Coldwell v. RITEcorp Environmental Property Solutions

          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 ...