Summary
holding that the FLSA does not preempt claim under Arizona statute for retaliatory discharge
Summary of this case from Helm v. Alderwoods Group, Inc.Opinion
No. CV 05-4214-PHX-SMM.
July 24, 2006
MEMORANDUM OF DECISION AND ORDER
Pending before the Court is Defendant Chas Roberts Air Conditioning Inc.'s ("Roberts") Motion to Dismiss Plaintiffs' second cause of action pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. (Dkt. 4.) Plaintiffs Orlando Medina, Mahelio Rico, Joseph Muniz, and Jose Rodriguez (collectively, "Plaintiffs") have filed a response to Roberts' Motion to Dismiss. (Dkt. 6.) In turn, Roberts has filed a reply in support of its motion. (Dkt. 8.)
FACTUAL BACKGROUND
When considering a Motion to Dismiss, this Court must "accept as true all material allegations in the complaint and construe them in the light most favorable to the plaintiff."Westlands Water Dist. v. Firebaugh Canal, 10 F.3d 667, 670 (9th Cir. 1993). Accordingly, the following facts are taken entirely from the allegations of Plaintiffs' Complaint. (Dkt. 1.)
Roberts is an employer engaged in commerce within the meaning of the Fair Labor Standards Act (the "FLSA"). (Dkt. 1, ¶ 4.) Defendant Does 1-10 are management personnel of Roberts who were partly responsible for Roberts' decision to discharge Plaintiffs. (Id., ¶ 5.) Plaintiffs Medina and Rico previously filed an action alleging that Roberts has been underpaying its current and former employees in violation of the FLSA and an Arizona state statute (the "Class Action"). (Id., ¶ 6; see Rico, et al. v. Chas Roberts, et al., U.S.D.C. Ariz. Case No. 05-1371-PHX-EHC.)
On December 1, 2005, Defendants first learned that Medina and Rico were actively participating in the Class Action and had allegedly discovered violations of the FLSA and state payment laws. (Id., ¶ 7.) On December 2, 2005, foreman Rick Lange responded by announcing that Plaintiffs would not be permitted to work under him. (Id.) Manager Charles Brooks echoed Lange's sentiments. (Id.)
Plaintiffs made up a work crew based out of Roberts' Queen Creek yard. (Id., ¶ 8.) On December 5, 2005, after Plaintiffs reported for work in Queen Creek, Defendants reassigned them to Roberts' Litchfield yard. Plaintiffs drove to the Litchfield yard, stopping only once to get gas. Due to several freeway accidents, the trip took two hours. (Id., ¶ 9.)
When they arrived at the Litchfield yard, management advised Plaintiffs that they would be permitted to work only if they reported working no more than eight hours and agreed to be paid one hour for drive time each way. (Id., ¶ 10.) Plaintiffs objected to these demands and reminded management they were to be paid for all time worked, including drive time between work locations. Defendants refused to allow Plaintiffs to work and sent them back to the Queen Creek yard, where they were sent home early. (Id., ¶ 11.)
On December 6, 2005, Defendants suspended Plaintiffs on the grounds that it took three hours for them to get from the Queen Creek yard to the Litchfield yard on December 5, 2005. (Id., ¶ 12.) Plaintiffs were not provided an opportunity to explain that the trip had not in fact taken three hours or that the delay resulted from freeway accidents. (Id., ¶ 13.) The State Police have confirmed that, on December 5, 2005, four accidents were reported on the freeway Plaintiffs used to get to the Litchfield yard. (Id., ¶ 14.)
On December 9, 2005, Defendants discharged Plaintiffs without offering any explanation except that their services were no longer needed. (Id., ¶ 15.) There was no shortage of work, as other persons were subsequently hired to do the work Plaintiffs could have done. (Id., ¶ 16.)
Roberts claims that Plaintiffs were fired because they stole materials. (Id., ¶ 17.) Plaintiffs deny stealing materials. (Id., ¶ 18.) Based on the timing of their discharge, the shifting explanations for their discharge, Defendants' failure to investigate the allegations against them, and the falsity of such allegations, Plaintiffs claim they were discharged in retaliation for engaging in activities protected by the FLSA and state law. (Id., ¶ 19.)
Relying on 29 U.S.C. § 215(a)(3), Plaintiffs' first count alleges that Defendants breached the FLSA by discharging them in retaliation for complaining to both the court and Defendants that they were violating the FLSA. (Dkt. 1, ¶¶ 21-25, Count I). In Count two, Plaintiffs Medina and Rico allege that Defendants breached Arizona's Employment Protection Act (the "EPA"), Ariz.Rev.Stat. § 23-1501(3)(c)(ii), by discharging them in retaliation for filing the Class Action and responding to discovery requests that Defendants were violating Arizona payment laws.
STANDARD OF REVIEW
Fed.R.Civ.P. 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law. Neitzke v. Williams, 490 U.S. 319, 326 (1989). A complaint may not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [the] claim which would entitle [the plaintiff] to relief." Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). If as a matter of law it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations, under Rule 12(b)(6) a claim must be dismissed, without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one. See Neitzke, 490 U.S. at 327. On a motion to dismiss for failure to state a claim, the court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party.Usher, 828 F.2d at 561. A court is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged. McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810 (9th Cir. 1988).
DISCUSSION
I. Plaintiffs Rico and Medina Have Alleged A Valid Claim Under Arizona's EPA
Relying on Galati v. America West Airlines, Inc., 69 P.3d 1011, 1014 (Ariz.Ct.App. 2003), Roberts argues that Medina's and Rico's second cause of action is not cognizable under Arizona's EPA because A.R.S. § 23-1501(3)(c)(ii) "does not give rise to a retaliation claim premised upon an employee's reporting of a violation of a federal statute," such as the FLSA. (Dkt. 8 at 1.) Plaintiffs Medina and Rico do not dispute the holding ofGalati, but contend count two is distinguishable because it is premised upon their reporting a violation of A.R.S. § 23-353, i.e., that Roberts failed to pay current and former employees for all hours worked. (Dkt. 6 at 3.) The Court agrees with Plaintiffs Medina and Rico.
A.R.S. 23-353 provides that an employee "shall be paid wages due him within three working days or the end of the next regular pay period, whichever is sooner," when he is discharged from the service of an employer, and shall be paid in the usual manner all wages due him no later than the regular payday for the pay period during which the termination occurred, when he quits the service of an employer. A.R.S. 23-353(A)-(B).
Pursuant to A.R.S. § 23-1501(3)(c)(ii), an employee has a wrongful termination claim against the employer if the employer terminates the employment relationship of an employee in retaliation for:
The disclosure by the employee . . . that [he] has information or a reasonable belief that the employer . . . has violated . . . the statutes of this state to either the employer or a representative of the employer who the employee reasonably believes is in a managerial or supervisory position and has the authority to investigate the information provided by the employee and to take action to prevent further violations of the . . . statutes of this state. . . .
A.R.S. § 23-1501(3)(c)(ii). In their Class Action complaint, Plaintiffs Medina and Rico alleged that "former Roberts' field employees" were paid for fewer hours than they actually worked, and thus were not paid in full when they left their jobs, a violation of A.R.S. § 23-353. See Rico, et al. v. Chas Roberts Air Conditioning, Inc., CV 05-1371-PHX-EHC, Dkt. 1, Ex. A at ¶¶ 1,7,20,22,26; at page 6, ¶ E. Roberts' reliance onTaylor v. Graham County Chamber of Commerce, 33 P.3d 518, 522 (Ariz.Ct.App. 2001) (dkt. 8 at 2), is inapposite. Taylor only addresses claims under A.R.S. § 23-1501(3)(b); it does not refer to claims brought under A.R.S. § 23-1501(3)(c)(ii). Accordingly, Plaintiffs Medina and Rico have stated a cognizable state law retaliation claim stemming from the filing of their Class Action complaint that Roberts violated an Arizona wage statute, A.R.S. § 23-353.
II. The FLSA Does Not Preempt Plaintiffs' State Law Retaliatory Discharge Claim
Roberts argues that, even if cognizable, Medina's and Rico's state law claim for retaliatory discharge is preempted because the FLSA provides an adequate statutory remedy, and thus imposition of Arizona's state law remedy would frustrate the purpose of the FLSA. (Dkt. 4 at 6-10.) Rico and Medina argue that the FLSA contains no express preemption language, that the Ninth Circuit has held "the FLSA's savings clause is proof that Congress did not intend to occupy the field," and that remedies for state law retaliatory discharge claims do not conflict with the FLSA because compliance with both state laws and the FLSA is not impossible. (Dkt. 6 at 1-2,6.)
Article VI of the Constitution provides that the laws of the United States "shall be the supreme Law of the Land; . . . any Thing in the Constitution or laws of any state to the Contrary notwithstanding." Art. VI, cl. 2. However, consideration of issues arising under the Supremacy Clause "`start[s] with the assumption that the historic police powers of the states [are] not to be superseded by . . . Federal Act unless that [is] the clear and manifest purpose of Congress.'" Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (citation omitted). Moreover, States possess broad authority under their police powers to regulate the employment relationship to protect resident workers. DeCanas v. Bica, 424 U.S. 351, 356 (1976). Thus, in addressing the preemption question, this Court "`start[s] with the assumption that the historic powers of the States were not to be superseded by [federal legislation] unless that was the clear and manifest purpose of Congress.'" Chevron U.S.A., Inc. v. Hammond, 726 F.2d 483, 488 (9th Cir. 1984) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Moreover, "because the States are independent sovereigns in our federal system," it is "presumed that Congress does not cavalierly pre-empt state-law causes of action." See Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996).
In the Ninth Circuit, preemption analysis is based "on the Supreme Court's three categories: (1) express preemption — `where Congress explicitly defines the extent to which its enactments preempt state law'; (2) field preemption — `where state law attempts to regulate conduct in a field that Congress intended the federal law exclusively to occupy'; and (3) conflict preemption — `where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Williamson v. General Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir. 2000) (internal citations omitted) (emphasis in original).
In the present case, both parties agree that no statutory language expressly preempts Rico's and Medina's state law retaliatory discharge claim. In addition, Roberts concedes that the FLSA does not preempt the entire field. (Dkt. 4 at 9.) The Court agrees. See Williamson, 208 F.3d at 1151 ("the FLSA's `savings clause' is evidence that Congress did not intend to preempt the entire field"). Given that Roberts does not argue express or field preemption, the only way Plaintiffs' second claim can be found preempted is by conflict preemption. Id.
Roberts does not argue conflict preemption, but instead claims that the FLSA provides plaintiffs an adequate statutory remedy, and thus Rico's and Medina's state retaliatory discharge claim is barred. (Dkt. 4 at 6-7.) Plaintiffs Medina and Rico respond that the FLSA does not preempt a state law claim for retaliatory discharge based on public policy when the basis for such claim is the employee's report of a state law violation. (Dkt. 6 at 4-8.) Although the Ninth Circuit Court of Appeals has not yet addressed this issue, the Court finds that the FLSA does not preempt Rico's and Medina's state law retaliatory discharge claim.
First, in support of its argument that the FLSA provides the Plaintiffs with an adequate statutory remedy and thus their state law retaliatory discharge claim is preempted, Roberts relies onPrewitt v. Factory Motor Parts, Inc., 747 F.Supp. 560 (W.D. Mo. 1990), Tate v. Pepsi-Cola Metropolitan Bottling Co., 1983 WL 549 (E.D. Wis. 1983), and Gusdonovich v. Business Information Co., 705 F.Supp. 262 (W.D. Pa. 1985). (Dkt. 4 at 6-8.) In all three cases, however, the plaintiffs alleged that their state law claims for wrongful discharge were based on violations of public policy "underlying the FLSA." See Prewitt, 747 F.Supp. at 565; Tate, 1983 WL 549, at *4; Gusdonovich, 705 F.Supp. at 263. As a result, these three courts agreed that the statutory remedy contemplated by the FLSA completely replaced the common law remedy because the FLSA contained its own exhaustive enforcement remedies for a violation of the FLSA. See Prewitt, 747 F.Supp. at 565; Tate, 1983 WL 549, at *4;Gusdonovich, 705 F.Supp. at 266.
Prewitt, Tate, and Gusdonovich are distinguishable from the instant case, because the plaintiffs at issue there based wrongful discharge claims on the policy underlying the FLSA. Here, by contrast, Rico and Medina base their state retaliatory discharge claim on the public policy underlying Arizona's wage law that requires employers to properly count the number of hours employees work and pay them the resulting sum by the time of their last regular paycheck. See A.R.S. § 23-353. Thus, unlike the cases cited by Roberts, no aspect of Rico's and Medina's claim for retaliatory discharge in violation of public policy relies on the FLSA. Moreover, Roberts' argument that Medina's and Rico's retaliatory discharge claim is limited to the exclusive remedy provided by the FLSA asserts "field preemption," and conflicts with Williamson's holding (and its concession) that Congress did not intend to preempt the entire field (see dkt. 4 at 9). See Williamson, 208 F.3d at 1151 (under "field preemption," the common law claim is preempted because the statute provides exclusive remedies).
Second, in support of its argument that the imposition of a state law remedy would frustrate the purpose of the FLSA, Roberts relies on Spieth v. Adasen Distributing, Inc., 1989 WL 61187 (D. Ariz. 1989). (Dkt. 4 at 8-10.) In Spieth, the Court held that "the FLSA preempts any recovery for a claim of wrongful discharge as the FLSA remedies are all-encompassing." (Id. at *2.) In light of the Ninth Circuit's decision in Williamson, however, Spieth is no longer good law on this particular point. In Williamson, the Ninth Circuit held that the FLSA did not preempt fraud claims related to dissuading participation in an FLSA complaint. In permitting the plaintiff's fraud claims to go forward, theWilliamson Court rejected the district court's conclusion that the "FLSA is the exclusive remedy for claims that duplicate or are the equivalent of rights protected by the FLSA."Williamson, 208 F.3d at 1154; see also Barnett v. Washington Mutual Bank, 2004 WL 2011462, *6 (N.D. Cal. 2004) ("the assumption that the FLSA is the exclusive remedy for claims duplicated by or equivalent of rights covered by the FLSA is incorrect").
Spieth is also distinguishable because, in support of its conclusion that "the FLSA preempts any recovery for a claim of wrongful discharge" (id.), Spieth relied on two district court cases, Wanderlingh v. May Dept. Stores Co., 1984 WL 3293 (D. Colo. 1984), and Tate, 1983 WL 549, neither of which comports with Ninth Circuit jurisprudence. In both Wanderlingh and Tate, the courts held that the FLSA provided the exclusive remedy for the plaintiffs' state law claims of wrongful discharge because the violation underlying each claim was also covered by the FLSA. Here, as stated above, Rico and Medina base their state retaliatory discharge claim on the public policy underlying Arizona's law, which requires employers to properly count the number of hours employees work and pay them the resulting sum by the time of their last regular paycheck. See A.R.S. § 23-353.
Roberts also contends that the Ninth Circuit's decision inWilliamson implicitly recognizes that the FLSA savings clause does not permit a wrongful discharge claim based on state law. (Dkt. 4 at 11.) According to Roberts, the Ninth Circuit's decision in Williamson "effectively embraced" Spieth's interpretation of the FLSA savings clause because "the plaintiffs' state law [fraud] claims were not preempted based on the fact that the employer's alleged conduct `would not be actionable under the [FLSA's] anti-retaliation provision." (Id.) Roberts' interpretation of Williamson, however, is incorrect. As previously discussed, the Ninth Circuit clearly rejected the district court's assumption that the "FLSA is the exclusive remedy for claims that duplicate or are the equivalent of rights protected by the FLSA." Williamson, 208 F.3d at 1154; see also Barnett, 2004 WL at *6 ("the assumption that the FLSA is the exclusive remedy for claims duplicated by or equivalent of rights covered by the FLSA is incorrect"). Moreover, the Ninth Circuit specifically found in Williamson that "the principal purpose of the FLSA is to protect all covered workers from substandard wages and oppressive working hours." 208 F.3d at 1150 (quotation and citations omitted). If the goal of the FLSA is generally to protect workers and their right to minimum wages and overtime, no threat to the accomplishment of that goal is posed by Medina's and Rico's state law claim for retaliatory discharge based on Arizona's requirement that an employer properly count the number of hours employees work and pay them the resulting sum by the time of their last regular paycheck.
For the reasons set forth above, Roberts has failed to demonstrate that it would be impossible for a private party to comply with both state and federal requirements, nor has it shown that Arizona law stands as an obstacle to the accomplishment of the congressional objectives of the FLSA. Thus, Roberts has not satisfied its burden of proving that Rico's and Medina's state law claim for retaliatory discharge in violation of public policy is preempted by the FLSA.
III. Doe Defendants Are Permitted in Federal Court
Roberts argues that the naming of fictitious "Does 1 through 20" in Plaintiff's Complaint "is contrary to longstanding practice in this district and elsewhere in the Ninth Circuit." (Dkt. 4 at 12-13.) Controlling authority suggests otherwise.
The Ninth Circuit has rejected naming "Doe" defendants in diversity actions, on the grounds that complete diversity cannot exist if the identity and citizenship of some defendants (i.e., the "Does") are unknown. See Fifty Associates v. Prudential Life Ins. Co. of America, 446 F.2d 1187, 1191 (9th Cir. 1970). The use of "Does" in federal question cases, however, is permissible if the complaint alleges why the defendant's real name was not then known or ascertainable. See Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 390 (1971); Merritt v. Los Angeles, 875 F.2d 765, 768 (9th Cir. 1989). Where "Doe" allegations are permissible, the form and content should be patterned after state law. See Anderson v. Allstate Ins. Co., 630 F.2d 677, 680-83 (9th Cir. 1980). Pursuant to Rule 10(f) of 16 A.R.S. Rules of Civil Procedure, "[w]hen the name of the defendant is unknown to the plaintiff, the defendant may be designated in the pleadings or proceeding by any name. When the defendant's true name is discovered, the pleading or proceeding may be amended accordingly."
The present case is a federal question proceeding. Here, Plaintiffs contend "[n]one of the managers who communicated to Plaintiffs about their firings discussed who made the firing decision," and "[t]hus it was not feasible to include in the complaint the names of the individual defendants and they were named as Does instead." (Dkt. 6 at 9.) Applying Rule 10(f), the Court finds that the Does may remain as named defendants until Plaintiffs discover their true names. See 16 A.R.S. Rules of Civil Procedure, 10(f). Accordingly,
IT IS HEREBY ORDERED DENYING Defendant Chas Roberts Air Conditioning, Inc.'s Motion to Dismiss. (Dkt. 4.)