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Beltran v. Interexchange, Inc.

United States District Court, D. Colorado

August 6, 2018

JOHANA PAOLA BELTRAN, LUSAPHO HLATSHANENI, BEAUDETTE DEETLEFS, ALEXANDRA IVETTE GONZALEZ, JULIANE HARNING, NICOLE MAPLEDORAM, LAURA MEJIA JIMENEZ, SARAH CAROLINE AZUELA RASCON, CAMILA GABRIELA PEREZ REYES, CATHY CARAMELO, LINDA ELIZABETH, and Those similarly situated, Plaintiffs,
v.
INTEREXCHANGE, INC., USAUPAIR, INC., GREATAUPAIR, LLC, EXPERT GROUP INTERNATIONAL INC., d/b/a Expert AuPair, EURAUPAIR INTERCULTURAL CHILD CARE PROGRAMS, CULTURAL HOMESTAY INTERNATIONAL, CULTURAL CARE, INC., d/b/a Cultural Care Au Pair, AUPAIRCARE INC., AU PAIR INTERNATIONAL, INC., APF GLOBAL EXCHANGE, NFP, d/b/a/ Aupair Foundation, AMERICAN INSTITUTE FOR FOREIGN STUDY, d/b/a Au Pair in America, AMERICAN CULTURAL EXCHANGE, LLC, d/b/a GoAuPair, AGENT AU PAIR, A.P.E.X. AMERICAN PROFESSIONAL EXCHANGE, LLC, d/b/a ProAuPair, 20/20 CARE EXCHANGE, INC., d/b/a The International Au Pair Exchange, ASSOCIATES IN CULTURAL EXCHANGE, d/b/a GoAuPair, and GOAUPAIR OPERATIONS, LLC, d/b/a GoAuPair, Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION TO CLARIFY THE ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT AND, UPON RECONSIDERATION, GRANTING IN PART PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiffs' Motion to Clarify the Order Denying Motions for Summary Judgment, in which Plaintiffs request that the Court resolve tension between the Court's Order Denying Motions for Summary Judgment (Doc. # 1102) and its previous orders, with regard to Defendants' preemption defense. (Doc. # 1118.)

         I. BACKGROUND AND PROCEDURAL HISTORY

         The factual and procedural background of this case has been comprehensively detailed in the Court's previous orders and the Magistrate Judge's recommendations. See, e.g., (Doc. ## 240, 569, 828.) Additional information is included here only to the extent necessary to address Plaintiffs' Motion to Clarify.

         A. INITIAL ARGUMENTS REGARDING PREEMPTION

         Various Defendants first raised preemption as an affirmative defense to Plaintiffs' state law wage claims in their Motions to Dismiss. E.g., (Doc. # 127 at 12-17; Doc. # 130 at 8-12; Doc. # 131 at 5; Doc. # 136 at 4-6.) For example, Defendant Cultural Care, Inc. (“Cultural Care”), argued that Plaintiffs' “state-law wage claims in Counts IX and X are preempted by the Exchange Act and the [Department of State (“DOS”)] regulations because the DOS regulations encompass the subject matter of Plaintiffs' claims as well as every other facet of the au pair program. Thus, the U.S. government occupies the ‘field.'” (Doc. # 127 at 12-13.) It also asserted that “[t]he application of state law minimum wages to the exchange program would . . . directly conflict with the DOS regulations and the Stipend Notice.” (Id. at 13.)

         Shortly after filing Motions to Dismiss, several Defendants filed Motions for a Protective Order, seeking a stay of discovery pending resolution of their Motions to Dismiss. E.g., (Doc. ## 160, 162, 164, 166.) Defendants reasoned that their arguments in their Motions to Dismiss, including their argument that Plaintiffs' state law wage claims “are preempted by federal law, ” were “based on threshold legal issues” that could be resolved on the briefings alone, (Doc. # 160 at 9-10, 12) (emphasis added); see also (Doc. # 164 at 10), and that a stay of discovery would not prejudice Plaintiffs (Doc. # 160 at 12). Magistrate Judge Tafoya conducted a scheduling conference on July 6, 2015, to address Defendants' Motions for a Protective Order, at which counsel for Defendant Cultural Care reiterated that it sought dismissal based on its legal defenses, including preemption. (Doc. # 218 at 20.) Magistrate Judge Tafoya granted Defendants' Motions for a Protective Order, thereby staying discovery “pending the issuance of a recommendation on Defendants' Motions to Dismiss.” (Doc. # 198 at 2.)

         Magistrate Judge Tafoya issued her Recommendation on February 22, 2016, advising this Court to largely deny the Motions to Dismiss.[1] (Doc. # 240 at 43.) Relevant here, Magistrate Judge Tafoya rejected Defendants' argument that any state law wage claims are preempted by DOS regulations. (Id. at 28-32.) She first addressed Defendants “fragmented argument that begins with the premise that the au pair program falls under immigration law, ” dismissing Defendants' reliance on Arizona v. United States, 567 U.S. 387 (2012), as irrelevant because the state laws “at issue herein do not pertain to immigration.” (Doc. # 240 at 29.) Rather, the au pair program is a “cultural exchange” outside of Immigration and Naturalization Services' authority, she explained. (Id.)

         Magistrate Judge Tafoya then determined that “the federal laws and regulations unambiguously contemplate the application of state wage laws to au pairs.” (Id. at 29- 32.) She wrote, “[F]ederal regulations are explicitly clear that the [Fair Labor Standards Act (the “FLSA”)] applies to the au pair program, ” citing 29 C.F.R. § 62.31(j)(1), which requires that au pairs be paid in conformance with the FLSA.[2] (Doc. # 240 at 30.) She also cited the Wilberforce Pamphlet on the Rights and Protections for Temporary Workers, which sponsoring organizations are required to distribute to au pairs, see 22 C.F.R. § 62.10(c)(8); this pamphlet advises holders of J-1 visas, such as au pairs, “You have the right to earn at least the federal legal minimum wage, $7.25 per hour, in the same manner as U.S. workers. Also check [t]he minimum wage for the state in which you work. If that wage is higher, you have the right to be paid the higher amount, ” (Doc. # 199-1 at 8). (Doc. # 240 at 31.)

         The Magistrate Judge continued, “[f]urther, the FLSA mandates that state minimum wage laws control within each respective state, ” citing the FLSA's “savings clause, ” 29 U.S.C. § 218(a).[3] (Doc. # 240 at 30.) Magistrate Judge Tafoya observed that Defendants “fail[ed] to cite to any federal law, regulation or guideline that provides for what would essentially be an exemption to the FLSA's savings clause.” (Id.) For those reasons, Magistrate Judge Tafoya found “Defendants' contention that an overall federal scheme and/or federal regulations pre-empt the state minimum wage laws in this country as applied to au pairs has no support in federal law.” (Id. at 32.)

         Certain Defendants objected to the Magistrate Judge's Recommendation, taking issue with her analysis of their preemption defense. (Doc. # 247 at 9-11.) Defendants argued that Magistrate Judge Tafoya's assessment of the regulations and statutes was erroneous because “preemption does not flow from the FLSA but rather from the regulatory framework designed by [the United States Information Agency (“USIA”), DOS's predecessor], which embodies the government's policy judgments regarding au pair compensation.” (Id. at 10.) “Application of state minimum wage laws, ” according to Defendants, was an obstacle to the accomplishment of USIA's and DOS's policy goal of “a uniform wage.” (Id.) Defendants asserted, “[a]ccordingly, Plaintiffs' state law wage claims are preempted pursuant to traditional conflict-preemption principles.” (Id.) Plaintiffs filed a Response to Defendants' Objections, arguing that DOS “actually clearly expressed the exact opposite” of Defendants' position. (Doc. # 256 at 11.)

         On March 31, 2016, this Court adopted and affirmed most of Magistrate Judge Tafoya's Recommendation on the Motions to Dismiss, including her analysis of Defendants' preemption argument. (Doc. # 258.) The Court first observed that Defendants had “slightly recast” their preemption argument, which had previously focused on the au pair program being an immigration matter, and deemed as waived any arguments Defendants were raising for the first time in their Objection. (Id. at 28 n.22.) Nevertheless, the Court held that Magistrate Judge Tafoya properly decided that state wage laws are not preempted. (Id. at 28.) The Court affirmed that “the regulations implemented by the USIA expressly provided that the au pair program must conform with the FLSA, without exception, ” and that the “FLSA, in turn, explicitly provides that, if a state sets a higher minimum wage than that mandated by the FLSA, employees within that state are entitled to receive that higher wage.” (Id.) The Court also agreed with Magistrate Judge Tafoya's analysis of Defendants' argument regarding USIA and DOS's wage uniformity policy goals. (Id. at 28-29.) The Court therefore affirmed that “Plaintiffs' claims under state wage laws are not, in fact, preempted by some kind of amorphous ‘federal framework.'” (Id. at 29.)

         In late 2017 and early 2018, Defendant Cultural Care deposed au pairs on topics related to Defendants' preemption defense, such as the au pair's views on the cultural exchange aspect of being an au pair. See, e.g., (Doc. # 954-19 at 10) (Defendant's counsel requesting an au pair's journals on the ground that “[t]hey're at least facially relevant. We're raising a cultural exchange preemption argument”.)

         On March 5, 2018, Defendant Cultural Care filed its Motion for Clarification of Topics That Remain Open and Appropriate for Depositions of FLSA Opt-In Plaintiffs, alleging that “Plaintiffs' counsel [had] objected to certain lines of questioning on relevance grounds, based on Plaintiffs' view that the scope of the depositions should be extremely narrow.” (Doc. # 924 at 3.) It characterized the Court's previous holdings on preemption as “preliminary thoughts based only on the pleadings.” (Id. at 5 n.2.) Defendant Cultural Care argued that a “holding that preemption does not apply would require a fact-based determination that . . . the predominant purpose of the program is labor, not cultural exchange, ” (id.), and that, accordingly, it was permissible to ask deponents about their “principal intent in participating in the program, ” their “comparative compensation” before entering and after exiting the program, and “the importance” they assigned “to the cultural exchange aspects of [their] participation” in the au pair program. (Id. at 8-9.)

         On March 26, 2018, Plaintiffs filed a competing Motion for a Protective Order Regarding Defendant Cultural Care's Depositions of FLSA Opt-In Class Members, alleging that Defendant Cultural Care subjected “young deponents, who [were] unfamiliar with the U.S. legal system and ha[d] varying levels of English proficiency . . . to hours of unnecessary, anxiety-provoking questions.” (Doc. # 953 at 1.) Plaintiff rejected Defendant Cultural Care's justification that the questions were necessary to prove its preemption on the grounds that “(i) its preemption defense was denied as a matter of law at the pleading stage; (ii) preemption is a matter of law, not fact to be established by deposition testimony; and (iii) preemption considers legislative or regulatory intent, but the au pairs are neither ...


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