Opinion
5:22-CV-00459-BO-RJ
12-26-2023
Ovis Matamoros Canales, on behalf of himself and all others similarly situated, Plaintiffs, v. OPW Fueling Components LLC, Defendant.
MEMORANDUM & RECOMMENDATION
ROBERT T. NUMBERS, II UNITED STATES MAGISTRATE JUDGE.
Plaintiff Ovis Matamoros Canales has sued his former employer, Defendant OPW Fueling Components, LLC, for, among other things, violating his rights under the Federal Labor Standards Act and the North Carolina Wage and Hour Act. His FLSA claim alleges that OPW failed to properly pay him for all the overtime hours he worked. And his NCWHA claim asserts that his former employer violated that law's payday provision by failing to pay him all the wages he was entitled to receive. Along with suing on his own behalf, Canales wishes to pursue a collective action under the FLSA and a class action under the NCWHA.
OPW has asked the court to grant it a judgment on the pleadings on Canales's NCWHA claim. The company maintains that Canales's NCWHA payday claim is actually a claim for unpaid overtime wages. Determining the truth about that claim matters because North Carolina law does not allow a plaintiff to pursue an overtime claim under the NCWHA against an employer, like OPW, who is subject to the FLSA. If the court were to agree with OPW, it would also need to dismiss Canales's class action claim. Canales opposes OPW's request.
In addition to his statutory claims, Canales has brought some state tort law claims. As those claims are not relevant to this motion, the background section will only address facts related to his stator claims.
Canales worked as a machine operator and welder at OPW's Smithfield, North Carolina facility from 2011 to 2021. Am. Compl. ¶¶ 40-41, 53, D.E. 13. In the Amended Complaint, Canales says he was scheduled to be at work between 8 and 8.5 hours each weekday and for about 6 hours each Saturday. Id. ¶ 46. Each workday was supposed to include a 30-minute unpaid lunchbreak. Id. ¶ 47. This schedule would have had Canales working between 43 and 45.5 hours a week.
But Canales alleges that he worked many more hours than that. From October 2011 until October 2021, he says that he was at work for between 10 and 10.5 hours on weekdays. Id. ¶ 51. And he claims that from October 2021 to the time he was fired in November 2021 he was at work between 12 and 12.5 hours each weekday. Id.
What's more, the Amended Complaint alleges that although Canales was supposed to get a 30-minute unpaid lunchbreak each day, he often had to work through some or all of it. He says that he never received his 30-minute lunchbreak on Saturdays. Id. And he claims that during the week he really only received between 15 and 20 minutes for lunch because of the time it took to wash his hands to remove toxic chemicals and the time to walk to the cafeteria. Id. ¶¶ 48-50. Yet, according to Canales, OPW still calculated his hours worked as if he took a full 30-minutes unpaid lunchbreak. Id. ¶¶ 48, 50, 55.
According to Canales's calculations, when considering the hours he worked and the reduced or non-existent lunchbreak, he should have been paid for working between 59 and 69 hours a week. Id. ¶ 51. But he says that OPW failed to properly compensate him for at least 3 hours a week. Id. ¶ 52. He also asserts that at least twice he did not receive a $250 non-discretionary bonus he was entitled to for working more than 60 hours a week. Id. ¶¶ 44, 45, 52.
Canales sued OPW in November 2022 and amended his Complaint in January 2023. D.E. 1, 13. In response to a motion by OPW, the court dismissed several of Canales's claims, leaving him with the two claims already discussed as well as a claim under North Carolina's Retaliatory Employment Discrimination Act. D.E. 58.
II. Discussion
OPW argues that it is entitled to a judgment in its favor on Canales's NCWHA payday claim. That is because, according to OPW, the payday claim is really just a claim for unpaid overtime wages, which, under state law, must be brought under the NCWHA's overtime provision. But the NCWHA does not allow a plaintiff to bring an overtime claim against an employer if that employer is also subject to the FLSA's overtime provisions (which everyone agreed OPW is). So, the argument goes, since the payday claim is really just an impermissible NCWHA overtime claim, it must be dismissed. And once that claim is dismissed, OPW argues that the Amended Complaint's class action allegations must be dismissed as well because those allegations arise out of the payday claim.
The Federal Rules of Civil Procedure provide that “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). In considering a motion for judgment on the pleadings, a court must apply “the same standards as a motion to dismiss under Rule 12(b)(6).” Occupy Columbia v. Haley, 738 F.3d 107, 115 (4th Cir. 2013).
The Supreme Court has explained that to withstand a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court explained that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Thus, while a court must accept all the factual allegations in a complaint as true, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
After Iqbal, a court considering a motion under Rule 12(b)(6) must subject a complaint to a two-part test. First, the court must identify the allegations in the complaint that are not entitled to the assumption of truth because they are conclusory or mere formulaic recitations of the elements of a claim. Id. at 679. Then, taking the remaining factual allegations as true, the court must determine whether the complaint “plausibly give[s] rise to an entitlement to relief.” Id. If, after conducting this two-part analysis, “the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not show[n]- that the pleader is entitled to relief.” Id. (internal citation and quotations omitted). If a party fails to show that they are entitled to relief, the court must dismiss the deficient claims.
With that standard in mind, the court turns to its analysis of OPW's argument.
Both parties' briefs address claims or arguments not made by the other side. For example, Canales argues that his NCWHA claim is not preempted by the FLSA. Resp. in Opp. at 5-9. But OPW maintains that it is not claiming that the NCWHA claim is preempted by the FLSA. Reply at 2-3. Similarly, OPW claims that Canales cannot maintain a claim under North Carolina General Statues § 95-25.13 because that statute does not create a private right of action. Canales responds that he is not bringing a claim under that statute, but, instead, he is using that statute's requirements in support of his payday claim. Resp. in Opp. at 18-20. This opinion will address the only issue squarely presented by the parties and applicable to the claims in the Amended Complaint: whether the NCWHA's exemption provision precludes him from pursuing a payday claim.
State and federal law provide various statutory protections to ensure that workers are paid for their labor. On the federal level, the FLSA prohibits, among other things, an employer from requiring an employee to work more than 40 hours a week unless the employee is paid at least 1.5 times their regular hourly rate for each hour worked over the 40-hour threshold. 29 U.S.C. § 207(a)(2)(C).
On the state level, North Carolina enacted the NCWHA to address similar issues. N.C. Gen. Stat. § 95-25.1. Three sections of the Act are relevant here. To begin with, the Act's overtime provision requires employers to pay employees at 1.5 times their regular hourly rate for every hour the employee works in excess of 40 hours. Id. § 95-25.4. Next, the Act's payday provision requires employers to pay employees their accrued wages and tips “on the regular payday.” Id. § 95-25.6. And finally, the Act contains a provision exempting employers-like OPW-who are subject to the FLSA from several of the Act's provisions, including the overtime provision. Id. § 95-25.14. But there is no exemption from the payday provision. So an employer who is subject to FLSA cannot be sued for violating the overtime provision but can be sued for violating the payday provision.
OPW argues that the exemption provision entitles it to a judgment as a matter of law on Canales's payday claim. But in light of the clear delineation of what is and is not covered by the exemption provision, how can it make this argument? It does so by claiming that what Canales's payday claim is merely a repackaged overtime claim. And, the argument goes, if the payday claim is really just an overtime claim, the exemption provision precludes Canales from bringing it.
This argument arises with some frequency in North Carolina's federal courts. See, e.g., Cirillo v. Citrix Sys., Inc., No. 5:21-CV-88-BO, 2022 WL 841327, at *5 (E.D. N.C. Mar. 21, 2022); Figueroa v. Butterball, LLC, No. 5:20-CV-585-D, 2021 WL 4203652, at *3 (E.D. N.C. Sept. 15, 2021); Santos v. M.A.C. Grading Co., No. 7:19-CV-219-D, 2020 WL 12815229, at *4 (E.D. N.C. Aug. 27, 2020); Lima v. MH & WH, LLC, No. 5:14-CV-896-FL, 2019 WL 2602142, at *15-16 (E.D. N.C. Mar. 8, 2019).
And those courts generally agree that when a plaintiff seeks to bring a FLSA overtime claim and a payday claim under the NCWHA, the facts underlying those two claims must be “separate and distinct.” Cirillo, 2022 WL 841327, at *5 (citing cases). “A separate and distinct payday claim is one that seeks payment of accrued wages that should have been paid to the plaintiff on his payday.” DeHoll v. Eckerd Corp., No. 1:18CV280, 2018 WL 5624150, at *5 (M.D. N.C. Oct. 30, 2018) (quoting Laurence v. Harris Teeter, LLC, No. 3:17-CV-00602-RJC-DSC, 2018 U.S. Dist. LEXIS 69323, at *8-9 (W.D. N.C. Feb. 20, 2018)). Thus, at bottom, “the pertinent question . . . is whether Plaintiff has adequately pled that his state law claim arises from the withholding of accrued wages under section 95-25.6, as opposed to non-payment for what amounts to disputed work time.” McKethian v. Novant Health, Inc., No. 1:08-CV-00374, 2008 WL 5083804 (M.D. N.C. Nov. 25, 2008).
Allowing both claims to proceed in the absence of a separate and distinct factual basis would allow a plaintiff to circumvent the NCWHA's exemption provision. See Lima, 2019 WL 2602142, at *15. As a result, “[c]ourts routinely dismiss NCWHA payday claims that rely on the very same allegations that support plaintiffs' overtime claims.” Cirillo, 2022 WL 841327, at *5.
OPW's argument relies on its claim that the factual allegations supporting both Canales's FLSA claim and his NCWHA claim are, for all material purposes, the same. To begin with, it points out that both claims rely on the same set of factual allegations contained in a section of the Amended Complaint labeled “Wage-Related Factual Allegations.” Mem. in Supp. at 8 (quoting Am. Compl. ¶¶ 40-55). That section lacks an allegation that Canales was not paid as scheduled. Id.
And it notes that the language in the claims is similar. It points out that the FLSA claim alleged a failure to pay Canales for “all hours worked” while the NCWHA claim alleges failure to pay him “all wages due, including all hours worked[.]” Id. (quoting Am. Compl. ¶¶ 116, 130). Similarly, the basis for the violation of the FLSA claim is that Canales did not receive “the appropriate overtime rate for hours worked in excess of [40] per week” and the basis for the NCWHA claim is that he did not receive “overtime wages for hours worked in excess of [40] per week pursuant to promised straight-time rate and corresponding premium overtime rate.” Id. (quoting Am. Compl. ¶¶ 117, 131). The alleged damages for both claims are also materially similar. Id.
In response, Canales does not dispute the factual similarities, but argues that the two claims are based on “entirely different theories of relief.” Resp. in Opp. at 12. He says the NCWHA claim is not based solely on “a simple failure to compensate overtime” at the appropriate rate. Id. Instead, it is based on OPW's alleged failure to pay Canales for “all of his hours worked, either below or above [40] per week[.]” Id. The failure to pay includes overtime wages in general and a failure to pay the non-discretionary bonus for working more than 60 hours a week. Id.
But there are two problems with Canales's response. The first issue is that Canales's factual allegations do not allege that OPW failed to pay him for the first 40 hours a week he worked. Canales claims that he worked 59 to 69 hours a week and that his employer failed to pay him for “at least 3 of those hours.” Am. Comp. ¶ 52. And he then explains that he is due additional wages because of OPW's “failure to augment [his] regular rate when he received additional earnings for bonuses or shift differential during overtime workweeks.” Id. There are no allegations in the Amended Complaint that plausibly establish that this dispute is over anything besides pay he was due for working more than 40 hours a week. So his claims are only focused on overtime wages.
The second issue with Canales's argument is that, at least based on how he framed the Amended Complaint, the non-discretionary bonus issue does not appear to be part of his NCWHA claim. In that claim, he alleges that OPW was required to pay him “all wages, when due, for all promised earned and accrued regular, straight, and overtime wages of one and one-half times the promised wage rate” on his regular payday. Am. Compl. ¶ 119.
Compare that allegation to the allegations of Canales's FLSA claim. In his federal claim, Canales asserts that OPW “willfully failed and refused to pay for all hours worked to Plaintiffs, including for nondiscretionary bonuses.” Id. at 107. Since Canales did not include the nondiscretionary bonus in his list of wages he was owed under the NCWHA claim, the bonus is not part of the wages he is seeking to recover in that claim. See Steves & Sons, Inc. v. JELD-WEN, Inc., 988 F.3d 690, 728 (4th Cir. 2021) (“[T]he civil plaintiff is the ‘master of his complaint' and ‘determines the claims . . . to bring.'”).
But even if the nondiscretionary bonuses were part of the NCWHA claim, that would not be enough to differentiate it from the FLSA claim. This dispute is over how many hours Canales should have gotten credit for working and the resulting wages he should have been paid. In other words, this is a dispute over the amount of overtime hours Canales worked, not over the payment of accrued overtime wages. That type of dispute is an overtime dispute, no matter what label Canales puts on it. Since Canales has not provided a basis for his payday claim that is separate and distinct from his FLSA overtime claim, OPW is entitled to a judgment in its favor on the payday claim. The District Judge presiding over this case recently reached a similar conclusion. See Cirillo, 2022 WL 841327, at *4-5.
In an attempt to avoid this conclusion Canales cites a recent case from another federal district court: Webb v. Daymark Recovery Servs., Inc., 646 F.Supp.3d 675, 688 (M.D. N.C. 2022). In Webb, the plaintiff distinguished his overtime claim from his payday claim “by comparing the PrimePay timesheets with his paystubs.” Id. at 688. The timesheets reflected the straight-time hours, overtime hours, and pay accrued. Id. But the paystubs showed no compensated overtime wages. Id.
Unlike Webb, Canales has not alleged a difference between timesheets and paystubs. Rather, Canales is disputing the proper calculation of hours and claims his lunchbreaks “should not have been automatically deducted from [the] workday.” Am. Compl. ¶ 50. Thus Webb's reasoning does not support reaching a different conclusion.
The District Court should also dismiss Canales's NCWHA Class Action claim. That claim relies on the allegation that OPW violated the NCWHA's payday provision. See Am. Compl. ¶ 105. Since OPW is entitled to a judgment in its favor on the payday claim, that claim cannot support a class action. Therefore, that claim should also be dismissed.
III. Conclusion
For the reasons discussed above, the district court should grant OPW's motion for partial judgment and class certification dismissal (D.E. 28). Canales's NCWHA claim and his related class action allegations should be dismissed.
The Clerk of Court must serve a copy of this Memorandum and Recommendation (“M&R”) on each party who has appeared here. Any party may file a written objection to the M&R within 14 days from the date the Clerk serves it on them. The objection must specifically note the portion of the M&R that the party objects to and the reasons for their objection. Any other party may respond to the objection within 14 days from the date the objecting party serves it on them. The district judge will review the objection and make their own determination about the matter that is the subject of the objection. If a party does not file a timely written objection, the party will have forfeited their ability to have the M&R (or a later decision based on the M&R) reviewed by the Court of Appeals.