United States District Court, D. Colorado
JEFF COLDWELL, and ISAAC MERTENS, Individually and on behalf of all others similarly situated, Plaintiffs,
v.
RITECORP ENVIRONMENTAL PROPERTY SOLUTIONS, a Colorado corporation, formerly d/b/a PESTRITE, Defendant.
MEMORANDUM OPINION AND ORDER ON DEFENDANT
RITECORP'S MOTION FOR SUMMARY JUDGMENT
NINA
Y. WANG UNITED STATES MAGISTRATE JUDGE.
This
civil action comes before the court on Defendant Burns Family
Investments & Holdings's
(“RITECorp”)[1] Motion for Summary Judgment
(“Motion for Summary Judgment”) filed June 14,
2018 [#87]. The Motion for Summary Judgment is before the
undersigned Magistrate Judge pursuant to 28 U.S.C. §
636(c) and the Order of Reference dated September 16, 2016
[#15]. In the Motion for Summary Judgment, RITECorp claims
that summary judgment on all of Plaintiffs'[2] claims under the
Fair Labor Standards Act (“FLSA”) and Colorado
Wage Claim Act (“CWCA”) is appropriate because
the former is barred by the statute of limitations and the
latter does not create a cause of action for the type of
relief Plaintiffs seek.[3]
Plaintiffs
Jeff Coldwell and Isaac Mertens (individually, “Mr.
Coldwell” and “Mr. Mertens”; collectively,
“Named Plaintiffs”) filed a Response on July 16,
2018 [#94] to which RITECorp replied on July 30, 2018 [#96].
The matter is now fully briefed and ripe for disposition, and
this court finds that oral argument would not materially
assist in its resolution. For the reasons set forth in this
Order, the Motion for Summary Judgment [#87] is
GRANTED IN PART and DENIED IN
PART.
BACKGROUND[4]
Plaintiffs
are former employees of RITECorp, a now-defunct pest control
and extermination company, who routinely worked in excess of
forty hours per week but were nevertheless paid on a salaried
basis. When RITECorp hired the Plaintiffs in this case, it
classified those employees as “exempt employees.”
[#87 at 1-4; #94 at 4-5]. An “exempt employee” is
any employee who is not subject to overtime requirements
under the Fair Labor Standards Act (“FLSA”). 29
U.S.C. § 213(a); 29 C.F.R. § 541.0(a). Thus,
despite working overtime-in excess of forty hours per
week-the Plaintiffs were not paid for that work due to their
exempt classification. This arrangement continued for several
years.
RITECorp
classified the Plaintiffs as exempt based on extensive
discussions with ESG Achievement, Inc. (“ESG”), a
Professional Employer Organization governed by the Colorado
Employment Security Act, C.R.S. § 8-70-101 et
seq. ESG and RITECorp referred to the former's role
as that of an “administrative employer, ” handing
payroll, employee benefits, workers compensation, tax
withholding, and other such personnel matters. When personnel
were hired at RITECorp, they were presented with an
“employee acknowledgement” form that referred to
the employees as “co-employee[s]” of RITECorp and
ESG. [#33 at 7; #33-2].
RITECorp
and ESG spent several years discussing the issue of employee
classification as “exempt” or
“non-exempt.” See [#55-8 at 16] (June
16, 2009 email from ESG employee Jessica Hergenreter to
RITECorp General Manager Michael Burns regarding exempt
classification); [Id. at 12] (August 1, 2012 email
from RITECorp employee Rae Wree asking “to clarify the
rules” on employee compensation); [#94-5 at 56-60]
(Deposition testimony of Michael Burns). Over the course of
these years-long discussions, RITECorp received advice from
ESG that its employees were improperly classified as exempt.
See [#94-6 at 4] (November 14, 2014 email from ESG
employee Loraine Stokes to RITECorp employee Cindy Gilland
expressing concern that a Department of Labor audit would
find that RITECorp's exempt classification constituted a
willful violation of the FLSA); [#94-6 at 2] (August 15, 2012
email from Meribeth Lunn, Vice President of ESG, to Michael
Burns stating “your employees should be classified as
non-exempt and therefore should be paid overtime”);
[#55-8 at 3-4] (January 5, 2010 email from Ms. Hergenreter to
Michael Burns stating that her recommendation was to pay
overtime); [#55-8 at 15] (June 5, 2009 email from Ms.
Hergenreter to Rae Wree stating that “[a]t first
glance, I believe your staff does not qualify to be
exempt”).
Nevertheless,
RITECorp also received advice that its employees'
classification was uncertain, and that they were not
unambiguously violating the FLSA. See [#55-8 at 16]
(June 16, 2009 email from Ms. Hergenreter to Michael Burns
stating that application of the exempt classification was
unclear and depended on precise job description); [#87-1 at
3] (Michael Burns's declaration in support of summary
judgment stating that RITECorp relied on ESG for exempt
classification and acted based on its best understanding of
the applicable law). In early 2015, two former RITECorp
employees sued RITECorp for unpaid overtime (“the 2015
lawsuit”). [#87-1]. RITECorp then consulted with
counsel and determined that its employees should be
classified as non-exempt and paid overtime, and quickly
changed its compensation structure to reflect this. [#87-1 at
3-4]. The final exempt paychecks were issued in April 2015.
The
Named Plaintiffs initiated the present action on August 5,
2016, by filing a Complaint asserting a collective action
under the Fair Labor Standards Act (“FLSA”), 29
U.S.C. § 216(b), for unpaid overtime wages on behalf of
themselves and all others similarly situated. [#1].
Plaintiffs also asserted a claim under the Colorado Wage
Claim Act, Colo. Rev. Stat. § 8-4-101 et seq.
(“CWCA”). [Id.]. On July 20, 2017, the
court granted in part and denied in part the Named
Plaintiffs' Motion for Conditional Certification as a
Collective Action [#59], allowing Notice to be sent to
putative opt-in members. On June 14, 2018, Defendant moved
for summary judgment. Plaintiffs Responded on July 16, 2018
[#94] and Plaintiffs filed their Reply on July 30 [#96].
LEGAL
STANDARDS
I.
Summary Judgment
A party
is entitled to 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.”
Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). “At the summary judgment stage
the judge's function is not himself to weigh the evidence
and determine the truth of the matter but to determine
whether there is a genuine issue for trial.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986); see also Roberts v. Jackson Hole Mountain Resort
Corp., 884 F.3d 967, 972 (10th Cir. 2018)
(“Summary judgment is inappropriate where there is a
genuine dispute over a material fact, that is, if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party. (citation and quotation
marks omitted)). There is no issue for trial unless there is
sufficient evidence favoring the non-moving party for a jury
to return a verdict for that party. Anderson, 477
U.S. at 249. If the evidence is merely colorable, or is not
significantly probative, summary judgment may be granted.
Id. Summary judgment is “generally
inappropriate when mental state is an issue, unless no
reasonable inference supports the adverse party's
claim.” Sec. & Exch. Comm'n v.
Johnston, 972 F.2d 357 (Table) (10th Cir. 1992).
The
non-moving party must offer evidence in opposition to the
motion that is admissible, but the non-moving party does not
have to produce that evidence in an admissible format.
See Fed. R. Civ. P. 56(c)(4) (An affidavit or
declaration used to support or oppose a motion must . . . set
out facts that would be admissible in evidence[.]”);
Celotex, 477 U.S. at 324 (“We do not mean that
the nonmoving party must produce evidence in a form that
would be admissible at trial in order to avoid summary
judgment.”); Thomas v. Int'l Bus. Machs.,
48 F.3d 478, 485 (10th Cir. 1995) (“To be sure, the
nonmoving party need not produce evidence in a form that
would be admissible at trial, but the content or substance of
the evidence must be admissible.” (cleaned up)). For
example, affidavits submitted in opposition to summary
judgment are typically inadmissible at trial as hearsay, but
may be considered at the summary judgment stage on the theory
that the underlying evidence may ultimately be presented at
trial in an admissible form. See Brown v. Perez, 835
F.3d 1223, 1232 (10th Cir. 2016); Argo v. Blue Cross and
Blue Shield of Kan., Inc., 452 F.3d 1193, 1199 (10th
Cir. 2006). The court therefore does not need to conduct a
prior evidentiary hearing or resolve a motion in limine
before weighing evidence proffered at the summary judgment
stage. See O'Connor v. Williams, 640 Fed.Appx.
747, 750 (10th Cir. 2016) (holding that the district court
did not err in considering prior testimony because
“even assuming the transcript of [defendant's]
prior testimony would be inadmissible in its current form,
[defendant] hasn't alleged the substance of the
transcript wouldn't be admissible in some other
form-e.g., in the form of [his] live testimony.”).
II.
FLSA
A.
Claim Accrual and Commencement of Action
A
claim for unpaid overtime under the FLSA “accrues each
time the employer issues a paycheck in violation of the
FLSA.” Topp v. Lone Tree Athletic Club, Inc.,
No. 13-CV-01645-WYD-KLM, 2014 WL 3509201, at *8 (D. Colo.
2014) (citing Nealon v. Stone, 958 F.2d 584, 591
(4th Cir. 1992)). Absent unusual circumstances, the usual
rules governing claim accrual and the applicable statute of
limitations apply to a collective action as other
non-collective civil actions. Sardina v. Twin Arches
P'ship, Ltd., No. 15-CV-00054-REB-KLM, 2016 WL
10828741, at *1 (D. Colo. 2016).
Collective
actions brought under the FLSA are “opt in.” That
is, a plaintiff is not joined in the action and will not be
bound by the resolution of the action unless he files a
written consent to participate in the action. See In re
Am. Family Mut. Ins. Co. Overtime Pay Litig., 638
F.Supp.2d 1290, 1297-98 (D. Colo. 2009). A collective action
is commenced as to an individual claimant “on the date
when the complaint is filed, if he is specifically named as a
party plaintiff in the complaint and his written consent to
become a party plaintiff is filed on such date in the court
in which the action is brought.” 29 U.S.C. §
256(a). Or, if the claimant is a later, opt-in party, when
she files written consent to join the action. Id. at
§ 256(b).
The
requirement to file a separate written consent under §
256 applies to all plaintiffs, including those specifically
named as plaintiffs in the original complaint. Acosta v.
Tyson Foods, Inc., 800 F.3d 468, 472 (8th Cir. 2015)
(holding that plaintiff Acosta was required to file separate
written consent when complaint was styled as collective
action despite being the party to have filed the complaint in
the first instance); Frye v. Baptist Mem'l Hosp.,
Inc., 495 Fed.Appx. 669, 675 (6th Cir. 2012)
(“[C]ourts construe [§ 256(a)] to do what it says:
require a named plaintiff in a collective action to file a
written consent to join the collective action.”);
Harkins v. Riverboat Svcs., Inc., 385 F.3d 1099,
1101 (7th Cir. 2004) (“The statute is unambiguous: if
you haven't given your written consent to join the suit,
or if you have but it hasn't been filed with the court,
you're not a party. It makes no difference that you are
named in the complaint . . . .”). This is the only
understanding of § 256(a) that gives effect to its plain
language, which is phrased in the conjunctive: an action is
considered commenced “if [claimant] is specifically
named as a party plaintiff in the complaint and his
written consent . . . is filed on such date.” 29 U.S.C.
§ 256(a) (emphasis added).
The
apparently-superfluous nature of the § 256(a)
requirement has not gone unnoted, courts have referred to it
as “curious, ” “redundant, ” and
“unusual.” Mendez v. The Radec Corp.,
260 F.R.D. 38, 52 (W.D.N.Y. 2009) (“Although it may
seem curious that this consent requirement would apply to a
named plaintiff, this requirement has been held to apply even
to the Named Plaintiffs in a collective action under the
FLSA. (citing Harkins, 385 F.3d at 1101)); Faust
v. Comcast Cable Commc'ns Mgmt., LLC, No.
WMN-10-2336, 2013 WL 5587291, at *3 (D. Md. 2013)
(“Although the filing of a separate written consent by
a plaintiff named in a complaint may be redundant, it is
nevertheless required by the plain, unambiguous meaning of
the statutory text.”); Salazar v. Brown, No.
G87-961, 1996 WL 302673, at *11 (W.D. Mich. 1996) (“The
statutory requirement that Named Plaintiffs file consents is
unusual.”) The requirement to file a written consent is
clear, but the particular requirements as to the form and
contents of the written consent is not. But it is at least
clear that the complaint itself cannot meet the written
consent requirement. See Harkins, 385 F.3d at 1101;
Gomez v. Tyson Foods, Inc., 799 F.3d 1192, 1194 (8th
Cir. 2015); Contrera v. Langer, 290 F.Supp.3d 269,
279 (S.D.N.Y. 2018). Given that the statute references the
complaint and the written consent as two different
entities, the two must be distinct. Salazar, 1996 WL
302673, at *10 (“Section 256 is expressly
conjunctive.”). To read the statute otherwise would
render part of the statute meaningless.
Courts
have generally taken a lenient approach in deciding what sort
of written notice is sufficient. See, e.g.,
Callari v. Blackman Plumbing Supply, Inc., 988
F.Supp.2d 261, 282 (E.D.N.Y. 2013) (holding that a written
declaration made during discovery in which plaintiff
obliquely referred to himself as a plaintiff in the action
was sufficient); D'Antuono v. C & G of Groton,
Inc., No. 3:11-CV-33-MRK, 2012 WL 1188197, at *3 (D.
Conn. 2012) (holding that an affidavit attached to the
response to the motion to dismiss wherein Plaintiff referred
to “this litigation” met the requirement);
Contrera, 290 F.Supp.3d at 277 (holding that
requirement was met by plaintiff's filing affidavit to
motion to conditionally approve case as FLSA collective
action in which plaintiff stated he was a plaintiff in the
action); Manning v. Gold Belt Falcon, LLC, 817
F.Supp.2d 451, 454 (D.N.J. 2011) (same). So long as there is
a signed, written document from a plaintiff that manifests
his consent to suit and puts the defense on notice of who is
a plaintiff in the action, most courts have held that
sufficient “written consent.”
B.
FLSA-Statute of Limitations
The
FLSA imposes a two-year statute of limitations unless the
defendant's conduct is willful in which case a three-year
period applies. 29 U.S.C. § 255(a); Mumby v. Pure
Energy Svcs. (USA), Inc., 636 F.3d 1266, 1270 (10th Cir.
2011). Proving willful conduct under the FSLA requires
proving either actual knowledge and willful disregard for
that knowledge in committing a violation, or proving that the
defendant showed “reckless disregard” for
compliance with the requirements of the FLSA. Mumby,
636 F.3d at 1270; see also McLaughlin v. Richland Shoe
Co., 486 U.S. 128, 134 (1988) (“The word
‘willful' is . . . generally understood to refer to
conduct that is not merely negligent . . . . that the
employer either knew or showed reckless disregard for the
matter of whether its conduct was prohibited by the statute .
. . .”); Perez v. El Tequila, LLC, 847 F.3d
1247, 1256-58 (10th Cir. 2017). Similarly, federal
regulations define a “willful violation” as
“a violation in circumstances where the agency knew
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