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Judd v. Keypoint Government Solutions, Inc.

United States District Court, D. Colorado

June 20, 2018

ORSON JUDD, Plaintiff,



         Magistrate Judge Scott T. Varholak This matter comes before the Court on a Motion to Dismiss [#41] filed by Defendant KeyPoint Government Solutions, Inc. (“KeyPoint”). The Court has considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that further oral argument would not materially assist in the disposition of the Motion. For the following reasons, this Court respectfully RECOMMENDS that KeyPoint's Motion to Dismiss be DENIED.

         I. BACKGROUND[1]

         KeyPoint provides background checks for the federal government. [#1 at ¶ 4] As investigators for KeyPoint, Plaintiff Orson Judd and others performed investigations, including acquiring and interviewing witnesses and reviewing public records, and prepared reports on those investigations for KeyPoint to submit to the government. [Id.] Investigators, including Judd, routinely worked in excess of 40 hours per week. [Id.] Judd alleges that KeyPoint violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b), by improperly classifying him and other investigators as independent contractors, enabling KeyPoint to withhold overtime wages due to them for working over 40 hours a week. [See generally #1]

         Judd claims that KeyPoint has willfully violated the FLSA because it “has known that its classification of Investigators as independent contractors violates” the statute since at least September 2011. [Id. at ¶ 8] At that time, the Internal Revenue Service (“IRS”) provided a determination letter to KeyPoint's chief executive officer, stating that KeyPoint “had misclassified one of its Investigators as an independent contractor rather than an employee.” [Id. at ¶ 2] Judd alleges that KeyPoint “employs thousands of Investigators across the United States who perform the same kind of work” as the misclassified investigator, “under the same corporate-wide constraints, policies and procedures . . . that le[]d to the IRS determination.” [Id.] Judd also alleges that KeyPoint reclassified all of its investigators in California as employees in approximately 2014, but nevertheless continues to classify investigators in other states as independent contractors, even though they perform the same work “under the same or substantially similar policies, procedures and constraints as the Investigators properly classified as employees.” [Id. at ¶ 3] Judd worked for KeyPoint as an investigator from approximately June 2008 through September 2014. [Id. at ¶ 15]

         a. 2015 Smith Action[2]

         In 2015, Richard Smith, a former KeyPoint investigator, filed a FLSA action against KeyPoint on behalf of a nationwide proposed class of similarly situated investigators in the United States. Smith v. KeyPoint Government Solutions, Inc., Civil Action No. 15-cv-00865-REB-KLM (D. Colo. 2015) (“Smith Action”), Docket No. 1-1.[3]On April 24, 2015, that suit was transferred to the U.S. District Court for the District of Colorado. Id., Docket No. 1. Judd filed a consent to join the Smith Action on August 20, 2015. Id., Docket No. 43. Smith filed a motion for conditional certification on April 18, 2016, id., Docket No. 78, which the Court denied without prejudice on April 25, 2016, id., Docket No. 83. Senior United States District Court Judge Robert E. Blackburn determined that, prior to deciding the issues impacting the certification of a collective action, it would be more efficient to resolve the substantive issues raised by the motion for summary judgment filed by KeyPoint, which was also pending before the Court. Id. at 2.

         The Court later granted KeyPoint's Motion for Summary Judgment. Id., Docket No. 95. Judge Blackburn explained that Smith's claims were barred by the standard two-year statute of limitations under the FLSA, and that Smith had failed to present sufficient evidence to show that KeyPoint had acted “willfully, ” such that a three-year limitations period applied. Id. at 3- 5; see also 29 U.S.C. § 255(a). The Court also found that Smith's motion for certification of a collective action, which had been filed nearly a year after the case was transferred to the Colorado federal district court, and 16 months after the case was originally filed, was untimely. Smith Action, Docket No. 95 at 6-8. The Court entered final judgment in favor of KeyPoint. Id., Docket No. 97. In January 2017, the Court amended the judgment to clarify that “while [Smith's] individual claims are dismissed with prejudice as barred by limitations, the collective action claims are dismissed without prejudice.” Id., Docket No. 99 at 1.

         b. Instant Suit

         Judd filed the instant suit in the United States District Court for the District of Arizona on March 10, 2017. [#1] Judd requests that this matter be certified as a collective action. [#1 at 18; #43] Judd seeks compensatory and statutory damages, including lost wages, earnings, and all other money owed to him and members of the collective, and an order directing KeyPoint to identify and restore restitution and compensation for lost wages to all current and former investigators classified as independent contractors, among other relief. [#1 at 18-19]

         In April 2017, KeyPoint moved to transfer the action to this Court. [#9] While the case remained pending in the Arizona federal district court, Judd filed a motion for conditional certification. [#11] KeyPoint then filed a motion to stay all case deadlines, pending resolution of its motion to transfer. [#12] Concurrent with the motion to stay, the parties stipulated to a tolling agreement, which provided in part that if the transfer was granted, Judd would “have 7 days to adjust his moving papers for conditional certification.” [#12-1 at ¶ 4]

         In February 2018, the Arizona federal district court granted KeyPoint's motion to transfer and transferred the instant suit to this Court. [#24] Pursuant to the parties' stipulation, Judd re-filed his Motion for Conditional Certification in this Court on February 16, 2018. [#43] On the same day, KeyPoint moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). [#41] The Motion to Dismiss is fully briefed. [##57, 60] Additionally, the parties addressed the Motion to Dismiss, along with the Motion for Conditional Certification, at a status conference on April 10, 2018. [#64]


         Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In deciding a motion under Rule 12(b)(6), a court must “accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). Nonetheless, a plaintiff may not rely on mere labels or ...

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