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Glunt v. Gatsby Entertainment, Inc.

United States District Court, D. Colorado

February 7, 2014

LYSA GLUNT, on behalf of herself and all similarly situated persons, Plaintiff,
v.
GATSBY ENTERTAINMENT, INC., a Colorado corporation, and ROB MERSIS, Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S COMLAINT PURSUANT TO FED. R. CIV. P. 12(b)(1) AND 12(b)(6), OR IN THE ALTERNATIVE, MOTION FOR SUMMARY JUDGMENT

CHRISTINE M. ARGUELLO, District Judge.

This matter is before the Court on Defendant's Motion to Dismiss Plaintiff's Complaint Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), or in the Alternative, Motion for Summary Judgment. (Doc. #13.) For the reasons discussed below, the Court dismisses Plaintiff's federal claims with prejudice and dismisses Plaintiff's state law claims without prejudice.

I. BACKGROUND

A. FACTS

Plaintiff Lysa Glunt brings this suit against Defendants Gatsby Entertainment and Rob Mersis, who owns and operates Gatsby's, a restaurant and bar in Denver, Colorado. (Doc. #1, ¶¶ 3, 5.) Plaintiff alleges, as an individual and on behalf of other similarly situated persons, that: (1) Defendants Gatsby Entertainment and Rob Mersis violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq.; the Colorado Wage Claim Act, C.R.S. § 8-4-101; and the Colorado Minimum Wage Act, C.R.S. § 8-6-101; by diverting employee tips and failing to pay overtime and the minimum wage (Doc. #1, ¶ 1); (2) Defendants breached their contract with Plaintiff ( id., ¶ 39); (3) Plaintiff worked at Gatsby's as a bartender and server from May 30, 2013, to August 20, 2013 ( id. ¶ 23); (4) Defendants paid her pursuant to a "tip credit, " which permits restaurants to pay a sub-minimum wage to their employees who customarily receive tips ( id., ¶¶ 8, 9); (5) in tandem with the tip credit, Defendants instituted a "tip-pooling" arrangement that violated state and federal law in that Gatsby's required all employees who received tips directly from customers to combine their tips into a pool, which Gatsby's distributed among those tipped employees, as well as management, kitchen staff, and other employees who are not "customarily and regularly" tipped ( id., ¶ 14); (6) in doing so, Defendants instituted an invalid tip pool under the FLSA ( id., ¶ 15); and (7) by instituting this invalid tip pool, Defendants improperly invoked the tip credit against her wage, and she and others similarly situated were paid an illegal, sub-minimum wage as a result. ( Id. )

B. PROCEDURAL HISTORY

Plaintiff filed her Complaint on October 11, 2013 (Doc. #1). On November 29, 2013, Defendant filed a Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), or in the Alternative, a Motion for Summary Judgment (Doc. #13). Defendants allege that this Court lacks subject matter jurisdiction over Plaintiff's claims pursuant to Fed.R.Civ.P. 12(b)(1), because Gatsby's does not have the requisite $500, 000 minimum gross annual volume of sales to establish enterprise liability under the FLSA. ( Id. at 2-3.) With respect to the Fed.R.Civ.P. 12(b)(6) Motion, Defendants argue that Plaintiff failed to allege sufficient facts in support of her claims. Plaintiff responded on December 23, 2013 requesting discovery to determine Gatsby's gross annual volume of sales. (Doc. #24.) Defendants replied on January 9, 2014. (Doc. #26.) On January 17, 2014, Defendants provided Gatsby's accounting records from January 1, 2013 through December 31, 2013, showing that Gatsby's gross annual volume of sales was $495, 740.61. (Doc. #30.)

II. DISCUSSION

A. NATURE OF THE MOTION UNDER REVIEW

Fed. R. Civ. P. 12(b)(1) provides that a defendant may move to dismiss a claim for "lack of subject matter jurisdiction." A Rule 12(b)(1) motion to dismiss may take the form of a facial attack on the complaint's allegations, or, as here, it may challenge the facts on which subject matter jurisdiction depends. Holt v. United States, 46 F.3d 1000, 1002-1003 (10th Cir. 1995). When a party's Rule (12)(b)(1) motion challenges the facts upon which subject matter jurisdiction depends, "a district court may not presume the truthfulness of the complaint's factual allegations. A court has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1)." Id. at 1003 (citation omitted). Such reliance on evidence outside the pleadings does not, as a general rule, convert the motion to one for summary judgment under Fed.R.Civ.P. 56, unless resolution of the jurisdictional question is "intertwined with the merits of the case." Id. "When subject matter jurisdiction is dependent upon the same statute which provides the substantive claim in the case, the jurisdictional claim and the merits are considered to be intertwined." Wheeler v. Hurdman, 825 F.2d 257, 259 (10th Cir. 1987) (citation omitted). In that situation, a court is required to convert the Rule 12(b)(1) motion into a Rule 56 summary judgment motion. Redmon v. United States, 934 F.2d 1151, 1155 (10th Cir. 1991).

In the instant case, Plaintiff's claim of federal jurisdiction is predicated on her FLSA allegations. In order to establish both federal subject matter jurisdiction and a violation of the FLSA, Plaintiff must establish that Gatsby's fulfills the definition of an "enterprise" for the purposes of the Act. 29 U.S.C.A. § 203(s)(1). Thus, the jurisdictional claim and the merits of this case are intertwined. Defendants contend that because Gatsby's did not reach the minimum gross annual volume in the 2013 calendar year, this Court's does not have subject matter jurisdiction over Plaintiff's claims, nor has Plaintiff stated a violation of the FLSA. (Doc. #30.) Therefore, the Court must convert Defendant's motion to dismiss into a Rule 56 motion for summary judgment. See Jensen v. Johnson County Youth Baseball League, 838 F.Supp. 1437, 1440 (D. Kan. 1993) ; Delisle v. LYG Corp., 535 F.Supp.2d 1266, 1267 (S.D. Fla. 2008) (converting a motion to dismiss to a motion for summary judgment where the defendant alleged it did not reach the requisite $500, 000 minimum gross annual volume of sales under the FLSA.)

B. SUMMARY JUDGMENT STANDARD

Under Fed.R.Civ.P. 56(a), "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." When reviewing a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party. Allen v. Muskogee, Okl., 119 F.3d 837, 840 (10th Cir. 1997). "However, conclusory statements based merely on conjecture, speculation, or subjective belief are not competent summary judgment evidence." The Wellinger Family Trust 1998 v. Hartford Life & Accident Ins. Co., a Conn. Ins. ...


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