpaid for certain hours that they worked, but have not
alleged that they were not paid the statutory minimum for each of
the total number of hours they worked.
Therefore, Plaintiffs have
not stated a claim for unpaid wages under the FLSA.").
2. Sufficiency of the Complaint
Plaintiff's
(approximately
complaint
$16
an
seeks
hour)
plus
payment
at
liquidated
her
normal
damages
uncompensated hours she worked on mandatory training.
24.
for
rate
the
Compl. f
Plaintiff does not allege that the failure to compensate her
for the additional training hours caused her average wages for the
Specifically, Plaintiff alleges that she completed four hours of training on
January 3, 2015, two and a half hours of training on January 4, 2015, two hours
of training on December 29, 2015, two hours of training on December 31, 2015,
and six hours of training in January 2017 (a specific date is not provided) for
a total of sixteen and a half hours. Compl. f 28.
She requests damages at a
rate of approximately $16 an hour for these hours, for a total of $267.78, plus
liquidated damages. Compl.
28, 37.
39
week to fall below the minimum rate of $7.25 an hour.
argues
in
her
response
to
the
12(b)(6)
motion
Plaintiff
that,
"
[b] y
implication," her complaint alleges that Defendant violated the
FLSA by failing to pay her the statutory minimum when the training
hours are included in the number of hours worked for those weeks.
Pl.'s Resp. 6, ECF No. 11.
not
apparent
allegations
standard.
on
the
face
insufficient
However, such alleged implication is
of
the
complaint,
to satisfy the
See Twombly, 550 U.S. at 554.
rendering
the
plausibility pleading
Therefore, the complaint
does not sufficiently allege an FLSA claim for Plaintiff's unpaid
regular time, and the Court GRANTS Defendant's 12(b)(6) motion as
to such claim.
3. Leave to Amend
Plaintiff requests that, if the Court dismisses her regulartime claim under Rule 12(b)(6), she be granted leave to amend her
complaint.
Pl.'s Resp. 6.
The Federal Rules of Civil Procedure
provide that ''court[s] should freely give leave [to amend the
pleadings] when justice so requires."
Fed. R. Civ. P. 15(a)(2).
Courts should only deny leave to amend when (1) there would be
prejudice to the opposing party, (2) the moving party acted in bad
faith, or (3) the amendment would be futile.
Edwards v. City of
Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999).
An amendment is
futile if the claim would still be dismissed after the amendment.
40
See United States ex rel. Wilson v. Kellogg Brovm Root, Inc., 525
F.3d 370, 376 (4th Cir. 2008).
Here, Defendant argues that an amendment would be futile
because, even if Plaintiff's amended complaint properly alleged
that she was paid below the $7.25 statutory minimum, her claim
would be dismissed as moot because she has been more than fully
compensated by the cashier's check paying her at a rate of $16 an
hour.
See Price, 2016 U.S. Dist. LEXIS 35807, at *8-10; see also
Def.'s Br. 21-22, ECF No. 10.
In response. Plaintiff broadly
argues that she is entitled to more damages.
Pl.'s Resp. 6.
With regard to Defendant's argument that the amended claim
would be moot, because facts relevant to the merits of Plaintiff's
minimum wage claim appear to be intertwined with facts relevant to
the jurisdictional issue of mootness, this Court declines to find
that amendment would be "futile.
This
Court cannot resolve
factual disputes over damages without depriving Plaintiff of the
procedural protections afforded in a proceeding on the merits.
To succeed on the merits of her claim for minimum wage. Plaintiff needs to
prove that '*(1) [she] was employed by the defendant; (2) [she] engaged in
commerce or in the production of goods for commerce; and (3) [she] was not
compensated for all hours worked during each work week at a rate equal to or
greater than the then-applicable minimum wage." Urquia v. Law Office of Kyle
Courtnall, PLLC, No. 1:14-cv-00056, 2014 U.S. Dist. LEXIS 189569, at *7 (E.D.
Va. May 19, 2014) (citing 29 U.S.C. § 206).
The jurisdictional issue depends
on whether the amount Defendant paid was complete relief for Plaintiff's minimum
wage claims. Both the third element of her claim and the jurisdictional issue
require proof of the number of hours Plaintiff worked and the compensation she
received for those hours.
41
Notwithstanding
Defendant's
payment,
this
Court
has
substantial reservations about whether Plaintiff can, in good
faith, allege that her wages fell below $7.25 an hour in the weeks
she completed unpaid training.
Plaintiff's timecards attached to
her complaint show the number of additional hours she alleges that
she worked in the weeks she completed training.
EOF No. 1-5 to 1-7.
Pl.'s Exs. E-G,
Plaintiff only alleges that the training
hours, not the other regular hours each week, were unpaid.
H 28.
Compl.
If Plaintiff was paid her salary, or at an hourly rate of
$16 for the other hours worked in those
weeks, it appears
questionable that her average pay rate would fall below $7.25 an
hour based on a few unpaid hours.20
That said, because Defendant does not argue futility on such
grounds, and because the Court is wary to speculate regarding the
proper mathematical calculations, the appropriate course is to
afford Plaintiff the opportunity to amend her complaint, cf. Davis
V.
Piper
Aircraft
Corp. /
615
F.2d
606,
613
(4th
Cir.
1980)
("[C]onjecture about the merits of the litigation should not enter
into
the
decision
whether
to
allow
amendment.").
For
these
20 For example, Plaintiff claims she was not paid for 4 hours of training on
December 29 and December 31, 2015. Compl. H 28. In addition to the 4 hours of
allegedly unpaid training. Defendant's timecard indicates that she worked 4.40
hours that week, for a total of 8.40 hours. Pl.'s Ex. E. Assuming that she
was paid for the 4.40 hours at her regular rate of $16 an hour. Plaintiff made
$70.40 that week. When the weekly pay of $70.40 is divided by the 8.40 hours
of work, the rate is equal to approximately $8.38 an hour, which is $1.13 over
minimum wage.
42
reasons, and because leave to amend should be freely given, the
Court PROVIDES Plaintiff leave to amend her complaint to state an
FLSA claim for unpaid regular hours, if she can do so in good
faith.
IV. CONCLUSION
For the reasons set forth above. Defendant's motion to dismiss
Plaintiff's overtime claim for lack of subject matter jurisdiction
is DENIED.
Defendant's motion to dismiss Plaintiff's regular time
claim for failure to state a claim is GRANTED, and Plaintiff is
PROVIDED leave to amend her complaint to state an FLSA claim for
unpaid regular hours within twenty-one days (21) days of the date
of this Opinion and Order, if she can do so in good faith.
The Clerk is DIRECTED to send a copy of this Opinion and Order
to all counsel of record.
IT IS SO ORDERED.
/s
Mark S. Davis
CHIEF UNITED STATES DISTRICT JUDGE
Norfolk, Virginia
February
/ 2019
43
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?