Wright v. Violet Energy, Inc.

Full title: RUSSELL WRIGHT, Plaintiff, v. VIOLET ENERGY, INC., and DESARI STRADER…

Court: United States District Court, District of Oregon

Date published: Apr 22, 2024

3:22-cv-00151-SB (D. Or. Apr. 22, 2024)

Opinion

3:22-cv-00151-SB

04-22-2024

RUSSELL WRIGHT, Plaintiff, v. VIOLET ENERGY, INC., and DESARI STRADER, Defendants.

HON. STACIE F. BECKERMAN UNITED STATES MAGISTRATE JUDGE

FINDINGS AND RECOMMENDATION

HON. STACIE F. BECKERMAN UNITED STATES MAGISTRATE JUDGE

Russell Wright (“Wright”) filed this action against Violet Energy, Inc. (“Violet Energy”) and Desari Strader (“Strader”) (together, “Defendants”) alleging a minimum wage claim under the Fair Labor Standards Act (“FLSA”) and claims for breach of contract and violations of Oregon wage and hour statutes. Wright invokes this Court's federal question jurisdiction over his FLSA claim and supplemental jurisdiction over his state law claims. See 28 U.S.C. §§ 1331, 1367.

After Defendants failed to appear or otherwise defend, the Clerk of Court (the “Clerk”) entered Defendants' defaults. Wright now moves, pursuant to Federal Rule of Civil Procedure (“Rule”) 55(b), for a default judgment. For the reasons explained below, the Court recommends that the district judge deny Wright's motion.

BACKGROUND

I. THE PARTIES

Wright is a resident of Oregon. (See First Am. Compl. ¶¶ 5-6, 8-9, ECF No. 22, reflecting that Wright now resides in Deschutes County, Oregon; see also Compl. ¶¶ 5-6, 8-9, ECF No. 1, indicating that Wright previously resided in Washington County, Oregon). Wright alleges that he worked for Defendants in both Washington County and Multnomah County, Oregon, and that the present “action arises out of events occurring during [his] employment[.]” (First Am. Compl. ¶¶ 5, 8-9.)

With respect to Defendants, Wright alleges that Violet Energy is a Delaware corporation with its principal place of business in Richland, Washington, and that at all relevant times, Strader resided in Washington County, Oregon. (See First Am. Compl. ¶¶ 5, 7, alleging that “Washington County . . . [is] where [Wright] was working [and] the listed address for . . . Strader . . . [on] the Oregon Secretary of State['s website]”).¹ Wright also alleges that “[a]t all material times . . . until October 19, 2020,” Defendants “conduct[ed], transact[ed], or carr[ied] [on] business” under an unregistered assumed business name-namely, “Violet Power.”² (Id. ¶ 36.)

1 The Oregon Secretary of State's website reflects that (1) after Violet Energy's registered agent resigned on September 27, 2021, and before Plaintiff filed suit on January 27, 2022, the Oregon Secretary of State's system automatically and administratively revoked Violet Energy's authority to transact business in Oregon on December 30, 2021, and (2) Violet Energy's president and secretary, Strader, resided in Portland. (See Decl. Michael Stevens Supp. Pl.'s Mot. Alternate Serv. (“Stevens Alternate Serv. Decl.”) ¶ 5, ECF No. 8; id. Ex. 2 at 1-2, attaching a December 22, 2021 printout of Violet Energy's page on the Oregon Secretary of State's website). As discussed further below, the Court may take judicial notice of information on the Oregon Secretary of State's website. See Ryan v. Microsoft Corp., 147 F.Supp.3d 868, 873 n.1 (N.D. Cal. 2015) (taking judicial notice of “filings submitted to the Oregon Secretary of State's Office,” which are “matters of public record”); IV Sols., Inc. v PacifiCare Life & HealthIns. Co., 804 Fed.Appx. 497, 500 n.2 (9th Cir. 2020) (taking judicial notice of “corporate Statements of Information for [business entities] . . . filed with the California Secretary of State” (citing FED. R. EVID. 201)); Woong Joo Yoon v. I.N.S., 236 Fed.Appx. 270, 271 n.1 (9th Cir. 2007) (taking judicial notice of “selected portions of . . . the California Secretary of State's ‘Certificate of Status, Domestic Corporation'”); FED. R. EVID. 201(c)(1) (“The court . . . may take judicial notice on its own[.]”).

2 Under Oregon's Assumed Business Name Act (“ABNA”), OR. REV. STAT. § § 648.005.990, “a plaintiff may sue an unregistered entity only until a plaintiff realizes the entity is unregistered and a plaintiff then must determine the ‘real and true' name of the defendant.” Covelli v. Avamere Home Health Care LLC, No. 3:19-cv-486-JR, 2020 WL 6395448, at *5 (D. Or. Nov. 2, 2020); see also Kelly v. Olinger Travel Home, Inc., 117 P.3d 282, 284, 288-90 (Or. Ct. App. 2005) (reviewing the trial court's grant of the defendant's motion for summary judgment on the plaintiffs' ABNA claim). As Wright discovered before filing suit, the Oregon Secretary of State's website reflects that Violet Power filed an application for registration of its assumed business name on October 19, 2020. (See First Am. Compl. ¶ 36; Compl. ¶ 32, alleging that there was not a current registration for Violet Power on the Oregon Secretary of State's website “until October 19, 2020,” and seeking damages under Oregon Revised Statutes (“ORS”) § 648.135(2)).

II. WRIGHT'S WORK HISTORY

Wright alleges that on or about August 28, 2018, Strader sent him “an employment offer letter . . . [for] a position at Violet Power as Vice President of Strategic Development with a starting [yearly] salary of $238,000,” and “the potential to receive 50% of [the] salary as performance-based compensation, which was tied to meeting individual and company goals.” (Id. ¶¶ 11-12.) The offer letter stated that the “compensation package also included medical, dental, vision, disability, life insurance, paid time off, paid holidays, [a] stock plan, and [a] 401(k).” (Id. ¶ 12.)

Wright alleges that he accepted Strader's offer, his “employment with Defendants started on or about October 1, 2018,” and his work consisted of selling “services on behalf of Violet Power[].” (Id. ¶¶ 13, 39.) Additionally, Wright alleges that from “in or about November 2018 to in or about July 2019,” he “sold a total of $60,000 in services” on Violet Power's behalf. (Id. ¶¶ 39-40.)

Notably, Wright alleges that on or about April 1, 2019, he received “a contract to transition into an independent contractor [role] for Defendants[.]” (Id. ¶ 13.) Wright alleges that “Defendants never sign[ed] the contract” related to an independent contractor role. (Id.) However, Wright also alleges that he “switch[ed] to an independent contractor in April 2019,” that Defendants paid him “$20,000 as 1099 income” for “independent contractor services,” and that Defendants owe him $40,000 for contract “work [performed] as an independent contractor.” (Id. ¶¶ 13, 15, 30, 43.) Wright's allegations about his entitlement to certain wages likewise suggest that he may have only been an “employee through the end of March 2019.” (See, e.g., ¶ 23, seeking recovery of certain wages “if . . . the employment relationship ended at the end of March 2019,” or “[i]f employment continued [up until his] resignation”).

In addition to the contracts to serve as Defendants' Vice President of Strategic Operations and independent contractor, Wright also alleges that he is “owed $60,000 [under] a consulting agreement with Defendants[, which] pre-dated [Wright's] employment with Defendants.”³ (Id. ¶ 42.)

3 The Court notes that Wright's initial complaint did not mention work or a contract to serve as an independent contractor, or that Defendants paid Wright “$20,000 as 1099 income.” (See Compl. at 1-7.) The Court also notes that a “[f]orm 1099 . . . [is] a federal tax form for independent contractors,” Absolute Roofing & Constr., Inc. v. Sec. of Labor, 580 Fed.Appx. 357, 361 (6th Cir. 2014), whereas “the W-2 form [is] used for employees.” Viet v. Le, 951 F.3d 818, 821 (6th Cir. 2020) (“Victor and Le treated Viet as an independent contractor. Viet always received the 1099 tax form used for independent contractors, not the W-2 form used for employees.”). Further, the Court notes that Wright does not allege that Defendants ever misclassified him as an independent contractor, even though FLSA plaintiffs often proceed on such a theory. See Boggs v. Onity, Inc., No. 21-842-MK, 2022 WL 3021154, at *6 (D. Or. July 12, 2022) (noting that the plaintiff filed a putative class action alleging violations of the FLSA and Oregon law and seeking to “obtain monetary, injunctive, and declaratory relief resulting from [the] [d]efendant's misclassification of [the] [p]laintiff and other installer-trainers as independent contractors”).

Wright submitted a letter of resignation to Defendants on or about April 16, 2021, nearly three years after Wright received the August 28, 2018 employment offer letter from Strader. (Id. ¶¶ 11, 15, 21.) Wright alleges that he submitted a resignation letter because he had “not receiv[ed] [the] salary or benefits listed” in Strader's offer letter, and that his resignation letter included “a demand for full compensation due to be paid per the terms of the employment agreement.” (Id. ¶¶ 11, 15.) Furthermore, Wright alleges Defendants “were fully aware of both [their] obligation to pay [him] and the amount Defendants owed” when he submitted his resignation letter, and “to date, Defendants have failed to properly pay [him] any wages or commissions.” (Id. ¶¶ 16-17, 20-22.)

III. PROCEDURAL HISTORY

Wright filed this action on January 27, 2022. Wright asserts four causes of action: (1) failure to pay wages on termination of employment in violation of ORS § 652.140; (2) failure to pay minimum wages in violation of both ORS § 653.025 and the FLSA; (3) carrying on, conducting, or transacting business under an unregistered name in violation of Oregon's ABNA; and (4) breach of contract. (First Am. Compl. at 3-8; see also Compl. at 3-7, same).

A. The Court's July 18, 2022 Order to Show Cause

On July 18, 2022, the Court ordered Wright to show cause in writing on or before August 1, 2022, why the Court should not dismiss this case for failing timely to effect service of process under Rule 4(m). (ECF No. 6.) On July 25, 2022, Wright responded to the Court's Order to Show Cause, filed proof that he effected substitute service on Violet Energy through the Oregon Secretary of State, and moved for leave to effect alternative service of process on Strader. (ECF Nos. 7-12.)

B. Wright's Service Papers and Timeline

Before filing suit on January 27, 2022, Wright's counsel was engaged in “negotiations” with Defendants' counsel, whose law firm served as Violet Energy's registered agent until September 27, 2021. (Decl. Michael Stevens Supp. Pl.'s Resp. Order Show Cause (“Stevens OSC Decl.”) ¶¶ 3-6, ECF No. 12; see also id. Ex 1 at 2; id. Ex. 2 at 1, showing that in a February 14, 2022 email with the subject line “RE: Russ Wright's Personnel File,” Wright's counsel asked opposing counsel if their firm “still represented [Defendants],” noting that he “needed to serve [the firm's] clients,” the “firm's registered agent service ha[d] been resigned as registered agent,” and Violet Energy's “authority to conduct business in Oregon ha[d] been revoked”). Violet Energy did not appoint or maintain a registered agent after September 27, 2021. (See id. Ex. 1 at 2.)

On February 23, 2022, about a week after Defendants' counsel's firm advised that it “no longer represent[ed] [Defendants] in any capacity,” Wright's counsel unsuccessfully attempted to serve Defendants at the Portland address listed on the Oregon Secretary of State's website as Violet Energy's mailing address and the address for Violet Energy's president and secretary, Strader. (Id. ¶ 7; id. Ex. 1 at 1; id. Ex. 3 at 1-2; id. Ex. 4 at 1.) Wright's counsel “called the Oregon Department of Motor Vehicles and confirmed [that the] address for Strader was the [same] Portland address [listed on the Oregon Secretary of State's website].” (Id. ¶ 8.) However, when Wright's counsel's process server visited the Portland address and attempted to serve Defendants, the process server observed that “no one by the name Desari Strader [was] listed on the directory.” (Id. Exs. 3-4 at 1.) The process server also spoke to a representative of the building's “West Park Leasing management office,” who “stated that they are not there anymore.” (Id.)

On March 8, 2022, as part of his effort to effect alternative service on Violet Energy and comply with ORS § 60.121(3)'s requirements, Wright's counsel sent a service process form, payment, and copies of the summons, complaint, civil cover sheet, and case assignment order by certified mail to the Oregon Secretary of State.⁴ (Pl.'s Proof Substituted Serv. (“Pl.'s Proof Serv.”) at 3, ECF No. 9; Decl. Michael Stevens Supp. Pl.'s Proof Substituted Serv. (“Stevens Substitute Serv. Decl.”) ¶¶ 6-8, ECF No. 10; id. Ex. 3 at 1-3.) Wright was entitled to invoke such an alternative method of service because Violet did not appoint or maintain a registered agent after September 27, 2021, and Wright was unable to find a registered agent, officer, or director “within the county the court is located in.” See Rosado v. Roman, No. 16-cv-00784-SI, 2017 WL 3473177, at *3-4 (D. Or. Aug. 11, 2017) (noting that Rule 4(h) “offers two methods for serving a corporation, partnership, or association,” one of the methods is “to follow state law for serving a Summons,” and “[a]s applied to district courts in Oregon, to invoke any of the alternative methods, a plaintiff must first show that a registered agent, officer, or director could not be found within the county the court is located in”); see also OR. R. CIV. P. 7(D)(3)(b)(ii)(D) (listing the alternative method of service “[o]n the Secretary of State in the manner provided in ORS 60.121 or 60.731”).

4 ORS § 60.121 provides that “[t]he [Oregon] Secretary of State shall be an agent of a corporation . . . whenever the corporation fails to appoint or maintain a registered agent in this state or whenever the corporation's registered agent cannot with reasonable diligence be found at the registered office.” OR. REV. STAT. § 60.121(2); see also id. § 60.731(2)(a) (same); Figueroav. BNSF Ry. Co., 390 P.3d 1019, 1028 (Or. 2017) (explaining that ORS §§ 60.121 and 60.731 respectively apply to domestic and foreign corporations). The person who “initiat[es] the proceedings” can complete service on the Oregon Secretary of State by: (1) “mailing to the [Oregon Secretary of State's] office a copy of the process, notice or demand and the required fee for [the] party being served by certified or registered mail,” (2) “[t]ransmitt[ing] . . . notice of the service on the [Oregon] Secretary of State and copy of the process, notice or demand and accompanying papers to the corporation being served by certified or registered mail . . . [a]t the last registered office . . . as shown by the records on file in the office of the Secretary of State[,] and . . . [a]t such address the use of which the person . . . knows or, on the basis of reasonable inquiry, has reason to believe is most likely to result in actual notice,” and (3) “[f]iling with the appropriate court . . ., as part of the return of service, the return receipt of mailing and an affidavit . . . stating that this section has been complied with.” OR. REV. STAT. § 60.121(3)(a)-(c). There is a limited exception in cases involving foreign corporations: “Service on the Secretary of State of any such process, notice or demand shall be made in the same manner as provided in ORS 60.121(3), except that when the corporation served is not authorized to transact business in this state and was not authorized to transact business in this state at the time the transaction, event or occurrence upon which the proceeding is based occurred, the copy of the process, notice or demand shall be sent immediately by registered or certified mail by the plaintiff or the attorney of the plaintiff to the principal office or place of business of the corporation, instead of the last registered office of the corporation.” id. § 60.731(3). As discussed, the Oregon Secretary of State's system automatically and administratively revoked Violet Energy's authority to transact business in Oregon on December 30, 2021. The Oregon Secretary of State's website reflects that Violet Energy applied for authority to transact business in Oregon on June 24, 2019. Thus, the above exception appears to apply because the “corporation served was not authorized to transact business,” and “the transaction, event or occurrence upon which [this] proceeding is based occurred” between August 28, 2018 and April 1, 2019, when Violet Energy was not authorized to transact business and Defendants allegedly extended job offers to Wright.

Later that same day, March 8, 2022, Wright's counsel received a “Service of Process document” from the Oregon Secretary of State's office. (See id. Ex. 3 at 1-3, listing the document type as “Summons/Complaint,” the “Date of Service[] [as] 3/8/2022,” the “Entity Served” as “Violet Energy, Inc.,” and “Certified Mail” as the delivery method) (bold and all caps omitted).

On May 7, 2022, not long after Rule 4(m)'s ninety-day default service period passed, Wright's counsel sent copies of the summons for Violet Energy, complaint, civil cover sheet, and civil case assignment order by certified mail, return receipt requested, to the Richland, Washington address that the Oregon and Washington Secretaries of States' websites identify as the location of Violet Energy's principal place of business. (Id. ¶¶ 6-8; id. Ex. 3 at 1-12; Pl.'s Proof Serv. at 1-2.) Thereafter, the U.S. Postal Service unsuccessfully attempted to deliver the service papers to Violet Energy at the Richland address, and Wright's counsel completed an affidavit declaring under penalty of perjury that he complied with ORS § 60.121(3)'s requirements. (Stevens Substitute Serv. Decl. ¶¶ 6, 8; id. Ex. 3 at 1-12; Pl.'s Proof Serv. at 2.)

On May 9, 2022, Wright's counsel obtained an amended summons for Strader from the Clerk. (Stevens OSC Decl. ¶ 9, citing ECF No. 5.) On three occasions in mid-May 2022, Wright's counsel's process server unsuccessfully attempted to serve Strader at the Richland address. (Id. Ex. 5 at 1.) In an affidavit of non-service dated May 17, 2022, the process server reported that it was “dark inside . . . in the office,” the office “appear[ed] vacant,” there was “mail stacked up” and “no signage for Violet Energy,” and the “building contain[ed] only one business[, which was named] . . . Terra [G]eoscience Environmental.” (Id.) (all caps omitted).

After engaging in these efforts, Wright's counsel and Wright “search[ed] for other addresses for Strader, but nothing definitive [could be] located.” (Stevens Alternate Serv. Decl. ¶ 11.) Wright's counsel also represented that after conducting this search and due to unspecified “time commitments in June [2022], [he] was unable to file a motion for alternative service when it appeared unlikely actual service would be possible on either [d]efendant.” (Stevens OSC Decl. ¶¶ 11-13.)

C. The Court's August 18, 2022 Order

On August 18, 2022, the Court entered an Order addressing Wright's filings in response to the Court's July 18, 2022 Order to Show Cause, compliance with ORS § 60.121(3), and motion for leave to effect alternative service of process on Strader. (ECF No. 14.) The Court observed that Wright sufficiently demonstrated that he complied with ORS § 60.121(3)'s requirements for alternative service on Violet Energy through the Oregon Secretary of State, and Wright completed such service shortly after Rule 4(m)'s ninety-day service period passed.⁵ (See id.)

5 Arguably, Wright should have sent his certified mailing to the Richland address before May 7, 2022. See OR. REV. STAT. § 60.731(3) (“Service on the Secretary of State of any such process, notice or demand shall be made in the same manner as provided in ORS 60.121(3), except that when the [exception applies] . . ., the copy of the process, notice or demand shall be sent immediately by registered or certified mail by the plaintiff or the attorney of the plaintiff to the principal office or place of business of the corporation, instead of the last registered office of the corporation.”) (emphasis added); see also id. § 60.121(3)(b) (discussing the transmittal of the “notice of the service on the Secretary of State and copy of the process, notice or demand and accompanying papers to the corporation being served by certified or registered mail . . . [a]t the last registered office . . . [and] [a]t such address . . . most likely to result in actual notice”). In any event, it is evident that service was reasonably calculated, under all the circumstances, to apprise Violent Energy of the pendency of this action, and that Wright sufficiently demonstrated that he complied with ORS § 60.121(3)'s requirements. See Linh Thi Minh Tran v. Clear Recon Corp., No. 3:16-cv-02318-SI, 2017 WL 626361, at *3 n.4 (D. Or. Feb. 15, 2017) (“[ORS § 60.121(6) states] . . . that ‘[n]othing contained in this section shall limit or affect the right to serve any process, notice or demand required or permitted by law to be served upon a corporation in any other manner now or hereafter permitted by law.' . . . Thus, the Court must consider whether service was reasonably calculated, under all the circumstances, to apprise the defendant of the action.”) (simplified); OR. REV. STAT. § 60.731(6) (same); cf. Villegas-Rubi v. Dynamic Change,Inc., No. 17-01531-HZ, 2018 WL 5314888, at *3 & n.1 (D. Or. Oct. 26, 2018) (finding that the plaintiff “sufficient[ly] . . . demonstrate[d] service” in the “manner described in ORS 60.121 for Service on a Corporation by serving the Oregon Secretary of State,” explaining that although the “[p]laintiff failed to provide evidence of . . . [certain] mailings through affidavit, declaration, or actual copies of the mailing receipts,” the court “assume[d] that [the] [p]laintiff possesse[d] such evidence and could present it if called on to do so,” and noting “all other attempts of service ha[d] been properly supported by admissible evidence”).

The Court exercised its discretion to accept Wright's proof of service and consider Violet Energy to have been served. See Bacon v. City & Cnty. of S.F., No. 04-3437, 2005 WL 1910924, at *2, *6 (N.D. Cal. Aug. 10, 2005) (accepting untimely proofs of service “as valid” and considering the defendants to “have been served,” and noting that a “[c]ourt has broad discretion [under Rule 4(m)] to determine whether to extend the period of service even absent a showing of good cause”); see also Hagewood v. Gore, 781 Fed.Appx. 673, 674 (9th Cir. 2019) (“[Even] [a]bsent a showing of good cause, the district courts have discretion either to dismiss the case without prejudice or to extend the time period to effect service.” (citing In re Sheehan, 253 F.3d 507, 513 (9th Cir. 2001))).

In its August 18, 2022 Order, the Court also found that Wright's proposed methods of alternative service were reasonably calculated to apprise Strader of this proceeding, and thus granted Wright's motion for leave to effect alternative service on Strader. (ECF No. 14.) The Court explained that Wright “may serve Strader by emailing the summons and complaint to all email addresses known to [Wright], as well as by mailing via first class, certified mail a copy of the summons and complaint to all mailing addresses known to [Wright].” (Id.) Consistent with the Court's discretion under Rule 4(m), the Court added that “[w]ithin thirty (30) days of this Order, [Wright] shall file a declaration attaching evidence of the approved alternative service.”⁶(Id.) Considering the motion, declaration, and exhibits that Wright filed, it was within the Court's discretion to enter an order allowing alternative service on Strader. See OR. R. CIV. P. 7(D)(6) (“When it appears that service is not possible under any method otherwise specified in these rules or other rule or statute, then a motion supported by affidavit or declaration may be filed to request a discretionary court order to allow alternative service by any method or combination of methods that, under the circumstances, is most reasonably calculated to apprise the defendant of the existence and pendency of the action.”); cf.Brown v. Wash. Cnty., No. 06-cv-01238-BR, 2007 WL 3341775, at *3 (D. Or. Nov. 9, 2007) (declining to order service by other method because the plaintiff “ma[de] no showing of attempts to locate alternate addresses for [two of the defendants], or any attempt identify or locate [the Doe defendant],” and thus failed to demonstrate that service was not possible under any method otherwise specified under state law).

6 “Under Rule 4(e), a plaintiff may serve an individual by using methods permitted by state law, . . . or by (1) delivering a copy of the summons and complaint to the individual personally; (2) leaving a copy of the summons and complaint at the person's dwelling or usual place of abode with someone of suitable age and discretion who resides there; or (3) delivering a copy of the summons and complaint to an agent authorized by appointment or by law to receive service of process.” Finicum v. United States, No. 18-cv-00160-SU, 2019 WL 7756341, at *4 (D. Or. Dec. 9, 2019) (citations omitted). Oregon Rule of Civil Procedure (“ORCP”) 7(D) “governs permissible method of services [under state law] and provides that ‘summons shall be served in any manner reasonably calculated, under all the circumstances, to apprise the defendant of the existence and pendency of the action and to afford reasonable opportunity to appear and defend.'” id. (simplified). In some cases, service of process by email is a permissible method. See Dep't of Hum. Servs. v. K.L., 355 P.3d 926, 930-31 (Or. Ct. App. 2015) (“[S]ervice of summons by email also may satisfy due process.... By sending an email note with copies of the summons and petition to an email address at which DHS had recently exchanged email notes with father, DHS measurably increased the likelihood that parents would receive a copy of the summons and petition and, hence, notice of the pendency of the proceedings.... [W]e conclude that, taken together, the methods that DHS used to serve parents were reasonably calculated to apprise them of the proceeding and, hence, that service met the due process standard embodied in the first sentence of [the statute modeled after ORCP 7(D)].” (citing Rio Props., Inc. v. RioInt'l Interlink, 284 F.3d 1007, 1017 (9th Cir. 2002))); see also Rio Props., 284 F.3d at 1017 (“Considering the facts presented by this case, we conclude not only that service of process by email was proper-that is, reasonably calculated to apprise [the defendant] of the pendency of the action and afford it an opportunity to respond-but in this case, it was the method of service most likely to reach [the defendant].”).

D. Post-August 18, 2022 Proceedings

On September 13, 2022, and in accordance with the Court's Order, Wright timely filed a declaration attaching evidence of the approved alternative service on Strader. (Decl. Michael Stevens Supp. Pl.'s Proof Alternative Serv. (“Stevens Proof Serv. Decl.”) ¶¶ 1-5, ECF No. 17; id. Exs. 1-3.)

Wright's service to Strader's last known Gmail and Violet Power email addresses were not returned as undeliverable or bounced back. (See id. ¶ 4, attaching “the confirmation of delivery” to these “last known email addresses for . . . Strader”; id. Ex. 1 at 2, stating that “[d]elivery to these recipients or groups is complete, but no delivery notification was sent by the destination server”). “Many cases have found service of process by email to be reasonably calculated to provide actual notice when the test email is not returned as undeliverable or bounced back.” See FTC v. Cottelli, 854 Fed.Appx. 837, 839-40 (9th Cir. 2021) (stating as much and noting that “it was reasonable for the district court to authorize service of process via email,” and “service through at least one of the four approved emails . . . did not generate a ‘bounce back' email” (quoting Toyo Tire & Rubber Co. v. CIA Wheel Grp., No. 15-0246, 2016 WL 1251008, at *3 (C.D. Cal. Mar. 25, 2016))).

Also on September 13, 2022, Wright moved for entry of Violet Energy's default under Rule 55(a). (ECF Nos. 15-16.) Wright moved for entry of Strader's default on November 7, 2022. (ECF Nos. 19-20.) The Court granted both motions and directed the Clerk to enter Violet Energy and Strader's defaults on September 26 and November 22, 2022, respectively. (ECF Nos. 18, 21.)

Wright's counsel took no further action over the course of the next several months. As a result, on April 12, 2023, the Court's courtroom deputy emailed Wright's counsel and asked if Wright's counsel intended to move for entry of default judgment. Later that day, Wright's counsel responded and advised that he intended to file such a motion, he was “most of the way through the motion,” and he “hope[d] to have it filed by the end of [April 2023].”

Instead, Wright filed a first amended complaint on September 11, 2023.⁷ (ECF No. 22.) In his first amended complaint, Wright asserted the same four causes of action against Defendants: (1) failure to pay wages on termination of employment in violation of ORS § 652.140; (2) failure to pay minimum wages in violation of both ORS § 653.025 and the FLSA; (3) carrying on, conducting, or transacting business under an unregistered name in violation of Oregon's ABNA; and (4) breach of contract. (First Am. Compl. at 1, 3-8; Compl. At 1, 3-7.) Wright, however, increased his requested damages and added additional factual allegations regarding, among other things, his work and the contract to serve as an independent contractor, his receipt of “$20,000 as 1099 income,” and how he may have only been “an employee through the end of March 2019[.]” (See First Am. Compl. ¶¶ 14-15, 30, 41, 43; id. at 7; see also Compl. at 1-7, failing to address these matters and asking for less damages).

7 Courts have found that a plaintiff is entitled to amend as a matter of course when he has not previously amended his complaint and the defendants have yet to appear and file responsive pleadings. See Vanguard Outdoor, LLC v. City of L.A., 648 F.3d 737, 748 (9th Cir. 2011) (“The [defendant] did not file a Rule 12(b) motion or an answer before this case was stayed and still has not filed a responsive pleading. Therefore, Plaintiff may file its amended complaint without leave of Court. Plaintiff's motion to amend is DENIED AS MOOT.”); Downing v. Fumo, No. 2:23-cv-00419, 2023 WL 4796857, at *1 (D. Nev. July 27, 2023) (“A plaintiff is permitted to amend the complaint once as a matter of course when a Rule 12(b) motion or answer has not yet been filed.” (citing, inter alia, Vanguard, 648 F.3d at 748)); Croucier v. Credit One Bank, N.A., No. 18-cv-00020, 2018 WL 2836889, at *2 (S.D. Cal. June 11, 2018) (noting that the “[p]aintiff filed a complaint, to which a responsive pleading is required,” the “[d]efendant ha[d] not filed a responsive pleading,” and [w]here a responsive pleading is required, [Rule 15's twenty-one day] deadline to amend is not triggered until service of a responsive pleading or Rule 12 motion” (quoting Swanigan v. City of Chicago, 775 F.3d 953, 963 (7th Cir. 2015))). Even if Wright were not entitled to amend as a matter of course, the Court would have granted Wright leave to amend given the procedural posture and the substantive changes that Wright made in his first amended complaint. See FED. R. CIV. P. 15(a)(2) (explaining that if a party may not amend without “the opposing party's written consent or the court's leave,” the district “court should freely give leave when justice so requires”); see also GS Holistic, LLC v. Cigarette Outlet Smoke Shop, No. 1:23-cv-00281, 2023 WL 4209633, at *1-2 (E.D. Cal. June 27, 2023) (noting that “no defendant ha[d] appeared in th[e] action and default ha[d] been entered against [the named] [d]efendant,” stating that “no responsive pleading ha[d] been filed and [the] [p]laintiff may amend the complaint as a matter of course pursuant to [Rule] 15(a),” and adding that “[e]ven if that were not the case, [the district court found that] leave to amend under Rule 15 [was] appropriate given the early stages and procedural posture of th[e] action”).

Also on September 11, 2023, Wright's counsel docketed a certificate of service indicating that he sent copies of Wright's first amended complaint “by U.S. Mail to Defendants” at the mailing addresses known to Wright, including the Portland and Richland addresses.⁸ (ECF No. 23.)

8 The Court notes that Wright's counsel was not required to serve the first amended complaint in accordance with Rule 4 because Wright did not assert any new or additional claims against Defendants. See Mondragon v. R T Farm Labor Inc., No. 1:22-cv-01259, 2023 WL 5806562, at *2 n.1 (E.D. Cal. Sept. 7, 2023) (stating that “[s]ervice of the amended complaint [was] not required on the defaulted defendants because the amended complaint d[id] not assert new or additional claims for relief against those defendants,” and noting that courts have found that “Rule 5(a)(2) did not require service of the amended complaint on defaulted defendants where [the] amended complaint added new forms of relief but did not assert any new claims against those defendants” (citing FED. R. CIV. P. 5(a)(2) and Tatum v. Layers, LLC, No. 19-cv-02668, 2021 WL 6332677, at *5 (N.D. Cal. Mar. 25, 2021), report and recommendation adopted, 2021 WL 6332781, at *1 (N.D. Cal. Apr. 27, 2021)); see also Emp. Painters' Tr. v. Ethan Enters., Inc., 480 F.3d 993, 999 (9th Cir. 2007) (“[T]here are circumstances in which amended complaints must be served pursuant to Rule 4.... An amended complaint need only be served in the manner provided by Rule 4 when (1) a party is ‘in default for failure to appear' and (2) the ‘pleadings assert[ ] new or additional claims for relief.'”) (citation omitted); 4B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1144 (4th ed. Apr. 2023 update) (“Federal Rule 5(a)(2) provides that no service of papers is required on a party who is in default for failing to appear.... According to the second sentence of Rule 5(a)(2), however, a party who is in default for failure to appear is entitled to receive a pleading asserting a new claim for relief against him, but it must be served on him under Rule 4 as if it were original process.”).

On November 10, 2023, Wright moved for entry of Defendants' defaults under Rule 55(a). (ECF No. 24.) The Court granted Wright's motion on November 13, 2023, and directed the Clerk to enter Violet Energy and Strader's defaults as to Wright's first amended complaint. (ECF No. 27.)

Wright's motion for default judgment followed on January 22, 2024. (ECF No. 31.) Wright also filed declarations and exhibits in support of his motion. (ECF Nos. 32-33.) The Court took Wright's motion for default judgment under advisement on February 5, 2024. (ECF No. 34.)

DISCUSSION

I. PRELIMINARY MATTERS

Before addressing the merits of Wright's motion for default judgment, the Court addresses whether, and the extent to which, it may consider Wright's supporting declarations and exhibits, and the threshold matters of subject matter jurisdiction, personal jurisdiction, and service of process. See Durland v. Straub, No. 20-00031-IM, 2022 WL 2704169, at *1 (D. Or. July 12, 2022) (addressing the “threshold matter[s]” of subject matter and personal jurisdiction before the merits of a motion for default judgment); see also Seiko Epson Corp. v. Koshkalda, 799 Fed.Appx. 463, 465 (9th Cir. 2019) (noting that default judgments may be “void for lack of personal jurisdiction due to insufficient service of process”); Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 F.2d 685, 688 (9th Cir. 1988) (stating that “[a] federal court does not have jurisdiction over a defendant unless the defendant has been served properly under [Rule] 4.”).

A. Wright's Declarations and Exhibits

1. Applicable Law

a. Judicial Notice and Incorporation by Reference

In reviewing a motion for default judgment, a court may consider matters that are subject to judicial notice and documents that the plaintiff incorporated by reference or attached to the complaint.

For example, in Bernardo v. Davis Davis & Associates, LLC, No. 21-cv-02010, 2022 WL 2101910, at *1 (C.D. Cal. Mar. 31, 2022), the plaintiff sued under the Fair Debt Collection Practices Act and its state counterpart, and later moved for default judgment. id. In considering the second and third Eitel factors (i.e., the merits of the claims and sufficiency of the complaint), the district court relied on and quoted the collection letter that the defendant sent to the plaintiff. id. at *2-3. After doing so, the district court explained the plaintiff did not attach the collection letter to the complaint, but the plaintiff's “[c]omplaint specifically reference[d] the letter” and the district court found “no reason to dispute the letter's accuracy.” id. at *3 n.2. Thus, the district court concluded that it was appropriate to consider the collection letter under the incorporation by reference doctrine. id. (citing Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1160 (9th Cir. 2012) and Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)); see also Durland, 2022 WL 2704169, at *1 (“This Court has reviewed Plaintiffs' Amended Motion for Default Judgment- and Plaintiffs' declarations in support-which allege that Defendants violated the [FLSA] . . . and various Oregon wage and hour statutes.... [T]he [relevant] factors favor default judgment.”).

Similarly, in Northfield Insurance Co. v. Garcia, No. 1:15-cv-01701, 2016 WL 2625934, at *1 n.1 (E.D. Cl. May 9, 2016), the district court took judicial notice of and “consider[ed] [matters of public record] in making its findings and recommendations with respect to [the plaintiff's motion] for [d]efault [j]udgment.” id. In support of its decision to do so, the district court observed that the Ninth Circuit has previously “affirm[ed] default judgment where [the] district court ‘exceeded the requirements of [Rule 55] by taking extensive evidence on all allegations in the complaint including damages.” id. (quoting TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987))); see also TeleVideo, 826 F.2d at 917 (“Rule 55 gives the court considerable leeway as to what it may require as a prerequisite to the entry of a default judgment.”).

Along similar lines, in Indian Hills Holdings, LLC v. Frye, 572 F.Supp.3d 872 (S.D. Cal. 2021), the district court addressed a motion for default judgment, took “judicial notice of . . . publicly available facts from the Colorado Secretary of State website,” and considered an agreement that the plaintiff attached to the complaint, noting that “[c]ourts may “consider exhibits attached to a complaint and incorporated by reference to be part of the complaint.” id. at 872 n.2, 878 n.3 (simplified); see also Finney v. Howey, No. 23-35026, 2023 WL 7042540, at *1 (9th Cir. Oct. 26, 2023) (noting that the defendant moved, pursuant to Rule 60(b)(4), to vacate a default judgment on the ground that it was void for lack of subject matter jurisdiction, accepting the complaint's factual allegations as true, and holding that the district court properly denied the defendant's motion to vacate under Rule 60(b)(4) because the plaintiff's “complaint and incorporated contract” demonstrated that the district court did not lack subject matter jurisdiction).

b. Damages Evidence

Generally, even if a court finds that a default judgment should enter against the defaulting defendant, the plaintiff still “bears the burden of demonstrating his entitlement to damages in the requested amount.” Stravrum v. N.W. Precision Constr., LLC, No. 21-01761-SB, 2022 WL 16798577, at *5 (D. Or. Oct. 14, 2022) (citing Szabo v. Sw. Endocrinology Assocs. PLLC, No. 20-01896, 2021 WL 3411084, at *1 (D. Ariz. July 27, 2021)). In other words, the “plaintiff must ‘prov[e] up [his] damages' by providing ‘detailed affidavits and supporting exhibits,'” and “[t]he court must ensure that the amount of damages is reasonable and demonstrated by the plaintiff's evidence.” id. (quoting Assaf v. Carp, No. 17-01883, 2018 WL 6051514, at *1 (C.D. Cal. June 5, 2018) and Waters v. Mitchell, 600 F.Supp.3d 1177, 1182 (W.D. Wash. 2022)).

2. Analysis

Wright and Wright's counsel submitted declarations in support of Wright's motion for default judgment. (See Decl. Russell Wright Supp. Pl.'s Mot. Default J. (“Wright Decl.”) ¶¶ 112, ECF No. 32; Decl. Michael Stevens Supp. Pl.'s Mot. Default J. (“Stevens Decl.”) ¶¶ 1-7, ECF No. 33.)

Wright attached three exhibits to his declaration: (1) a copy of Defendants' August 28, 2018 offer letter, (2) invoices that Wright sent to Defendants for consulting work he performed, and (3) the resignation letter Wright sent to Defendants on or about April 16, 2021. (Wright Decl. ¶¶ 4, 8-9; id. Exs. 1-3.) Wright's counsel also attached four exhibits to his declaration: (1) a copy of a demand letter Wright's counsel sent to Defendants on May 8, 2021, (2) a copy of a second demand letter Wright's counsel sent to Defendants on June 10, 2021, (3) a June 24, 2021 email Wright's counsel received from Defendants' former counsel, noting that Defendants' former counsel enclosed a copy of Wright's “personnel file” and stated that she was investigating Wright's allegations and would respond to Wright's counsel's demand letters, and (4) a copy of the February 15, 2022 email confirming that Defendants' former counsel no longer represented Violet Energy or Strader. (Stevens Decl. ¶¶ 2-4, 7; id. Exs. 4-7.)

Wright relies in his first amended complaint on the August 28, 2018 offer letter and April 16, 2021 resignation letter. (See First Am. Compl. ¶¶ 11-12, 15, 21, 23, 39-41, seeking, among other things, breach of contract damages based on the offer of employment/contract that the parties “entered [into] . . . on or about August 28, 2018,” and relying on demands set forth in Wright's resignation letter dated April 16, 2021). Thus, in evaluating Wright's motion for default judgment, the Court may consider the offer and resignation letters under the incorporation by reference doctrine. See Ecological Rts. Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 511 (9th Cir. 2013) (“Under the incorporation by reference doctrine, even if a document is not attached to a complaint, it may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim.”) (simplified).

Wright's first amended complaint does not specifically refer to any consulting “invoices” that he sent to Defendants. Wright, however, does base his breach of contract claim on consulting and independent contractor agreements and seeks amounts that Defendants allegedly owe Wright under these agreements. (See First Am. Compl. at 6-7.) Thus, at minimum, the Court may consider Wright's invoices in evaluating Wright's evidence of damages and to the extent the invoices have bearing on other matters the Court does not accept as admitted facts at this stage. See Bernardo, 2022 WL 2101910, at *1 (observing that “[a] plaintiff is required to provide evidence of her damages, and a court may rely only on the declarations submitted by the plaintiff or order a full evidentiary hearing”) (citation omitted); see also Durland, 2022 WL 2704169, at *2 (explaining that after entry of default, “[t]he court . . . does not accept as admitted facts that are not well-pleaded, conclusions of law, or facts relating to the amount of damage”) (citations omitted).

Like the offer and resignation letters, Wright also relies in his first amended complaint on the demand letters that Wright's counsel sent to Defendants on May 8 and June 10, 2021. (See First Am. Compl. ¶¶ 16-17, 22, referring to Wright's counsel's requests in the “first demand” and “final demand” letters that he sent to Defendants on these dates, and relying on the number of days that “passed since Defendants received” the “written notices of demand for nonpayment”). The Court may therefore also consider the demand letters. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010) (“We have extended the doctrine of incorporation by reference to consider documents in situations where the complaint necessarily relies upon a document or the contents of the document are alleged in a complaint, the document's authenticity is not in question and there are no disputed issues as to the document's relevance.”).

Finally, Wright does not refer in his first amended complaint to the June 24, 2021 and February 15, 2022 emails that Defendants' former counsel sent to Wright's counsel. These emails refer generally to Defendants' former counsel's enclosure of Wright's personnel file, investigation regarding Wright's allegations, intent to respond to Wright's counsel's demand letters, and notice that they no longer represented Violet Energy or Strader. These emails are not particularly relevant to Wright's factual allegations, claims, or damages. Accordingly, the Court need not consider these emails in evaluating Wright's motion for default judgment.

B. Personal Jurisdiction, Subject Matter Jurisdiction, and Service of Process

1. Applicable Law

“When entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties.” Stay Frosty Enters., LLC v. Amazon.com, Inc., No. 3:18-cv-00283-SB, 2021 WL 1232681, at *5 (D. Or. Mar. 10, 2021) (quoting Tuli v. Republic of Iraq, 172 F.3d 707, 712-13 (9th Cir. 1999)); see also Durland, 2022 WL 2704169, at *2 (“A district court ‘has an affirmative duty' to determine whether it has subject-matter jurisdiction and personal jurisdiction over the defendant before entering a default judgment.” (quoting In re Tuli, 172 F.3d at 712)). A district “court does not have jurisdiction over a defendant unless the defendant has been served properly[.]” Direct Mail, 840 F.2d at 688; see also Seiko, 799 Fed.Appx. at 465 (noting that default judgments may be “void for lack of personal jurisdiction due to insufficient service of process”).

2. Analysis

a. Federal Question and Supplemental Jurisdiction

Pursuant to 28 U.S.C. §§ 1331 and 1367, the Court has federal question jurisdiction over Wright's FLSA claim and supplemental jurisdiction over Wright's claims under Oregon law. See Durland, 2022 WL 2704169, at *2 (noting that the court had “federal question jurisdiction over [the] action pursuant to 28 U.S.C. § 1331, as [the] action [was] brought under the FLSA,” and “[p]ursuant to 28 U.S.C. § 1367, [the court had] supplemental jurisdiction over the claims based on Oregon law, as they [were] ‘part of the same case or controversy' as the FLSA claim”) (citations omitted); see also Cruz v. Quang, No. 13-cv-00181, 2015 WL 348869, at *3 (N.D. Cal. Jan. 23, 2015) (“This case is brought under the FLSA and various California wage and hour statutes. Accordingly, there is federal question and supplemental jurisdiction over the action.”).

Relatedly, and as discussed in greater detail below, Wright's allegations and damages evidence, and matters incorporated into the first amended complaint by reference, suggest that Wright's FLSA claim lacks merit. On the current record, however, Wright's FLSA claim clears the bar necessary to confer federal question jurisdiction. See Al-Qarqani v. Chevron Corp., 8 F.4th 1018, 1024-25 (9th Cir. 2021) (“[F]ailure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction, at least so long as the asserted federal claim is neither immaterial and made solely for the purpose of obtaining jurisdiction nor wholly insubstantial and frivolous.”) (simplified); Wengryn v. Provisions Consultants Corp., 667 Fed.Appx. 10, 11 (2d Cir. 2016) (noting that “simply raising a federal issue in a complaint will not automatically confer federal question jurisdiction, . . . [but] dismissal for lack of subject-matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is so insubstantial, implausible, foreclosed by prior decisions of the Supreme Court, or otherwise completely devoid of merit as not to involve a federal controversy,” and explaining that the plaintiff's “FLSA claim clear[ed] this low bar” because although “[i]t [was] certainly possible that [the plaintiff's] relationship with his former employer . . . was not covered by the FLSA, . . . that question ultimately [went] to the merits of [the plaintiff's] claim, not the [d]istrict [c]ourt's jurisdiction to decide it”) (simplified); see also Tijerino v. Stetson Desert Project, LLC, 934 F.3d 968, 970, 972-75 (9th Cir. 2019) (noting that there was a dispute about whether the plaintiffs were employees within the meaning of the FLSA or independent contractors, and holding that “employment status [in an FLSA action] is a merits-based determination, not an antecedent jurisdictional issue”) (bold omitted).⁹

9 The applicability of an FLSA exemption is also a merits-based determination. See Ferguson v. Smith, No. 3:18-cv-00372-SB, 2020 WL 6112186, at *3 (D. Or. Oct. 16, 2020) (noting that whether plaintiffs are exempt from the FLSA's requirements “goes to the merits of [the] [p]laintiffs' FLSA claims”) (simplified); Baker v. Sunburst Consulting, Inc., No. 16-00124, 2017 WL 3271727, at *2 (D. Mont. July 6, 2017) (stating that “arguments regarding FLSA exemption are merits-based”).

b. Diversity Jurisdiction

In his complaints, Wright did not invoke the Court's diversity jurisdiction under 28 U.S.C. § 1332, and acknowledged that there is not complete diversity between Wright and Strader. (See First Am. Compl. ¶¶ 1-3, 5-6, alleging that “[t]his is a suit for damages in excess of $75,000” but invoking only the Court's federal question and supplemental jurisdiction under 28 U.S.C. §§ 1331 and 1367, and alleging that Wright resides in Oregon and Strader's “listed address” is in Washington County, Oregon; Compl. ¶¶ 1-3, 5-6, reflecting the same). Wright, however, now claims that “diversity jurisdiction also exists between [him] and Defendant[s].” (Pl.'s Mot. Default J. (“Pl.'s Mot.”) at 7, ECF No. 31, citing First Am. Compl. ¶¶ 1-3.)

As the Ninth Circuit has explained, “[t]he party seeking to invoke [a] district court's diversity jurisdiction always bears the burden of both pleading and proving diversity jurisdiction[.]” Evans v. Fid. Brokerage Servs. LLC, 841 Fed.Appx. 7, 8 (9th Cir. 2021) (quoting NewGen, 840 F.3d at 611). Contrary to Wright's argument, the allegations set forth in his first amended complaint fail to demonstrate that this Court has diversity jurisdiction over this matter. Accordingly, the Court concludes that Wright has not carried his burden of pleading diversity jurisdiction. See id. (noting that § 1332(a)(1) “confer[s] jurisdiction on district courts where the plaintiff alleges that the parties are completely diverse and the amount in controversy exceeds $75,000”); see also Livingston v. DeJoy, No. 21-55114, 2021 WL 4811415, at *1 (9th Cir. Oct. 15, 2021) (holding that the district court “properly dismissed [the plaintiff's] action without prejudice because [the plaintiff] failed to allege[, among other things,] complete diversity”).

The Court also concludes that Wright has failed to carry his burden of proving diversity jurisdiction. Although Wright's motion does not include a citation to his declaration in support of his argument that the Court has diversity jurisdiction, Wright's declaration includes an allegation about Strader “us[ing] company funds to pay for her personal expenses, including for . . . her residence in Moses Lake, Washington.” (Wright Decl. ¶ 12.) Additionally, the Court notes that in granting Wright's motion for leave to effect alternative service of process on Strader, the Court approved Wright's proposed methods of alternative service, which included, but were not limited to, “mailing via first class, certified mail a copy of the summons and complaint to all mailing addresses known to [Wright].” (ECF No. 14.) The “addresses known” to Wright were the Portland, Oregon and Richland, Washington addresses, and addresses in Kennewick, Washington and Litchfield Park, Arizona. (See Stevens Proof Serv. Decl. ¶ 5; id. Ex. 2 at 1, reflecting that only the mailing to the Arizona address referred to Strader as “Desari Strader (Caldwell)”; ECF Nos. 23, 26, showing that Wright's counsel mailed copies of the first amended complaint and second motion for entry of Defendants' default to the same four addresses). Wright's counsel, however, acknowledged that “[he] and [his] client have been searching for other addresses for Strader, but nothing definitive has been located.” (Stevens OSC Decl. ¶ 12.)

It is well settled that “[t]o establish diversity jurisdiction, [a plaintiff] must show that the parties were citizens of different states ‘at the time suit is filed.'”¹⁰ Immigr. Sols., Inc. v. Stiffler, No. 22-35163, 2023 WL 5567151, at *1 (9th Cir. Aug. 29, 2023) (quoting Dole Food Co. v. Patrickson, 538 U.S. 468, 478 (2003) and citing Kanter v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001)). “[F]or diversity of citizenship, ‘a person is domiciled in a location where he or she has established a fixed habitation or abode in a particular place, and [intends] to remain there permanently or indefinitely[.]'” Chambers v. Knight, No. 20-56141, 2021 WL 4811360, at *1 (9th Cir. Oct. 15, 2021) (quoting Lew v. Moss, 797 F.2d 747, 749-50 (9th Cir. 1986)).

10 “Although subject matter jurisdiction ordinarily is determined at the time an action is filed, a well-established exception to the time-of-filing rule allows a court to ‘cure a jurisdictional defect by dismissing a dispensable nondiverse party' at any time, even after judgment has been rendered and an appeal has been filed.” Kanaan v. Yaqub, No. 21-cv-09591, 2022 WL 19692035, at *1 (N.D. Cal. Oct. 27, 2022) (quoting Grupo Dataflux v. Atlas Glob.Grp., L.P., 541 U.S. 567, 573 (2004)). A district “court's authority to cure a jurisdictional defect in this manner flows from [Rule] 21, which provides that ‘the court may at any time, on just terms, add or drop a party.'” id. (citations omitted). The Ninth Circuit has described “Rule 21 ‘as a grant of discretionary power to the federal court to perfect its diversity jurisdiction by dropping a nondiverse party provided the nondiverse party is not indispensable to the action under Rule 19.'” id. (quoting Kirkland v. Legion Ins. Co., 343 F.3d 1135, 1142 (9th Cir. 2003)). Wright's allegations suggest that Strader is indispensable in this case. (See First Am. Compl. ¶¶ 5, 9-10, 33, alleging that both Defendants employed Wright, Strader made the employment offer, and “Strader is personally liable for the back wages needed to make [Wright's] wages meet minimum wage”).

Wright fails to satisfy his burden of proving diversity jurisdiction. Wright's allegations suggest that at the time he filed suit (i.e., January 27, 2022), Strader was domiciled in Oregon. (See First Am. Compl. ¶¶ 1-3, 5-6; Compl. ¶¶ 1-3, 5-6; cf. Stevens OSC Decl. ¶ 8, noting that after filing this suit, Wright's counsel contacted the Oregon Department of Motor Vehicles and “confirmed [that] the address for Strader was the Portland address” listed on the Oregon Secretary of State's website and referenced in the complaint and first amended complaint; Decl. Michael Stevens Supp. Pl.'s Req. Entry Strader's Default ¶¶ 5-6, ECF No. 20; id. Ex. 1 at 1-3, attaching an August 2009 news article, which quoted and identified Strader as a Washington County Commissioner and “executive director of [the] Oregon Solar Energy Industries Association”). Further, nothing in the record demonstrates that Strader has established a fixed habitation or abode in Washington or Arizona, and intends to remain in either place permanently or indefinitely.

For these reasons, Wright fails to carry his burden of pleading and proving diversity jurisdiction.

c. Personal Jurisdiction

With respect to personal jurisdiction, Wright alleges that (1) Defendants resided and conducted substantial business activities in Multnomah County and Washington County, Oregon, and/or were previously authorized to transact business in Oregon, (2) Defendants employed and entered into a contract with an Oregon resident (i.e., Wright), (3) Wright's federal and state employment, ABNA, and contract claims arise out of Defendants' forum-related activities, and (4) Strader is personally liable for the back wages that Defendants owe to Wright. (See First Am. Compl. At 1-7.)

Courts have found that comparable allegations sufficiently supported the exercise of specific personal jurisdiction over the defendants. For example, in Hernandez v. Martinez, No. 12-cv-06133, 2014 WL 3962647, at *3-5 (N.D. Cal. Aug. 13, 2014), the district court observed at the outset that the plaintiffs alleged that the defendants “were engaged in business in Santa Clara County[,]” California, but did not allege that the defendants were “residents of California.” Id. at *4. The district court thus turned to whether the nonresident defendants' contacts satisfied the due process standard for the exercise of specific personal jurisdiction. Id. The district court determined that “the exercise of subject matter jurisdiction and personal jurisdiction [was] appropriate.” Id. at *5. In support of this finding, the district court emphasized, among other things, that the defendants allegedly violated the “FLSA and California state law . . . [on] overtime pay, minimum wage . . ., and waiting time,” the “[d]efendants' employment of [the] [p]laintiffs in California and failure to pay overtime compensation reflect[ed] actions that target[ed] known individuals . . . in California,” the defendants “could reasonably foresee that their failure to pay [the] [p]laintiffs overtime would harm [the] [p]laintiffs in California,” and “no facts before the [c]ourt suggest[ed] that the exercise of personal jurisdiction [was] unreasonable.” id. at *4-5; see also Aquirre v. Custom Image Pros LLC, No. 23-cv-00419, 2023 WL 7924177, at *1 (D. Ariz. Nov. 16, 2023) (“Defendants are an Arizona . . . company and two individuals alleged to be owners and managers thereof.... The Court . . . has personal jurisdiction over Defendants. Plaintiff's claims arise from Defendants' business activities in Arizona and their alleged failure to comply with federal and state employment laws during those activities.”).

Based on the allegations and authorities discussed above, the Court concludes that Wright has alleged sufficient facts to support the Court's exercise of specific personal jurisdiction over Defendants.

d. Service of Process

As discussed above (see supra Background Part III.B.-D), Wright has demonstrated that he adequately served Defendants. See Anderson v. Ross Island Sand & Gravel Co., No. 3:18-cv-00549-SB, 2018 WL 3947018, at *1 (D. Or. July 11, 2018) (“Under Rule 55(b)(2), [a] district court has discretion to grant a motion for default judgment provided jurisdiction is proper and there was adequate service on defendant.”); see also Direct Mail, 840 F.2d at 687-89 (finding that service was “sufficient to create personal jurisdiction over [the defendant],” and thus rejecting the defendant's argument that district court lacked “personal jurisdiction over it to enter the default judgment”).

II. MOTION FOR DEFAULT JUDGMENT

Pursuant to Rule 55(b), Wright moves for entry of default judgment against Defendants on his FLSA minimum wage and state law claims. (Pl.'s Mot. at 1.) The Court finds that Wright is not entitled to default judgment, and therefore recommends that the district judge deny Wright's motion.

A. Applicable Law

In reviewing a motion for default judgment under Rule 55(b), the “court takes ‘the well-pleaded factual allegations' in the complaint ‘as true.'” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (quoting Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992)). The court, however, does not accept as true factual allegations “relating to the amount of damages.” See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (“The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” (citing Pope v. United States, 323 U.S. 1, 12 (1944))).

It is also well settled that a defaulting “defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc., 503 F.3d at 854 (simplified). Thus, “[n]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps, 980 F.2d at 1267 (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978))).

Although “default judgments are ordinarily disfavored[, and] [c]ases should be decided upon their merits whenever reasonably possible,” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986)), a court has the discretion to enter a default judgment. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (citations omitted). A court's decision should be guided by these seven factors (the “Eitel” factors):

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

NewGen, 840 F.3d at 616 (quoting Eitel, 782 F.2d at 1471-72); see also Lasheen v. Embassy of The Arab Republic of Egypt, 625 Fed.Appx. 338, 340 (9th Cir. 2015) (stating that “[t]he district court properly applied the factors discussed in Eitel . . . in determining whether to enter default judgment”).

B. Analysis

The Court recommends that the district judge deny Wright's motion for entry of default judgment.

In determining whether to enter default judgment, courts often focus on the second and third Eitel factors (i.e., the merits of the plaintiff's substantive claim and sufficiency of the complaint). See, e.g., Nationstar Mortg. LLC v. Presley, No. 1:20-cv-00620, 2023 WL 121746, at *3 (E.D. Cal. Jan. 6, 2023) (beginning “with and plac[ing] particular emphasis on factors two and three,” and noting that courts “often treat these two factors ‘as the most important' in an Eitel analysis” (quoting Mnatsakanyan v. Goldsmith & Hull APC, No. 12-cv-04358, 2013 WL 10155707, at *10 (C.D. Cal. May 14, 2013))); see also GS Holistic, LLC v. Ravens Smoke Shop,Inc., No. 22-cv-7199, 2023 WL 5504964, at *3 (C.D. Cal. July 10, 2023) (stating that a court “may render judgment based on an assessment of the second and third Eitel factors alone,” and holding that the plaintiff “fail[ed] to satisfy the second and third Eitel factors, and therefore the [c]ourt focuse[d] only on those factors”); Bailey v. HVSN Enters. Inc., No. 22-cv-001744, 2021 WL 794501, at *2 (C.D. Cal. Mar. 2, 2021) (reflecting that the court began with the second and third factors because they were “dispositive” and “alone demonstrate[d] that default judgment [was] improper,” and found that it did “not [need to] assess the remaining factors”).

Further, when considering the second and third Eitel factors in federal question cases, courts have turned first to the merits and sufficiency of the plaintiff's federal causes of action. See Nationstar, 2023 WL 121746, at *8 (finding that the plaintiff “failed to establish the merits of any alleged federal cause of action as would be required for entry of default judgment against [the] [d]efendants,” and thus the court “should decline to exercise supplemental jurisdiction and address the merits of [the] [p]laintiff's state law claims” and deny the plaintiff's motion for default judgment); see also Crypto Asset Fund, LLC v. Hoard, Inc., No. 20-cv-00438, 2020 WL 13556128, at *4-10 (S.D. Cal. June 29, 2020) (addressing the second and third Eitel factors together in denying a motion for default judgment and explaining that “[w]ith no viable federal claim to provide the Court with subject matter jurisdiction under 28 U.S.C. § 1331, . . . the Court decline[d] to exercise supplemental jurisdiction over [the] [p]laintiff's remaining state law claims”); Langer v. Gonzalez, No. 16-4544, 2017 WL 10543992, at *2-4 (C.D. Cal. Feb. 13, 2017) (focusing on the second Eitel factor and the merits of the plaintiff's federal claim, finding that the plaintiff failed to state a federal claim, and “declin[ing] to grant default judgment to [the] [p]laintiff and . . . exercise supplemental jurisdiction over [the] [p]laintiff's remaining state law claim”).

Consistent with these authorities, this Court likewise focuses on the merits and legal sufficiency of Wright's FLSA minimum wage claim, which is the only original jurisdictional “hook” that would support assertion of § 1367(a) supplemental jurisdiction over Wright's state law claims. The Ninth Circuit's decision in Landers v. Quality Communications, Inc., 771 F.3d 638 (9th Cir. 2015), provides useful guidance. See Boon v. Canon Bus. Sols., Inc., 592 Fed.Appx. 631, 632 (9th Cir. 2015) (“Landers, for the first time, articulated this Court's requirements for stating [an FLSA] wage claim under Twombly and Iqbal.”); see also Boyack v. Regis Corp., 812 Fed.Appx. 428, 431 (9th Cir. 2020) (noting that Landers addressed what a plaintiff must allege “at minimum” to “state plausible claims for unpaid overtime and minimum wages under the [FLSA]”).

In Landers, the Ninth Circuit “addressed the degree of specificity required to state a claim for failure to pay minimum wages or overtime wages under the FLSA” post-Twombly and Iqbal, which was “an issue of first impression in this circuit.” 771 F.3d at 640. In his complaint, the plaintiff alleged, among other things, that the defendants “implemented a ‘de facto piecework no overtime' system and/or failed to pay minimum wages and/or overtime wages for the hours [that the plaintiff] worked” and “falsified payroll records to conceal [the defendants'] failure to pay required wages.” id. at 646. The Ninth Circuit held that the plaintiff “failed to state a claim for unpaid minimum wages and overtime wages” under the FLSA. id. at 645. In so holding, the Ninth Circuit emphasized that (1) the plaintiff “presented [only] generalized allegations asserting violations of the [FLSA's] minimum wage and overtime provisions,” (2) “[n]otably absent from the allegations in [the plaintiff's] complaint . . . was any detail regarding a given workweek when [the plaintiff] worked in excess of forty hours and was not paid overtime for that given workweek and/or was not paid minimum wages,” and (3) although the plaintiff's “allegations ‘raise[d] the possibility' of under compensation in violation of the FLSA, a possibility is not the same as plausibility.” id. at 646 (citation omitted). The Ninth Circuit concluded by summarizing the contours of the applicable standard and why the plaintiff failed adequately to satisfy that standard:

We decline to impose a requirement that a plaintiff alleging failure to pay minimum wages or overtime wages must approximate the number of hours worked without compensation. However, at a minimum the plaintiff must allege at least one workweek when he worked in excess of forty hours and was not paid for the excess hours in that workweek, or was not paid minimum wages. [The plaintiff's] allegations fell short of this standard, and the district court properly dismissed his complaint for failure to state a plausible claim.

id. (emphasis added).

Post-Landers, courts have held that when plaintiffs fail to allege at least one workweek when they worked and were not paid minimum wages or several hours when they worked without being paid minimum wages, they fail to state an FLSA minimum wage claim. For example, in Boyack, the Ninth Circuit recognized that Landers “held that to state plausible claims for unpaid overtime and minimum wages under the [FLSA], a plaintiff must ‘at minimum' allege ‘at least one workweek when [she] worked in excess of forty hours and was not paid for the excess hours in that workweek, or was not paid minimum wages.'” 812 Fed.Appx. at 430 (quoting Landers, 771 F.3d at 646). The Ninth Circuit found that the plaintiffs' “unpaid overtime and minimum wage claims fail[ed] to meet this requirement.” id. The Ninth Circuit explained that “Landers does not require plaintiffs plead with mathematical precision the number of hours they worked in a week, [but] Landers does require plaintiffs to allege they worked several hours without being paid minimum wages, which [the plaintiffs] failed to do.” id. at 430 n.1 (quoting Landers, 771 F.3d at 645). The Ninth Circuit added that the plaintiffs “merely alleged specific weeks for which they [were] ‘owed' a specified amount of overtime pay,” which was “a legal conclusion for which the complaint contain[ed] no supporting factual allegations, such as the number of hours worked compared to the number of hours for which compensation was given.” id.

This Court reached a similar result in an FLSA collective action involving minimum and overtime wages:

Plaintiffs have failed plausibly to allege claims under the FLSA, because they do not allege at least one workweek when they worked in excess of forty hours and were not paid for the excess hours in that workweek, or were not paid minimum wages. Plaintiffs acknowledge as much in their response.... Accordingly, the Court recommends that the district judge dismiss Plaintiffs' FLSA claims, with leave to amend.

Ferguson v. Smith, No. 3:18-cv-00372-SB, 2018 WL 3733665, at *7 (D. Or. July 18, 2018), findings and recommendation adopted, 2018 WL 3732657, at *1 (D. Or. Aug. 6, 2018).

Wright fails plausibly to allege a minimum wage claim under the FLSA, as his allegations do not satisfy the Landers standard. Wright's FLSA claim is based on the time he allegedly spent as Defendants' Vice President of Strategic Development and employee.¹¹ Wright alleges that his employment spanned from “on or about October 1, 2018” (i.e., the benefits start date listed in the offer letter) through “the end of March 2019” (i.e., the day before Defendants provided Wright with a contract to transition to an independent contractor role and before Wright “switch[ed] to an independent contractor”), or, alternatively, through his “resignation in April 2021.” (See First Am. Compl. ¶¶ 11, 14-15, 23, 30-31, alleging that Defendants provided Wright with a “contract to transition into an independent contractor [role] for Defendants” on or about April 1, 2019, Defendants “never sign[ed] the contract” but Wright “switch[ed] to an independent contractor in April 2019” and accepted “$20,000 as 1099 income” for “independent contractor services,” and presenting these alternative theories as to the length of Wright's employment; Wright Decl. Ex. 1 at 1, showing that Strader's offer letter stated that she “anticipated a start date on or before September 4, 2018,” Wright would “participate in [Violet Power's] standard employee benefits package which [would] begin on or about October 1, 2018,” and the position offered was “a full-time, exempt position [with a] beginning salary of . . . $238,000”).

11 An FLSA plaintiff “must be [the defendant's] employee to assert violations and seek reimbursement.” Carter v. Rasier-CA, LLC, No. 17-cv-00003, 2017 WL 4098858, at *2 (N.D. Cal. Sept. 15, 2017), aff'd, 724 Fed.Appx. 586 (9th Cir. 2018). Wright does not allege that Defendants ever misclassified him as an independent contractor or consultant instead of an employee, and thus effectively concedes that to the extent he worked in such capacities, he was not an employee under the FLSA. See generally Iontchev v. AAA Cab Serv., Inc., 685 Fed.Appx. 548, 549-51 (9th Cir. 2017) (addressing the “economic reality” test that governs an FLSA plaintiff's classification and holding that “the district court properly held that, as a matter of law, the [plaintiff cab drivers] were not employees under the FLSA” because “[u]nder the totality of the circumstances . . . [and] as a matter of economic reality, they were in business for themselves when they leased their taxicabs from [the defendant] and utilized them to earn a profit”).

Even setting aside the offer letter's reference to the “exempt” Vice President of Strategic Development position with a $238,000 annual salary, Wright fails to state a minimum wage claim. Notably, the allegations in Wright's operative complaint lack any detail regarding a given week or day when Wright worked without being paid minimum wages. (See First Am. Compl. ¶¶ 5, 9, 13, 15-16, 21, 24-33, 39-40, alleging only that Wright worked for Defendants in Oregon, Wright's employment “started on or about October 1, 2018,” Wright did “not receiv[e] his salary or benefits listed” in the offer letter, Wright “sold services on behalf of Violet Power[]” while “under the [c]ontract [offer],” Defendants “never paid [Wright] for [his] work, except for a total of $20,000 as part of the independent contractor services,” Defendants “failed to properly pay [Wright] any wages or commissions,” Strader is “personally liable for the back wages needed to make the wages meet minimum wage,” and “[e]ven if Defendants had pay periods of only once per month, there would have been seven pay periods between starting in October 2018 and [Wright's] switch to an independent contractor [role] in April 2019 . . . in which no wages were paid,” and “[i]n the alternative, [if Wright] continued as an employee until April 2021, . . . there were 24 additional [post-April 2019] pay periods in which no wages were paid”).

Like Boyack, Wright merely alleges pay periods for which he is owed wages. (See id. ¶¶ 16, 21, 23, 29-31, 41, alleging that “there are a total of 6 or 30 pay periods [for which Wright] is entitled to the minimum wage penalty” under state law, the amount of “wages owed” to Wright, and “Defendants were fully aware of . . . the amount [they] owed”). Thus, Wright fails to satisfy Landers. See Boyack, 812 Fed.Appx. at 430 n.1 (“Although Landers does not require plaintiffs plead with mathematical precision the number of hours they worked in a week, Landers does require plaintiffs to allege they worked several hours without being paid minimum wages, which Appellants failed to do.”) (simplified); Landers, 771 F.3d at 646 (“Notably absent from the allegations in [the] complaint . . . was any detail regarding a given workweek when Landers worked in excess of forty hours and was not paid overtime for that given workweek and/or was not paid minimum wages.... [A]t a minimum the plaintiff must allege at least one workweek when he worked in excess of forty hours and was not paid for the excess hours in that workweek, or was not paid minimum wages.”).

For these reasons, the Court concludes that Wright's FLSA claim is based on inadequately supported legal conclusions, and that Wright fails to raise anything more than the “possibility” of an FLSA minimum wage violation, which is “not the same as plausibility.” See Landers, 771 F.3d at 646; McKinnon v. Peloton Interactive, Inc., No. 22-cv-03368, 2022 WL 18284402, at *4 (C.D. Cal. Nov. 14, 2022) (“The Court agrees that Plaintiffs fail to meet the bar set by Landers because they do not allege at least one workweek or workday when they were not paid the minimum wage.”); Boyack, 812 Fed.Appx. at 430 n.1 (“Appellants merely alleged specific weeks for which they are ‘owed' a specified amount of overtime pay. This is a legal conclusion for which the complaint contains no supporting factual allegations, such as the number of hours worked compared to the number of hours for which compensation was given.”); cf. Durland, 2022 WL 2704169, at *2 (noting that after entry of default, a court “does not accept as admitted facts that are not well-pleaded, conclusions of law, or facts relating to the amount of damage”) (citations omitted).

Having reviewed Wright's motion papers, the allegations in Wright's first amended complaint, and the documents incorporated into the first amended complaint by reference, the Court questions whether Wright can plead a viable FLSA claim. As discussed, Strader's offer letter referred to the Vice President of Strategic Development role as an “exempt position” with an annual salary of $238,000. (Wright Decl. Ex. 1 at 1.)

However, Wright also alleges that he is “owed $60,000 for a consulting agreement with Defendants that pre-dated [his] employment with Defendants.” (First Am. Compl. ¶ 42.) Wright submitted invoices in support of his motion for default judgment which identify Wright as the “[m]anaging [m]ember” of an Oregon company named “Wright Works, LLC.” (Wright Decl. Ex. 2 at 1-3.) These invoices demonstrate that during Wright's alleged period as Defendants' “employee” and Vice President of Strategic Development, Wright and WrightWorks, LLC were invoicing Violet Power and Strader for Wright's $10,000 monthly retainer, “[r]etainer [s]ettlement,” and hourly “[b]usiness [d]evelopment and [c]ontract review” services. (See id., showing that in the last March 31, 2019 invoice, Wright and Wright Works, LLC invoiced Violet Power and Strader for $60,000, noted that $50,000 was the total “[o]utstanding delinquent balance due for Nov ‘18, Dec ‘18, Jan ‘19, Feb ‘19[, and] March ‘19,” stated that “[p]ayment [of] $20,000.00 [was] rec'd by wire transfer for Sept and Oct ‘19 [sic] - thank you,” and advised Violet Power and Strader to “[m]ake all checks payable to: Russ Wright”).

It is not clear to the Court how Wright served as Defendants' employee and Vice President of Strategic Development during the same period in which Wright and his LLC were invoicing Defendants for, among other things, Wright's hourly business development and investor outreach services. That is particularly true because the evidence Wright submitted in support of damages appears to be inconsistent with Wright's factual allegations. (See, e.g., First Am. Compl. ¶¶ 11, 13-15, 23, 30, 42, alleging that Wright accepted Strader's August 28, 2018 employment offer, Wright's “employment with Defendants started on or about October 1, 2018,” Wright “switch[ed] to an independent contractor in April 1, 2019,” Wright received “$20,000 as part of [his] independent contractor services” and “as 1099 income,” and Wright is “owed $60,000 for a consulting agreement with Defendants that pre-dated [his] employment with Defendants”; id. ¶¶ 39-40, alleging that “[w]hile [Wright was] under the Contract [i.e., the August 28, 2018 employment offer], [Wright] sold services on behalf of Violet Power[],” Wright is entitled to his salary and “performance-based compensation” because “in or about November 2018 to in or about July 2019, [Wright] sold a total of $60,000 in services”; id. ¶ 43, alleging that in addition to these sums, Wright is also “owed $40,000 for [his] work for Defendants as an independent contractor”).

At a minimum, Wright's allegations and evidence suggest that there is a strong possibility of a dispute concerning material facts here. See NewGen, 840 F.3d at 616 (noting that under Eitel, the fifth factor a court weighs in deciding whether to enter default judgment is “the possibility of a dispute concerning material facts” (quoting Eitel, 782 F.2d at 1472)).

Also relevant to the second and third Eitel factors (i.e., the merits of the plaintiff's substantive claim and sufficiency of the complaint, see Eitel, 782 F.2d at 1472) is that courts have rejected plaintiffs' FLSA claims under similar circumstances.¹² For example, in Miller v. Infinite Percent Partners LLC, No. 20-cv-02253, 2021 WL 2474440, at *2 (N.D. Cal. June 17, 2021), the district court held that the plaintiff failed plausibly to allege an FLSA minimum wage claim:

12 Wright requests $1,090,618.13 in penalties, wages, and contract damages. (Pl.'s Mot. at 7.) Thus, the fourth Eitel factor (i.e., the sum of money at stake in the action, see NewGen, 840 F.3d at 616) also weighs against entry of default judgment. SeeG & G Closed Cir. Events, LLC v. Nguyen, No. 11-cv-06340, 2012 WL 2339699, at *2 (N.D. Cal. May 30, 2012) (stating that “default judgment is generally disfavored when the sum of money at stake is either too large or unreasonable in light of the defendant's actions” (citing Eitel, 782 F.2d at 1471-72)). The same can be said about the seventh Eitel factor: “the strong policy underlying the [Rules] . . . favoring decisions on the merits.” New Gen, 840 F.3d at 616 (quoting Eitel, 782 F.2d at 1471-72).

According to Plaintiff's own allegations, she was hired to perform professional functions, and she was to be paid a monthly salary, not an hourly wage. Plaintiff does not even attempt to allege that she was a nonexempt employee.... Instead, she argues in her opposition that “[e]xempt employees are still entitled to the benefits of the FLSA if they are paid no minimum wage for 3 months.” . . . Plaintiff cites no authority, . . . and the Court has found none, in support of this proposition. On the contrary, the plain language of 29 U.S.C. § 213 clearly exempts “any employee employed in a bona fide executive, administrative, or professional capacity” from the minimum wage provisions of

29 U.S.C. § 206. Accordingly, the Court finds that Plaintiff has not plausibly alleged a violation of the FLSA's minimum wage provisions.

id. at *2 (simplified). In rejecting the plaintiff's FLSA retaliation claim, the district court also emphasized that the plaintiff “attempt[ed] to invoice [the] [d]efendants and enter into a consulting contract complete with retainer (actions not normally correlated with minimum wage disputes)[.]” id. at *3.

Similarly, in Ware v. Collectcorp Corp., No. 06-1753, 2007 WL 9724457, at *2 (D. Ariz. Aug. 28, 2007), in dismissing the plaintiff's FLSA claim against the defendant company's president, the district found that the plaintiff was “exempt from the FLSA's minimum wage provisions because [the] [p]laintiff asserted in her [c]omplaint that she was hired by [the company] as a Senior Vice President and she attached her employment agreement, which showed [the] [p]laintiff was to be paid a base salary of $170,000 per year.” id. In support of that finding, the district court explained that “[b]ecause the FLSA does not cover executive, administrative, or professional employees with a total annual compensation of at least $100,000, the . . . [p]laintiff was ineligible for FLSA coverage.” id. (simplified). Given these facts, the district court held that “[f]or the same reasons that [the] [p]laintiff failed to state a claim against [the company's president] under the FLSA, [the] [p]aintiff's claim against [the company] also fail[ed].” id.

Finally, in Hosseini v. Miilkiina LLC, No. 22-cv-01459, 2023 WL 2136390, at *3 (S.D.N.Y. Feb. 21, 2023), the district court addressed a motion for default judgment, concluded that the plaintiff had “not adequately pleaded her unpaid wages and unpaid overtime claims under the FLSA,” and declined to “exercise supplemental jurisdiction over the remaining claims.” id. In finding that the plaintiff failed to state a claim for “unpaid wages” under the FLSA, the district court emphasized, among other things, that the plaintiff appeared improperly to be using the FLSA as a vehicle to recoup certain wages and the declaration that the plaintiff submitted in support of her motion for default judgment included no FLSA-related damages calculation:

The FLSA statute requires payment of minimum wages and overtime wages only.... While the FLSA sets a national floor in terms of working conditions, it does not convert every suit involving the breach of an employment contract into a federal case.... Courts in [the Second] Circuit thus have generally rejected plaintiffs' attempts to recover unpaid wages under the FLSA when such claims fall outside of the FLSA's minimum wage and overtime provisions....

Here, Plaintiff seeks to recover her compensation under the Employment Agreement as well as her ‘earned wages.' . . . There is no mention of the term ‘minimum wage' in the Complaint, save for a brief mention under a separate claim for overtime wages under [New York law].... Plaintiff also makes no mention of damages for minimum wage violations and [the declaration in support of the plaintiff's motion for default judgment] includes no damages calculation that relies on minimum wage violations.... Plaintiff's allegations, as credited, seek to recover wages at an hourly rate of $125 per hour.... That far exceeds the national minimum wage of $7.25 per hour.... In short, Plaintiff is instead seeking to improperly use the FLSA as a vehicle to recoup her unpaid, agreed-upon wages.... She has therefore failed to state a claim.

....

In conclusion, Plaintiff's claim is not an attempt to recover the minimum wage but rather the amount allegedly owed to her under the Employment Agreement. Therefore, it does not constitute a cognizable FLSA minimum wage action.

id. at *4 (simplified).

Based on the observations in these cases, this Court questions whether Wright can plead a viable claim against Defendants under the FLSA. Even if Wright was an employee when his company was invoicing Defendants for the services described above, Wright's alleged role and salary (and the terms of Wright's offer letter) suggest that he was exempt from the FLSA's minimum wage provisions. Wright's allegations and evidence also highlight “actions not normally correlated with minimum wage disputes.” See Miller, 2021 WL 2474440, at *3.

It is also noteworthy that Wright's first amended complaint combines his FLSA and state minimum wage theories under a single cause of action. (See First Am. Compl. at 4-5.) Although Wright alleges that he is entitled to liquidated damages under the FLSA, Wright suggests that at his “election” he may (and does) seek to recover under state law instead of the FLSA. (See First Am. Compl. ¶¶ 28-31, alleging that “[i]n the alternative [to the remedies under the FLSA], and [at] the election of Plaintiff, Plaintiff is entitled to collect [certain] wages” under state law and requesting only specific amounts under state law). Consistent with this interpretation, Wright's motion for default judgment includes one quote from the FLSA's damages provision, but Wright addresses only what equates to a violation of state law and seeks only to recover under state law. (See Pl.'s Mot. at 3, 5-6, citing First Am. Compl. ¶¶ 26, 28-29, but not the FLSA damages paragraph). Thus, Wright fails adequately to address the merits and sufficiency of his FLSA claim.

Given that Wright has failed to establish the merits of his sole federal cause of action under the FLSA and the Eitel factors largely weigh against entry of default judgment, the Court recommends that the district judge deny Wright's motion for default judgment and decline to exercise supplemental jurisdiction over (or further address) Wright's state law claims. See Nationstar, 2023 WL 121746, at *8 (“Upon consideration of the Eitel factors, the Court concludes that Plaintiff has failed to establish the merits of any alleged federal cause of action as would be required for entry of default judgment against Defendants.... In its discretion, the Court should decline to exercise supplemental jurisdiction and address the merits of Plaintiff's state law claims. Moreover, the remaining Eitel factors largely weigh in favor of denying entry of default judgment. Accordingly, this Court will recommend Plaintiff's motion for default judgment be denied.”).

In Nationstar, the court declined to recommend that the district judge grant the plaintiff leave to amend his complaint, in part because (1) the court had previously identified deficiencies in the plaintiff's federal claims and “reluctantly granted [the] [p]laintiff's request for leave to amend,” and (2) the “[p]laintiff chose not to replead,” leading the court to “conclude at [that] juncture that any amendment to cure the[] additional deficiencies would be futile.”¹³ id. at *8-9.

13 The Nationstar docket, which is a matter of public record, reflects that the plaintiff did not object to the court's findings and recommendation. Instead, on January 23, 2023, nearly three years after filing the action, the plaintiff filed a notice of voluntary dismissal before the district judge addressed the court's findings and recommendation. See generally FED. R. CIV. P. 41(a)(1)(A)(i) (stating that a “plaintiff may dismiss an action without a court order by filing . . . a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment”).

Under different circumstances, courts have granted the plaintiffs leave to amend their complaints. For example, in Langer, the district court observed “[]in the absence of the [federal] claim, the Court does not have subject matter jurisdiction over [the] [p]laintiff's remaining claim pursuant to the [California statute].” 2017 WL 10543992, at *4. The district court explained that “[i]n the usual case in which federal law claims are eliminated before trial, the balance of factors will point toward declining to exercise jurisdiction over the remaining state law claims.” id.(quoting Gini v. Las Vegas Metro. Police Dep't, 40 F.3d 1041, 1046 (9th Cir. 1994)). Thus, the district court denied the plaintiff's motion for default judgment “with respect to [his] claims under the [California statute],” declined to “grant default judgment,” and “further decline[d] to exercise supplemental jurisdiction over [the plaintiff's] remaining state law claim.” id. Nevertheless, the district court granted the plaintiff a chance to amend his complaint and file a second motion for default judgment: “[The] [p]laintiff shall file[] a First Amended Complaint by March 10, 2017, and may file a second application for default judgment. No further amendments will be allowed.” id.; see also Crypto Asset, 2020 WL 13556128, at *12 (“Examining the Eitel factors, the Court finds that default judgment is not warranted. Primarily, Plaintiff's failure to state a plausible federal claim prevents the Court from issuing a judgment in its favor.... [Thus], the Court DENIES Plaintiff's motion for default judgment . . . without prejudice. If Plaintiff chooses to amend its claims . . ., Plaintiff must file an amended complaint on or before July 6, 2020.”) (emphasis omitted).

In accordance with these authorities, the Court recommends that the district judge deny Wright's motion for default judgment and decline to exercise supplemental jurisdiction over Wright's state law claims. Wright previously amended his complaint. In the Court's view, Wright's amendment and subsequent damages evidence only cast further doubt on whether he can in good faith allege the facts necessary to state a viable FLSA claim and obtain a federal court judgment. Wright's actions also show that he seeks only to recover under state law, not the FLSA.¹⁴

14 Also relevant to Wright's ability to obtain a federal court judgment is the fact that Wright has not demonstrated particular haste in prosecuting this case. After the Clerk initially entered Defendants' defaults in September and November 2022, and despite additional prompting from the Court's courtroom deputy, Wright waited until September 2023 to take further action. See Charles Alan Wright et al., Federal Practice and Procedure, § 2685 & n.7 (4th ed. Apr. 2023 update) (stating that “if plaintiff has engaged in a course of delay or has sought numerous continuances, [a] court may determine that a default judgment would not be appropriate,” and citing an example where the district court noted, among other things, that the “plaintiffs did not demonstrate particular haste in prosecuting the case, as they waited nearly 11 months after requesting the entry of default from the clerk of court before filing a motion for a default judgment”).

For these reasons, the Court recommends that the district judge dismiss this action without prejudice. The Court also “notes that 28 U.S.C. § 1367(d) provides that when a federal court declines supplemental jurisdiction over a state-law claim, the limitations period for that claim ‘shall be tolled while the claim is pending' in federal court ‘and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.'” Countryman v. Sherman, No. 19-01767, 2022 WL 17406341, at *24 n.12 (W.D. Wash. Oct. 21, 2022) (citation omitted).

CONCLUSION

For the reasons stated, the Court recommends that the district judge DENY Wright's motion for default judgment (ECF No. 31), and DISMISS his first amended complaint without prejudice.

SCHEDULING ORDER

The Court will refer its Findings and Recommendation to a district judge. Objections, if any, are due within fourteen (14) days. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within fourteen (14) days. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.