Wicke, Jeremy et al v. L&C Insulations, Inc.

Filing 124

OPINION AND ORDER granting in part and denying in part 29 Motion to Dismiss; granting 66 Motion to Amend Complaint; denying without prejudice 77 Amended Motion to Certify Class under Rule 23; denying 91 Motion for Leave to File Sur-Reply Brie f; denying as moot 117 Motion to Strike; denying as moot 122 Motion to Strike. Defendant L&C Insulation, Inc.'s motion to dismiss is granted with respect to defendant's argument that the court should decline to exercise supplemental jurisdiction over plaintiffs' state law class claims and denied in all other respects. Signed by District Judge William M. Conley on 9/18/2013. (arw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

JEREMY WICKE, COLE KNUDSON,
and SHAWN SIMMONS,
Plaintiffs,

OPINION & ORDER

v.
12-cv-638-wmc
L&C INSULATION, INC.,
Defendant.

In this civil action, plaintiffs Jeremy Wicke, Cole Knudson, and Shawn Simmons
allege that defendant L&C Insulation Inc., violated the Fair Labor Standards Act, 29
U.S.C. § 201, as well as Wisconsin state law, by failing to compensate its employees for
time spent in training, study, class and travel, and for failing to calculate overtime
correctly. Before the court is defendants’ motion to dismiss, on several grounds. (Dkt.
#29.)1 For the reasons that follow, the court will reject defendant’s motion to dismiss for
lack of subject matter jurisdiction, finding that the Rule 68 offer of judgment did not
moot Wicke’s claims.

The court will, however, decline to exercise supplemental

jurisdiction over the state law class claims, which moots defendant’s challenge pursuant to

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Plaintiffs moved for leave to file a sur-reply on this motion, arguing that defendant
raised several arguments for the first time in its reply brief. (Dkt. #91.) As detailed in
defendant’s opposition to plaintiff’s motion for leave to file a sur-reply, however, these
same arguments were made in defendant’s opening brief. (Def.’s Opp’n (dkt. #94).)
Accordingly, the court will deny plaintiffs’ motion for leave to file a sur-reply.

Federal Rule of Civil Procedure 8 to plaintiffs’ class allegations.2 Lastly, the court denies
defendant’s motion to dismiss any claim that it willfully violated the FLSA, finding that
allegations sufficient to meet the requirements of Rule 8.3

PROCEDURAL POSTURE
Plaintiff Jeremy Wicke and former plaintiff John Perry filed the original complaint
in this case on August 31, 2012.

(Dkt. #1.)

The original pleading, as well as the

amended pleadings, all contain claims under the Fair Labor Standards Act (“FLSA”), 29
U.S.C. § 201 et seq., along with claims under Wisconsin state law, Ch. 109 and Wis. Stat.
§§ 66.0903, 103.49. For some of the state law claims, plaintiffs seek class certification
pursuant to Fed. R. Civ. P. 23. Plaintiffs, however, do not seek to pursue their FLSA
claims as a collective action under 29 U.S.C. § 216(b).
L & C Insulation tendered an offer of judgment to each of the original plaintiffs
on October 31, 2012.

Because Perry accepted the offer, judgment has already been

entered in his favor. (Dkt. #34.) Defendant’s letter to Wicke referenced Fed. R. Civ. P.
68 and provided that:

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In light of this determination, the court will also deny without prejudice plaintiffs’
motion for class certification (dkt. #77) and will deny as moot their related motions to
strike (dkt. ##117, 122).
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While defendant’s motion to dismiss was pending, plaintiff filed a motion to amend the
complaint to add two additional named plaintiffs, Cole Knudson and Shawn Simmons.
(Dkt. #66.) Defendant initially opposed the motion, but subsequently withdrew its
opposition in light of the parties’ agreement as to certain depositions. Accordingly, the
court will grant plaintiffs’ motion to amend the complaint, making the Second
Amendment Complaint (dkt. #67) the operative pleading. Accordingly, the court has
altered the caption to reflect this change.
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[t]he offer is for a judgment in favor of Mr. Wicke and
against Defendant in the amount of $10,000, plus the cost of
this action and such reasonable attorney’s fees and expenses
as may be awarded to Wicke by the Court, pursuant to Fair
Labor Standards Act and Wisconsin law. This offer, if
accepted, would be in full and final resolution of all claims of
Mr. Wicke in this matter.
(Pls.’ Mot. to Stay Proceedings, Ex. 1 (dkt. #10-1) 1.) The letter also purports to make
an “alternative” offer of judgment:
(1) all wages owed to him pursuant to the FLSA for times
including the three years prior to the filing of Mr.
Wicke’s Complaint, plus an equal amount of all owed
wages as liquidated damages, and Mr. Wicke’s attorney’s
fees and costs of prosecution; (2) all wages owed to Mr.
Wicke pursuant to Chapter 109 of the Wisconsin
statutes for time including the two years prior to the
filing of Mr. Wicke’s Complaint, plus 50% of all owed
wages as liquidated damages, and Mr. Wicke’s attorney’s
fees and costs of prosecution; and (3) all wages owed to
Mr. Wicke pursuant to Wisconsin prevailing wage law
for times including the two years prior to the filing of
Mr. Wicke’s complaint, plus an equal amount of all
wages owed as liquidated damages, and Mr. Wicke’s
attorney’s fees and cost of prosecution, all as determined
by the Court under applicable law.
This offer, if
accepted, would be in full and final resolution of all
claims of Mr. Wicke in this matter.
(Id.)
Wicke accepted neither offer. Instead, on November 13, 2012, Wicke filed a
motion for class certification pursuant to Federal Rule of Civil Procedure 23.4

4

Because the court declines to exercise supplemental jurisdiction over plaintiffs’ putative
class claims brought under Wisconsin law, the court does not recount the allegations in
plaintiffs’ pleadings relevant only to defendant’s motion to dismiss pursuant to Fed. R.
Civ. P. 8.
3

OPINION
Defendant seeks dismissal of all or part of plaintiffs’ claims on three, separate
grounds. First, the court lacks subject matter jurisdiction over Wicke’s claims and over
the class action claims, because defendant’s offer of judgment satisfied his entire demand
and the motion for class certification was filed after the offer of judgment was served.
Second, the court should decline to exercise supplemental jurisdiction over plaintiffs’
state law claims pursuant to 28 U.S.C. § 1367(c), because the claims either substantially
predominate over the federal claims or raise issues under Wisconsin law which differ
substantially from federal law. Third, the court should dismiss plaintiffs’ class claims and
willfulness claim, because the allegations do not meet the pleadings requirements under
Fed. R. Civ. P. 8 as interpreted by the United States Supreme Court in Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009).

I. Rule 68 Offer of Judgment and Mootness
In support of defendant’s argument that this action has been mooted by its offer
of settlement, defendant principally points to the Seventh Circuit’s holding that “[o]nce
the defendant offers to satisfy the plaintiff’s entire demand, there is no dispute over
which to litigate, and a plaintiff who refuses to acknowledge this loses outright, under
Fed. R. Civ. P. 12(b)(1), because he has no remaining stake.” Damasco v. Clearwire Corp.,
662 F.3d 891, 894-95 (7th Cir. 2011) (internal citation and quotation marks omitted).
Wicke cannot and does not take issue with this controlling legal holding, but rather

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contends that defendant’s offer of judgment does not satisfy his entire demand as
required by Damasco.
As an initial matter, there are actually two offers to consider. The court need not
decide here whether making “alternative” offers itself complies with Rule 68, since
neither complies standing alone. The court rejects defendant’s second, “alternative” offer
because its convoluted terms do not comply with Rule 68, which requires “specified
terms.” Fed. R. Civ. P. 68(a); see also Sanchez v. Prudential Pizza, Inc., 709 F.3d 689, 692
(7th Cir. 2013) (criticizing offer of judgment which “would allow a defendant to force a
plaintiff to guess the meaning of the offer;” finding such an interpretation not supported
by Rule 68 or case law interpreting that rule).
That leaves only defendant’s concrete offer of $10,000. While this offer certainly
satisfies Rule 68’s “specified terms” requirement, it does not offer to satisfy plaintiff’s
“entire demand,” as required by Damasco. In its reply brief, defendant disputes each
category of damages, arguing that a different rate applies or that an entire category of
requested relief (e.g., plaintiff’s request for additional prevailing wage pay) should not be
part of the calculation. In determining whether a plaintiff’s “entire demand” is satisfied
by the offer of judgment, the court does not determine the validity of plaintiff’s demands.
If anything, defendant’s implicit admission that it need not compensate for specific
categories of requested relief helps establish that plaintiff’s entire demand is not satisfied.
See Smolinski v. Oppenheimer, No. 11 C 7005, 2012 WL 2885175, at *2 (N.D. Ill. July 11,
2012) (“Defendants’ offer does not include or even purport to include such damages,
which means that it does not satisfy [plaintiff’s] entire demand for relief and therefore
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cannot moot [plaintiff’s] claims.” (citing Warren v. Sessoms & Rogers, P.A., 676 F.3d 365,
372-73 (4th Cir. 2012)).
Regardless of the parties’ dispute over specific categories of damages, it is
undisputed that should Wicke prevail, he would be entitled to liquidated damages of
either 50% under the state law claims or 100% under the FLSA, keeping in mind that a
three-year statute of limitations may also apply to Wicke’s FLSA claims.

Defendant

provides a chart in its reply brief which lists the “claimed” amount for certain categories
of damages. Even disregarding damages associated with certain trips and any time spent
each morning reporting to the shop, both of which were arguably only added in his
amended complaint, the claimed damages including the appropriate liquidated damages
award exceeds $10,000. (See Def.’s Reply (dkt. #65) 16.) This damages calculation also
does not take into account the fact that Wicke would be entitled to an award of
reasonable attorney’s fees and costs under the FLSA. See 29 U.S.C. § 216(b); see also
Compl. (dkt. #1) ¶ 79 (seeking attorney’s fees and costs).

The court is, therefore,

satisfied that Wicke’s entire demand exceeds $10,000. Even if this were a closer call, any
“ambiguities in a Rule 68 offer must be resolved against the offeror.” Sanchez, 709 F.3d
at 692 (citing Nordby v. Anchor Hocking Packaging Co., 199 F.3d 390, 392-93 (7th Cir.
1999)).
Defendant also argues that “an offer of judgment deprives [this court] of
jurisdiction if it provides full relief as to the federal claims . . . without consideration of
the state law claims.” (Def.’s Opening Br. (dkt. #59) 10 (citing Lousidor v. Am. Telecomm.,
Inc., 540 F. Supp. 2d 368 (E.D.N.Y. 2008)).) There are at least two problems with this
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argument. First, the Lousidor decision offers no support for this holding of law. As here,
the plaintiff in Lousidor asserted claims under both federal and state law. Unlike here,
however, there was no dispute that the “Rule 68 offer [] represents the full amount that
Plaintiff could possibly recover in this action.” Lousidor, 540 F. Supp. 2d at 371. As far
as the court can tell -- and defendant has failed to direct the court to any contrary
language in that decision -- the court in Lousidor did not hold that the Rule 68 offer of
judgment only satisfied plaintiff’s federal claims. Second, defendant’s offer of judgment
here was made “in full and final resolution of all claims of Mr. Wicke in this matter.”
(Pls.’ Mot. to Stay Proceedings, Ex. 1 (dkt. #10-1) 1 (emphasis added).) Since the offer
of judgment makes no attempt to divide this sum between the two types of claims,
Wicke would have released his state law claims had he accepted the offer.

II. Supplemental Jurisdiction Over State Law Class Claims
Next, defendant urges the court not to exercise supplemental jurisdiction over
plaintiffs’ state law claims pursuant to 28 U.S.C. § 1367. For reasons unknown to the
court, plaintiffs seek to bring certain of their state law claims as a class action, but not to
pursue a collective action for their FLSA claims. Section 1367(c) provides in pertinent
part:
(c) The district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if-(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or
claims over which the district court has original jurisdiction,

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(3) the district court has dismissed all claims over which it
has original jurisdiction, or
(4) in exceptional circumstances, there are other compelling
reasons for declining jurisdiction.
While the court agrees with plaintiffs that the substance of plaintiffs’ state law
claims roughly track with their federal claims, asserting those state law claims as class
claims necessarily interjects the class certification process and all the complexity that
adjudicating a class action entails.

As such, the state law class claims would

“substantially predominate” over plaintiffs’ individual FLSA claims. Moreover, based on
the additional effort of adjudicating a class action, “there are compelling reasons for
declining jurisdiction.” The court, therefore, will decline to exercise its jurisdiction over
the state law class claims, though plaintiffs remain free to assert their own claims on an
individual basis.
In reaching this result, the court has considered the Seventh Circuit’s discussion of
28 U.S.C. § 1367(c) in Ervin v. OS Rest. Servs., Inc., 632 F.3d 971 (7th Cir. 2011). In
that case, the Seventh Circuit reversed the district court’s decision to decline to exercise
supplemental jurisdiction, finding error in the district court’s conclusion that the state
law class action substantially predominated over the FLSA collective action. There is an
important difference in this case as compared to Ervin: plaintiffs here allege no FLSA
collective action. Therefore, the need to consider liability and determine damages on a
class-wide or collective basis is solely interjected by the state law class claims. See also De
La Riva v. Houlihan Smith & Co., Inc., 848 F. Supp. 2d 887, 890 (N.D. Ill. 2012)
(distinguishing Ervin and declining to exercise supplemental jurisdiction over state law

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class claims where there was no FLSA collective action).

“[G]iven Ervin’s implicit

recognition that substantial predominance may be established by a significant enough
disparity between the respective number of participants in a[ state law] class action and
an FLSA collective action, it follows a fortiori that substantial predominance may be
established by the more significant disparity between a[ state law] class action and an
FLSA individual action” Id. at 891 (emphasis in original).

III. Sufficiency of Pleadings under Rule 8
A. Class Claims
In light of the court’s decision to decline to exercise supplemental jurisdiction over
the putative state class action claims, the court need not address defendant’s motion to
dismiss the class claims pursuant to Federal Rule of Civil Procedure 8.5

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The court does note, however, that defendant’s argument about basic pleading
requirements is at best muddled and at worst plainly wrong. Defendant at least appears
to assert that plaintiffs must somehow “show” that they meet the class action
requirements under Rule 23 at the pleading stage: “L & C’s Motion is directed to the
threshold issue of whether Plaintiff has adequately pled all the requirements for class
certification by showing that he meets those requirements.” (Def.’s Am. Opening Br.
(dkt. #59) 3 (bolding in original); see also id. at 5 (“Plaintiff’s Amended Complaint fails
to allege or show . . . .”); id. at 6 (“[T]he Amended Complaint fails to allege, much less show
. . . .”) (italics added).) No such requirement is necessary. Nor must plaintiffs expressly
plead any empty allegation that “numerosity is met” or “commonality is met.” Rather,
plaintiffs must plead sufficient facts to demonstrate that it is “plausible” that the class
action requirements can be met. Iqbal, 556 U.S. at 678.
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B. Willfullness
Finally, defendant argues that conclusory allegations in the second amended
complaint that L & C’s violations of the FLSA were “willful and not in good faith” are
inadequate.6 An employer acts “willfully” if it “knew or showed reckless disregard for the
matter of whether its conduct was prohibited by the statute.” McLaughlin v. Richland Shoe
Co., 486 U.S. 128, 133 (1988). Taking the complaint as a whole, plaintiffs sufficiently
allege that defendants acted in reckless disregard of the law in allegedly failing to pay its
employees for required training, classes and travel, as well as failing to pay 1.5 times the
appropriate rate for overtime. Whether plaintiffs will succeed in proving that L & C acted
willfully is an issue for another day, but the court finds that the amended complaint
sufficiently pleads the willfulness component of an FLSA claim.7

ORDER
IT IS ORDERED that:
1) Defendant L & C Insulation, Inc.’s motion to dismiss (dkt. #29) is
GRANTED IN PART with respect to defendant’s argument that the court
should decline to exercise supplemental jurisdiction over plaintiffs’ state law
class claims AND DENIED IN PART in all other respects;

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A finding of “willfulness” is meaningful under the FLSA because it extends the two year
statute of limitations to three years. 29 U.S.C. § 255(a).
7

Plaintiffs also argue that they need not even plead “willfulness” because this issue only
arises if defendant asserts a state of limitations defense, given that a complaint need not
anticipate affirmative defenses. While this argument appears to have merit, the court
need not reach it since plaintiffs’ complaint viewed in its entirety sufficiently alleges that
defendants acted willfully.
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2) Plaintiffs’ motion to amend the complaint (dkt. #66) is GRANTED, meaning
that the operative pleading going forward will be the second amended
complaint (dkt. #67);
3) Plaintiffs’ amended motion to certify class under Rule 23 (dkt. #77) is
DENIED without prejudice;
4) Plaintiffs’ motion for leave to file a sur-reply brief (dkt. #91) is DENIED;
5) Defendant’s motion to strike reply brief in support of plaintiff’s motion for
class certification (dkt. #117) is DENIED AS MOOT; and
6) Plaintiff’s motion to strike reply brief in support of defendant’s motion to
strike (dkt. #122) is also DENIED AS MOOT.
Entered this 18th day of September, 2013.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge

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