Opinion
Case No. 19-00358-CV-W-GAF
2019-10-10
Krystal LOCKETT, et al., Plaintiffs, v. PINNACLE ENTERTAINMENT, INC., et al., Defendants.
George A. Hanson, Pro Hac Vice, Alexander Thomas Ricke, Todd Michael McGuire, Stueve Siegel Hanson, LLP, Kansas City, MO, Jenny L Foley, Marta D. Kurshumova, HKM Employment Attorneys LLP, Las Vegas, NV, Kathryn S. Rickley, Matthew E. Osman, Pro Hac Vice, Osman and Smay LLP, Overland Park, KS, Michael James Rahmberg, Ryan L. McClelland, Pro Hac Vice, McClelland Law Firm, P.C., Liberty, MO, for Plaintiffs. Jason N. W. Plowman, Pro Hac Vice, Denise K. Drake, Travis L. Salmon, Polsinelli PC, Kansas City, MO, Mark E. Ferrario, Greenberg Traurig, Las Vegas, NV, for Defendants.
George A. Hanson, Pro Hac Vice, Alexander Thomas Ricke, Todd Michael McGuire, Stueve Siegel Hanson, LLP, Kansas City, MO, Jenny L Foley, Marta D. Kurshumova, HKM Employment Attorneys LLP, Las Vegas, NV, Kathryn S. Rickley, Matthew E. Osman, Pro Hac Vice, Osman and Smay LLP, Overland Park, KS, Michael James Rahmberg, Ryan L. McClelland, Pro Hac Vice, McClelland Law Firm, P.C., Liberty, MO, for Plaintiffs.
Jason N. W. Plowman, Pro Hac Vice, Denise K. Drake, Travis L. Salmon, Polsinelli PC, Kansas City, MO, Mark E. Ferrario, Greenberg Traurig, Las Vegas, NV, for Defendants.
ORDER
GARY A. FENNER, JUDGE
Now before the Court is Defendants' partial Motion to Dismiss for failure to state a claim. (Doc. # 58). Plaintiffs oppose. (Doc. # 70). For the following reasons, Defendants' partial Motion to Dismiss is DENIED.
Defendants Pinnacle Entertainment, Inc.; Ameristar Casino Council Bluffs, LLC d/b/a Ameristar Council Bluffs; Ameristar Casino East Chicago, LLC d/b/a Ameristar East Chicago; Cactus Pete's LLC d/b/a Cactus Pete's Resort Casino; Louisiana-I Gaming d/b/a Boomtown New Orleans; PNK (Baton Rouge) Partnership d/b/a L'Auberge Baton Rouge; PNK (Bossier City), L.L.C. d/b/a Boomtown Bossier City; PNK (Lake Charles), L.L.C. d/b/a L'Auberge Lake Charles; PNK (River City), LLC d/b/a River City; PNK Vicksburg, LLC d/b/a Ameristar Vicksburg; and Washington Trotting Association, LLC d/b/a The Meadows.
Krystal Lockett; Amber L. Caswell; Jacqueline Davis; David C. Devun, Jr.; Tabatha K. Dozier; Seth B. Istre; Racal Johnson; Cynthia J. Kofron; Tonisha S. Lonzo; Nathan J. McDermott; Jeremy Mitchell; Laura Perez; Wayne Sheffield; and Jamaica S. Young.
DISCUSSION
I. BACKGROUND
A. Procedural Background
On February 21, 2019, Plaintiffs filed their Complaint against Defendants in the United States District Court for the District of Nevada. (Doc. #1). Plaintiffs alleged that they were jointly employed by both Pinnacle Entertainment, Inc. ("Pinnacle") and the Pinnacle subsidiary casino at which they worked. (Id. at ¶ 1). Plaintiffs further alleged that Defendants operated an illegal tip pool for tipped employees and improperly deducted gaming license fees from their paychecks, which reduced the compensation below the required minimum wage. (Id. at ¶¶ 3, 4). Plaintiffs alleged these violations of federal and state laws were willful and emanated from Pinnacle's corporate headquarters in Las Vegas, Nevada, where Defendants set these policies and applied them to their centralized payroll center in Las Vegas, Nevada. (Id. at ¶ 5).
Defendants Ameristar Casino Council Bluffs, LLC d/b/a Ameristar Council Bluffs; Ameristar Casino East Chicago, LLC d/b/a Ameristar East Chicago; Cactus Pete's, LLC d/b/a Cactus Pete's Resort Casino; Louisiana-I Gaming d/b/a Boomtown New Orleans; PNK (Baton Rouge) Partnership d/b/a L'Auberge Baton Rouge; PNK (Bossier City), L.L.C. d/b/a Boomtown Bossier City; PNK (Lake Charles), L.L.C. d/b/a L'Auberge Lake Charles; PNK (River City), LLC d/b/a River City; PNK Vicksburg, LLC d/b/a Ameristar Vicksburg; and Washington Trotting Association, LLC d/b/a The Meadows.
On April 3, 2019, Defendants filed a Motion to Change Venue to this Court pursuant to the "first-to-file" rule and/or 28 U.S.C. § 1404(a). (Doc. # 31). Defendants stated that they consented to transfer to this Court pursuant to the consent prong of 28 U.S.C. § 1404(a). (Id. at pp. 16 n.12, 18). Also on that date, Defendants filed a partial Motion to Dismiss for failure to state a claim pursuant to Rule 12(b)(6), arguing that the deduction of gaming license fees from Plaintiffs' paychecks was not in contravention to law. (Doc. # 32).
On April 24, 2019, Plaintiffs filed their First Amended Complaint and responses to the motion to dismiss and motion to change venue. (Docs. ## 46, 48, 49). In their opposition to the motion to dismiss, Plaintiffs argued that the filing of their First Amended Complaint mooted the motion. (Doc. # 48, p. 2). In their response to the motion to change venue, Plaintiffs joined in Defendants' request and consented to a transfer to the Western District of Missouri. (Doc. # 49). In their reply, Defendants agreed that the filing of the First Amended Complaint rendered the motions to dismiss moot but reserved their right to refile the motion upon transfer to the Western District of Missouri. (Doc. # 50, ¶ 2).
On May 3, 2019, the Honorable Andrew P. Gordon, United States District Judge for the District of Nevada, issued an order denying the motion to dismiss as moot, extending deadlines for Defendants to answer or otherwise respond to the First Amended Complaint, granting the motion to change venue, and ordering transfer to the Western District of Missouri. (Doc. # 52). The case was subsequently transferred to this Court.
On May 15, 2019, Defendants refiled their partial Motion to Dismiss for failure to state a claim pursuant to Rule 12(b)(6), arguing the gaming licensing fee deduction claims should be dismissed. (Doc. # 58). Plaintiffs filed suggestions in opposition to the Motion on June 5, 2019, and Defendants replied on June 19, 2019. (Docs. ## 70, 73).
B. Allegations Regarding Gaming License Fee Deduction
Plaintiffs are current or former employees of Pinnacle and at least one of the Subsidiary Casinos. (Doc. # 46, ¶¶ 14-27). The Subsidiary Casinos are located in Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, and Pennsylvania. (Id. at ¶¶ 29-38). These states require some or all casino employees to possess state-issued gaming licenses before the employee can perform their job duties. (Id. at ¶ 60). The cost of the gaming licenses varies by state but ranges from $20 to $350 per employee. (Id. at ¶ 59).
According to the First Amended Complaint, Pinnacle has established a uniform or substantially similar gaming license fee deduction policy that governs employees at the Subsidiary Casinos. (Id. at ¶ 58). Under this policy, Defendants deduct from their employees' wages the amount it costs Defendants to initially obtain and thereafter renew the employee's state-issued gaming license. (Id. at ¶ 59). Specifically, Defendants deducted a gaming license fee from Plaintiffs Dozier's, Lonzo's, Kofron's, Sheffield's, Johnson's, Perez's, and Mitchell's (collectively "Gaming License Plaintiffs") wages as follows:
In their suggestions in opposition, Plaintiffs clarify that only these seven plaintiffs are asserting the gaming license fee deduction claims. (Doc. # 70, p. 3).
Plaintiff Total Incremental Number of Date Range Amount Amount Pay Periods Dozier $125 $41.67 3 5/13/2016 - 6/23/2016 Lonzo $200 $50 4 3/31/2017 - 5/25/2017 Kofron $50 $25 2 12/30/2016 - 1/26/2017 Sheffield $20 $20 1 2/24/2017 - 3/9/2017 Johnson $150 $50 3 6/30/2017 - 8/10/2017 Perez $50 $50 1 3/11/2016 - 3/24/2016 Mitchell $50 $50 1 8/26/2016 - 9/8/2016
(Id. at ¶¶ 73-79).
The Gaming License Plaintiffs allege that this deduction unlawfully reduces their earnings below the required minimum wage in the workweeks in which Defendants make the deduction. (Id. at ¶ 61). Allegedly, Defendants have misled tipped employees to believe that Defendants' gaming license fee deduction has never reduced wages below the minimum wage and do not maintain or provide payroll and timekeeping records that are segregated by workweek. (Id. at ¶¶ 64-65).
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint that fails to state a claim upon which relief may be granted. When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court treats all well-pleaded facts as true and grants the non-moving party all reasonable inferences from the facts. Westcott v. City of Omaha , 901 F.2d 1486, 1488 (8th Cir. 1990). However, courts are "not bound to accept as true a legal conclusion couched as a factual allegation" and such "labels and conclusions" or "formulaic recitation[s] of the elements of a cause of action will not do." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ) (internal quotation marks omitted). A Rule 12(b)(6) motion should be granted only if the non-moving party fails to plead facts sufficient to state a claim "that is plausible on its face" and would entitle the party to the relief requested. Twombly , 550 U.S. at 570, 127 S.Ct. 1955.
III. ANALYSIS
In the Second, Third, Fourth, and Fifth Causes of Action of the First Amended Complaint, the Gaming License Plaintiffs seek damages under federal, Missouri, and Iowa laws for alleged improper deductions from their pay to cover the cost of gaming license fees. (Doc. # 46, pp. 40-49). In their partial Motion to Dismiss for failure to state a claim, Defendants request dismissal of these Causes of Action. (Doc. # 58, p. 2). Defendants argue that the deduction is either permitted by or does not violate the applicable law. (Id. at pp. 13-24). Plaintiffs argue that the gaming license fee primarily benefits Defendants and therefore cannot be deducted from wages to drop pay below the minimum wage. (Doc. # 70, pp. 9-20).
Defendants also argue that Plaintiffs failed to provide a short, plain statement of relief. (Doc. # 58, pp. 7-8). The Court agrees with Defendants that the First Amended Complaint is littered with numerous conclusions and legal arguments. (See Doc. # 46). However, the Court also notes that these conclusions and legal arguments are intertwined with factual assertions. The Court is not inclined to grant Defendants' alternative motion to strike (Doc. # 58, p. 8 n.5) without more specific citations to the allegations Defendants seek to strike from the First Amended Complaint and the opportunity for Plaintiffs to respond to those specific requests.
Additionally, Defendants argue that Plaintiffs failed to adequately allege that their compensation fell below the minimum wage. (Doc. # 58, pp. 8-13). In making this argument, Defendants cite to two declarations and numerous documents attached to the declarations and attempt to read factual assertions into them. (Id. ). The Court agrees with Plaintiffs that these declarations, documents, and any factual assertion based upon them are not properly before the Court at this stage of the litigation. Accordingly, the Court disregards those materials in ruling on the pending Motion to Dismiss for failure to state a claim.
A. The FLSA
The Fair Labor Standards Act of 1938 ("FLSA") requires payment of a minimum wage for all hours worked. 29 U.S.C. § 206. To meet the minimum wage, the FLSA permits an employer to count the reasonable cost of certain "board, lodging, or other facilities" as wages. 29 U.S.C. § 203(m)(1). " ‘Other facilities’ ... must be something like board or lodging." 29 C.F.R. § 531.32(a). Examples of "other facilities" include:
Meals furnished at company restaurants or cafeterias or by hospitals, hotels, or restaurants to their employees; meals, dormitory rooms, and tuition furnished by a college to its student employees; housing furnished for dwelling purposes; general merchandise furnished at company stores and commissaries (including articles of food, clothing, and household effects); fuel (including coal, kerosene, firewood, and lumber slabs), electricity, water, and gas furnished for the noncommercial personal use of the employee; transportation furnished employees between their homes and work where the travel time does not constitute hours worked compensable under the Act and the transportation is not an incident of and necessary to the employment.
Id.
These examples "show a consistent line being drawn between those costs arising from the employment itself and those that would arise in the course of ordinary life" and "primarily benefit the employee." Arriaga v. Fla. Pac. Farms, L.L.C. , 305 F.3d 1228, 1242-43 (11th Cir. 2002). However, "the cost of furnishing ‘facilities’ which are primarily for the benefit or convenience of the employer ... may not ... be included in computing wages." 29 C.F.R. § 531.32(c) ; see also 29 C.F.R. § 531.3(d)(1) ; 29 C.F.R. § 531.35 (wage requirements are not met when an employee "kicks-back" for the employer's benefit any part of the wage).
Contrary to Defendants' assertions, it does not matter that a gaming license is mandated by State law rather than the employer. Nor does it matter if the gaming license is portable or considered a loan. The test is whether the item primarily benefits the employer or the employee. See Arriaga , 305 F.3d at 1242-43. As the Southern District of New York stated, "[p]rofessional licensing costs arise out of employment rather than the ordinary course of life. They therefore primarily benefit the employer, not the employee, and are not deductible to the extent that they bring an employee's pay below the minimum wage." Williams v. Secure Res. Commc'n Corp. , No. 11 Civ. 03986 (PAC)(JCF), 2013 WL 4828578, at *6 (S.D.N.Y. Sept. 10, 2013). Because Gaming License Plaintiffs have alleged facts that the deduction for a state-required gaming license fee bring their pay below the minimum wage, they have stated a plausible claim for relief.
Guidance from the Wage and Hour Division of the Department of Labor also supports this conclusion. Fact Sheet #16 states that if a uniform "is required by some other law , the nature of the business, or by an employer, the cost and maintenance of the uniform is considered to be a business expense of the employer." See U.S. Dep't of Labor, Wage & Hour Div., Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA) (July 2009), available at https://www.dol.gov/whd/regs/compliance/whdfs16.htm (emphasis added). Another example of an item which would be considered to be for the benefit or convenience of the employer are tools used in the employee's work. Id. Thus, Fact Sheet #16 suggests that a gaming license is for the benefit of the employer as it is required by State law and is necessary for the employee's work. Further, while Fact Sheet #4, which addresses state-licensed security guards, does not specifically list the license as an item for which the employer must cover its cost, it does states that "[t]he security guard cannot bear the cost of ... industry required tools if by purchasing them he/she receives less than the applicable minimum wage ...." See U.S. Dep't of Labor, Wage & Hour Div., Fact Sheet #4: Security Guard/Maintenance Service Industry Under the Fair Labor Standards Act (FLSA) (July 2008), available at https://www.dol.gov/whd/regs/compliance/whdfs4.pdf.
Defendants also cite a case from the District of Oregon to support their position. Haszard v. Am. Med. Response Nw., Inc. , 237 F. Supp. 2d 1151, 1153-54 (D. Or. 2001). However, it is evident that Haszard and the present case are distinguishable. The terms of art subject to interpretation in the two cases are distinct and are drawn from separate FLSA statutory and regulatory provisions. In Haszard , the plaintiffs sought relief under provisions governing overtime compensation. See generally id. Specifically, those plaintiffs sought overtime compensation for time spent satisfying state-mandated continuing education requirements. Id. Here, Gaming License Plaintiffs allege that Defendants violated the minimum wage requirements by taking an improper deduction for an item that primarily benefitted the employer. (Doc. # 46). Thus, the issues presented in Haszard are not persuasive here.
B. Missouri and Iowa Law
Plaintiffs also assert claims under the Missouri Minimum Wage Law ("MMWL"), Mo. Rev. Stat. §§ 290.500, et seq. ; the Iowa Wage Payment Collection Law ("IWPCL"), Iowa Code §§ 91A.1, et seq. ; and the Iowa Minimum Wage Law ("IMWL"), Iowa Code §§ 91D.1, et seq. , as enforced pursuant to the IWPCL. (Doc. # 46, ¶¶ 122-155). The MMWL, IWPCL, and IMWL are interpreted consistent with FLSA regulations. See Mo. Code Regs. Ann. tit. 8, § 30-4.010(1) (incorporating the written regulations interpreting the FLSA); Iowa Code § 91A.5(1) ("An employer shall not withhold or divert any portion of an employee's wages unless: a. The employer is required or permitted to do so by state or federal law or by order of a court of competent jurisdiction; or b. The employer has written authorization from the employee to so deduct for any lawful purpose accruing to the benefit of the employee."); Iowa Code § 91D.1(b) (incorporating provisions of the FLSA). For the reasons discussed above, Gaming License Plaintiffs have stated a plausible claim for relief under the MMWL, IWPCL, and IMWL.
CONCLUSION
The necessity of a gaming license arises out of employment, and therefore, it primarily benefits Defendants, as employers. Accordingly, the FLSA prohibits the deduction of any cost or fee for the gaming license. The MMWL, IWPCL, and IMWL are all interpreted consistent with the FLSA. For these reasons and the reasons stated above, Defendants partial Motion to Dismiss for failure to state a claim is DENIED.