Kucken v. Orsuga Consulting LLC et al, No. 2:2022cv00573 - Document 114 (D. Ariz. 2024)
Court Description: ORDER granting in part and denying in part 106 Motion for Partial Summary Judgment. At trial, Defendants are precluded from relying on the voluntary payment doctrine to offset any damages regarding overpayments to Plaintiff. FURTHER ORDERED grant ing Motions to Seal 104 , 108 . FURTHER ORDERED that, in light of Plaintiff's remaining claims for failure to pay overtime and unjust enrichment, the parties are directed to comply with Paragraph 10 of the Rule 16 Scheduling Order (Doc. 14 at 6 ) regarding notice of readiness for pretrial conference. Upon a joint request, the parties may also seek a referral from the Court for a settlement conference before a Magistrate Judge. Signed by Judge Diane J Humetewa on 1/29/24. (MAP)
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Shawnah Kucken, 9 Plaintiff, 10 11 v. 12 Orsuga Consulting LLC, et al., 13 No. CV-22-00573-PHX-DJH ORDER Defendants. 14 15 Plaintiff Shawnah Kucken (“Plaintiff”) has filed a Motion for Partial Summary 16 Judgment (Doc. 106) against Defendant Orsuga Consulting LLC d/b/a Pinnacle Growth 17 Advisors (“Defendant Pinnacle”), Defendant Brent Orsuga (“Defendant Orsuga”), and 18 Defendant Susanna Orsuga1 (“Mrs. Orsuga”) (collectively “Defendants”). Plaintiff seeks 19 judgment on the following issues: (1) her employment status, (2) her commission payments 20 owed, and (3) Defendants’ affirmative defense under the voluntary payment doctrine. (Id. 21 at 1–2). The matter is fully briefed. (Docs. 107; 110).2 For the reasons that follow, the 22 Court will grant Plaintiff’s Motion in part and deny it in part. 23 24 25 26 1 Plaintiff represents Mrs. Orsuga is a party to this action because Plaintiff alleges that any action taken by Mr. Orsuga was done for the benefit of their marital community. (Doc. 1 at ¶ 6). Defendants assert that Mrs. Orsuga is named as a defendant solely in her capacity as the spouse of Mr. Orsuga for community property purposes. (Doc. 11 at ¶ 6). 2 27 28 The parties have also filed unopposed Motions to Seal certain exhibits. (Docs. 104; 108). Finding good cause, the Court will grant Plaintiff’s Motion to Seal Exhibit 4 (Doc. 104) as well as Defendants’ Motion to Seal Exhibits F and P (Doc. 108) because these exhibits contain private financial information the parties’ protective order. (Doc. 42). 1 I. Background3 2 This is a failure to pay overtime case. Defendant Orsuga owns Pinnacle, which is a 3 recruiting company that places job candidates with companies. (Doc. 111 at 2 (the prior 4 Order)). Mrs. Orsuga is Defendant Orsuga’s wife. Plaintiff owns Legacy Solutions LLC 5 (“Legacy Solutions”), a business that helps find, screen, and place candidates for 6 companies in the logistics industry. 7 employment discussions, Defendant Orsuga suggested that Plaintiff create her own LLC. 8 (Id.) Plaintiff created Legacy Solutions soon thereafter and began providing services to 9 Pinnacle. (Id.) 10 A. 11 On April 9, 2020, Legacy Solutions and Pinnacle entered into an “Independent 12 Contractor Agreement” (Doc. 107-1 at 41–49) (the “First Agreement”). On March 26, 13 2021, Legacy Solutions entered into a second Independent Contractor Agreement (Id. at 14 51–60) (the “Second Agreement”). The First and Second Agreements both state that “[t]he 15 Contractor expressly acknowledges that Contractor will be an independent contractor and 16 not an employee of the Company.” (Id. at 44, 54). (Id.) In August of 2019, during prospective The Parties’ Independent Contractor Agreements 17 Plaintiff was paid in accordance with a fee schedule set forth in Schedule A of the 18 Agreement and the Second Agreement. (Id. at 42, 52). Schedule A of the Second 19 Agreement, the operative agreement, provides various percentages that Plaintiff shall 20 receive when recruiting candidates on behalf of Pinnacle: 21 - Plaintiff would receive a 20% commission for transactions where Plaintiff recruited the candidate but never “screened, spoke with, met, or had any involvement with the candidate” during the “Recruiting Function.” (Id. at 59) - Plaintiff would receive a 30% commission if she “screened, spoke with, or met with the candidate during the Recruiting Function, and the Company’s Founder/President was also involved during the Recruiting Function.” (Id.) 22 23 24 25 26 27 28 3 Unless otherwise noted, the following facts are undisputed. -2- 1 - Plaintiff would receive a 40% commission if she “managed the entire Recruiting function without involvement from [Pinnacle’s] Founder/President.”. (Doc. 107-1 at 59). - Plaintiff would receive a 50% commission if Plaintiff “did the business development and located the client and the candidate during the Recruiting Functions (i.e. Contractor was not provided any leads from the Company), and the Contractor managed all Recruiting Functions without any involvement from the Company’s Founder/President.” (Id.) 2 3 4 5 6 7 8 The Second Agreement further states that Pinnacle will not “dictate the time of 9 performance, except as necessitated by the service to be performed” and that Plaintiff “will 10 be paid by or through the Company based on the work the Contractor is contracted to 11 perform and that the Company is not providing the Contractor with a regular salary or any 12 minimum, regular payment.” (Id. at 55). 13 B. 14 Plaintiff acted as Pinnacle’s Director of Recruiting, and she used this title in all of 15 her recruiting activities. (Doc. 111 at 2). In this role, Plaintiff’s primary task was to screen 16 potential candidates. (Id.) This matter involves various placements of candidates and 17 alleged overpayments and underpayments for these placements, including candidates 18 “Brandon Bay,” “Nick K,” “Alex Giani,” and “Justin Day.” (Docs. 106 at 15; 107 at 16). 19 Plaintiff recruited candidate Brandon Bay and was paid a commission of $4,370 for 20 the placement. (Doc. 109-1 at 9). Pinnacle received a total of $13,350 for placing Brandon 21 Bay at “Traffix.” (Id.) Plaintiff was only owed $2,670 based on a 20% rate for the 22 placement of Brandon Bay. (Id.) Defendants’ records show that Plaintiff was paid $6,810 23 on 1/6/2020 for the placements of Brandon Bay and Alex Giani, but that she was only owed 24 Plaintiff’s Role at Pinnacle $4,670, so a total of $2,140 was overpaid to Plaintiff. (Id.) 25 Plaintiff recruited candidate Justin Day and Pinnacle received $28,500 for the 26 placement. (Id. at 12). Plaintiff earned a 40% rate on this placement, but the invoice shows 27 that she was paid $0. 28 $11,400.00, but Pinnacle had to credit the client for this placement.” (Doc. 109-1 at 12). This is because “Legacy Solutions would have been owed -3- 1 Pinnacle still paid Legacy Solutions $10,200 for Mr. Day’s placement, however. (Id.) 2 Defendant Orsuga stated in his deposition that the commission for Brandon Bay was 3 actually $21,850 but was listed as $13,350 because there was a $8,500 credit that needed 4 to be applied for a different candidate: “Nick K.” (Doc. 106-2 at 19). 5 6 Plaintiff terminated the Second Agreement with Defendants via email on September 9, 2021. (Doc. 111 at 2 (citing Doc. 60-1 at 175)). 7 C. 8 In April 2022, Plaintiff filed suit against Defendants alleging the following three 9 Procedural History claims: 10 (1) Failure and/or refusal to pay overtime under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq., against all Defendants (Doc. 1 at ¶¶ 30–34); (2) Failure to pay wages under the Arizona Wage Act (“AWA”), A.R.S. § 23-350, against Defendant Pinnacle (id. at ¶ 35–40); and (3) Unjust enrichment against all Defendants (id. at ¶ 41–45). 11 12 13 14 15 16 In their Answer (Doc. 11), Defendants assert that Pinnacle overpaid Legacy 17 Solutions for commissions that were advanced by Pinnacle but not earned by Legacy 18 Solutions. (Id. at ¶ 27). Defendants seek to offset any damages allegedly owed to Plaintiff 19 with the overpayments they already made to her. (Doc. 107 at 17). 20 Defendants previously filed a Motion for Partial Summary Judgment regarding 21 Plaintiff’s AWA claim. (Doc. 60). In the prior Order (Doc. 111), the Court found there 22 was a genuine dispute of material fact as to “whether an employer-employee relationship 23 existed and a reasonable expectation that [Defendants] owed Plaintiff payment” and denied 24 Defendants’ Motion. (Doc. 111 at 1–2). Plaintiff has since filed her own Motion for Partial 25 Summary Judgment regarding her AWA claim and other issues. (Doc. 106). 26 II. Legal Standard 27 A court will grant summary judgment if the movant shows there is no genuine 28 dispute of material fact and the movant is entitled to judgment as a matter of law. Fed. R. -4- 1 Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). A fact is “material” 2 if it might affect the outcome of a suit, as determined by the governing substantive law. 3 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “genuine” 4 when a reasonable jury could return a verdict for the nonmoving party. Id. Here, a court 5 does not weigh evidence to discern the truth of the matter; it only determines whether there 6 is a genuine issue for trial. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1131 (9th 7 Cir. 1994). 8 The moving party bears the initial burden of identifying portions of the record, 9 including pleadings, depositions, answers to interrogatories, admissions, and affidavits, 10 that show there is no genuine factual dispute. Celotex, 477 U.S. at 323. Once shown, the 11 burden shifts to the non-moving party, which must sufficiently establish the existence of a 12 genuine dispute as to any material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio 13 Corp., 475 U.S. 574, 585–86 (1986). Where the moving party will have the burden of 14 proof on an issue at trial, the movant must “affirmatively demonstrate that no reasonable 15 trier of fact could find other than for the moving party.” Soremekun v. Thrifty Payless, 16 Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue as to which the nonmoving party will 17 have the burden of proof, however, the movant can prevail “merely by pointing out that 18 there is an absence of evidence to support the nonmoving party’s case.” Id. (citing Celotex 19 Corp., 477 U.S. at 323). If the moving party meets its initial burden, the nonmoving party 20 must set forth, by affidavit or otherwise as provided in Rule 56, “specific facts showing 21 that there is a genuine issue for trial.” Anderson, 477 U.S. at 250; Fed. R. Civ. P. 56(e). In 22 judging evidence at the summary judgment stage, the court does not make credibility 23 determinations or weigh conflicting evidence. Rather, it draws all inferences in the light 24 most favorable to the nonmoving party. See T.W. Electric Service, Inc. v. Pacific Electric 25 Contractors Ass’n, 809 F.2d 626, 630–31 (9th Cir. 1987). 26 III. Discussion 27 Plaintiff argues that she is entitled to summary judgment on four separate issues: 28 (1) that she was Defendant Pinnacle’s employee under both the FLSA and the AWA; (2) -5- 1 that she was an employee of Defendant Orsuga for purposes of the FLSA; (3) she is owed 2 certain commission payments; and (4) that the voluntary payment doctrine prevents 3 Defendants from reducing Plaintiff’s commissions due to alleged overpayments made to 4 her. (Doc. 106 at 1–2). Defendants argue that these issues are “riddled with material 5 factual disputes and not ripe for summary judgment.” (Doc. 107 at 2). The Court will 6 address each issue in turn. 7 A. 8 As to Count Two, Plaintiff argues that she was Defendant Pinnacle’s employee 9 under the AWA and thus entitled to AWA protections. (Doc. 106 at 12). This argument 10 was resolved in the Court’s prior Order (Doc. 111). There, the Court noted that Defendant 11 Pinnacle had identified evidence suggesting Plaintiff was an independent contractor, but 12 that Plaintiff also identified evidence that suggested she was an employee. (Id. at 5). Thus, 13 the Court could not determine, as a matter of law, that Plaintiff was an employee under the 14 AWA due to disputes of fact for the jury to weigh at trial. (Id.) In so finding, the Court 15 had considered the eight relevant factors set out in Santiago v. Phoenix Newspapers, Inc. 16 (Id. (citing 94 P.2d 138, 142 (Ariz. 1990)). The AWA 17 When interpreting these factors in the light most favorable to Plaintiff, the non- 18 moving party there, the Court found that “a reasonable juror could infer that other 19 evidence—including Pinnacle providing Plaintiff with an Outlook and LinkedIn Recruiter 20 account, supplying all her office materials, naming her its Director of Recruiting, and 21 Mr. Orsuga claiming she was his ‘number two’—demonstrate[s] Plaintiff was an 22 employee.” (Id.) 23 For the same reasons as set forth in the Court’s prior Order, the Court finds that 24 Plaintiff is not entitled to summary judgment because a reasonable juror could also find 25 that an employer-employee relationship did not exist between the parties. Put differently, 26 a reasonable juror could find either way, given the conflicting evidence that each side 27 presents as to the employer-employee issue. For example, Plaintiff signed an “Independent 28 Contractor Agreement” with Defendants through her own LLC, Legacy Solutions. (Doc. -6- 1 107-1 at 48). She also entered into a second “Independent Contractor Agreement” later on 2 with Defendants. (Id. at 58). 3 The Second Agreement stated that Plaintiff “expressly acknowledges that [she] will 4 be an independent contractor and not an employee of the Company.” (Id. at 54). The 5 Agreement did not restrict Plaintiff from contracting with other businesses through her own 6 business, required Plaintiff to obtain her own business registration or license, if so required, 7 and stated that Orsuga Consulting did not dictate the time of performance, except as 8 necessitated by the service to be performed. (Id. at 55). Plaintiff also filed Legacy 9 Solutions’ tax returns as a sole operated LLC for tax years 2019, 2020, and 2021. (Doc. 10 109-1 at 2–7). Plaintiff testified in her deposition that she had “flexibility of hours that 11 [she] could work” but also stated that she kept Defendant Orsuga apprised of when she 12 would be working and that he required her to “to be up at a certain time so that [she] could 13 work.” (Doc. 107-1 at 21). These facts, in the aggregate, create a genuine dispute for the 14 factfinder to resolve. 15 Because the facts are in dispute, the Court cannot determine whether Plaintiff was 16 an employee under the AWA as a matter of law. See Anderson, 477 U.S. at 255 (the 17 nonmovant is “to be believed, and all justifiable inferences are to be drawn in 18 [their] favor”). Weighing and resolving these disputed factors is a role reserved for the 19 factfinder at trial. Gonzalez v. US Hum. Rts. Network, 617 F. Supp. 3d 1072, 1097 (D. 20 Ariz. 2022). Thus, Plaintiff is not entitled to summary judgment on this issue. 21 B. 22 As to Count One, Plaintiff argues that she was a joint employee of both Pinnacle 23 and Defendant Orsuga for FLSA purposes and thus entitled to FLSA protections. 24 (Doc. 106 at 2). For FLSA protections to apply, “Defendants must be ‘employers’ and 25 Plaintiffs must be ‘employees’ under the Act.” Terrazas v. Carla Vista Sober Living LLC, 26 2021 WL 4149725, at *4 (D. Ariz. Sept. 13, 2021). Employees are covered under the 27 FLSA while independent contractors are not. See id. Defendants do not dispute that 28 Pinnacle is an “employer” under the FLSA, but argue that Defendant Orsuga is not. (Doc. The FLSA -7- 1 107 at 15). The Court will address these arguments separately. 2 1. Defendant Pinnacle 3 To determine whether an individual is an employee or an individual contractor 4 under the FLSA, courts apply the “economic reality test” which states that “employees are 5 those who as a matter of economic reality are dependent upon the business to which they 6 render service.” Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 754 (9th Cir. 7 1979) (internal citations omitted). Courts consider the following non-exhaustive factors to 8 guide their application of the economic reality test: 9 (1) the degree of the alleged employer’s right to control the manner in which the work is to be performed; (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree of permanence of the working relationship; and (6) whether the service rendered is an integral part of the alleged employer’s business. 10 11 12 13 14 15 16 17 Id. at 754. “The presence of any individual factor is not dispositive of whether an 18 employee/employer relationship exists. Such a determination depends ‘upon the 19 circumstances of the whole activity.’” Id. at 745–55 (quoting Rutherford Food Corp. v. 20 21 McComb, 331 U.S. 722, 730 (1947)). This inquiry is a mixed question of law and fact. See Terrazas, 2021 WL 4149725, at *4. The determination of “the nature of the 22 employees’ duties is a question of fact, and the application of the FLSA to those duties is 23 a question of law.” Ballaris v. Wacker Siltronic Corp., 370 F.3d 901, 910 (9th Cir. 2004). 24 25 26 27 28 When the record contains evidence that supports contradictory findings regarding the nature of an employee’s work, an inquiry into the facts must be made. Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1128 (9th Cir. 2002). Plaintiff argues that, under the Real factors, she was Defendant Pinnacle’s employee. (Doc. 106 at 2–12). Plaintiff states that she “worked continuously at Pinnacle -8- 1 for two years, without any gaps, and her contract with Pinnacle was [for an] indefinite 2 term.” (Id. at 9). Plaintiff also states that Pinnacle provided her with access to an Outlook 3 account, including a “Pinnacle” email address: “shawnah@pinnacleadvisors.com,” which 4 contained Pinnacle’s contact information in the signature block. (Id. at 7). While this 5 evidence certainly weighs in favor of Plaintiff, Defendants, the non-movants, cite evidence 6 that weighs in Pinnacle’s favor as well. 7 Defendants argue that Plaintiff was not Pinnacle’s employee because “[Defendant] 8 Orsuga did not issue Plaintiff specific day-to-day instructions; rather, he requested services 9 of Legacy Solutions pursuant to their contract and, at times, provided mentor-like 10 guidance.” (Doc. 107 at 4). Defendants state that “Legacy Solutions was not restricted 11 from contracting with other businesses” and that “Legacy Solutions earned specific 12 percentages of commissions Pinnacle received based on Legacy Solutions’ level of 13 involvement in candidate placements.” (Doc. 107-1 at 45). Defendants further state that 14 Plaintiff’s use of an office was an optional offer and that she was not the only person to use 15 that office space, as Defendant Orsuga’s daughter and Plaintiff’s daughter sometimes did 16 schoolwork in the office, and other business acquaintances would stop by and use the 17 space. (Doc. 107 at 9 (citing Doc. 107-1 at 67–69). Defendants state that Plaintiff was not 18 “required” to use this space or any items that Pinnacle provided her. (Id.) Defendants state 19 that Plaintiff provided services to Pinnacle on a regular basis for nearly two years, but those 20 services were structured around specific projects: placing job candidates. (Id. (citing Doc. 21 107-1 at 51–60)). Finally, Defendants note that Plaintiff owned and operated Legacy 22 Solutions as a sole-proprietor and claimed her own business expenses. (Id. (citing Doc. 23 109-1 at 2–7)). 24 These facts, viewed in the light most favorable to Defendants as the non-movants, 25 do not establish that Plaintiff was Defendant Pinnacle’s employee as a matter of law. To 26 make such a finding, the Court would necessarily have to make credibility determinations 27 and weigh conflicting evidence—which is a job reserved for the factfinder. See T.W. 28 Electric Service, Inc., 809 F.2d at 630-31. -9- Defendants’ list of controverting facts 1 establishes a genuine dispute of material facts remains for trial. Thus, Plaintiff has failed 2 to demonstrate that no reasonable trier of fact could find other than for her, therefore, the 3 Court must deny her request for summary judgment as to this issue. Soremekun, 509 F.3d 4 at 984. 5 2. Defendant Orsuga 6 Plaintiff also argues that she was Defendant Orsuga’s employee under the FLSA as 7 “Pinnacle” is just a trade name for Defendant Orsuga Consulting, LLC. (Doc. 106 at 15). 8 Defendants argue that Defendant Orsuga was not an employer under the FLSA because he 9 did not supervise or control Plaintiff’s schedule or conditions of her work. (Doc. 107 10 at 15). Defendants essentially argue here that (1) Defendant Orsuga is not an employer 11 under the FLSA, and (2) even if he is an employer under the FLSA, Plaintiff was not his 12 employee. (See id.) 13 Multiple employers may jointly employ someone for purposes of the FLSA. Falk 14 v. Brennan, 414 U.S. 190, 195 (1973). All joint employers are individually responsible for 15 compliance with the FLSA. Bonnette v. California Health & Welfare Agency, 704 F.2d 16 1465, 1470 (9th Cir. 1983), disapproved of on other grounds by Garcia v. San Antonio 17 Metro. Transit Auth., 469 U.S. 528 (1985). Therefore, if Defendant Orsuga is Plaintiff’s 18 employer under the FLSA, he will be individually responsible for compliance with the 19 FLSA. See id. The Ninth Circuit has “recognized that the concept of joint employment 20 should be defined expansively under the FLSA” to effectuate its “broad remedial purpose.” 21 Torres-Lopez v. May, 111 F.3d 633, 639 (9th Cir. 1997) (internal citations omitted). 22 “Where an individual exercises ‘control over the nature and structure of the employment 23 relationship,’ or ‘economic control’ over the relationship, that individual is an employer 24 within the meaning of the [FLSA] and is subject to liability.” Id. at 1012 (quoting Bonnette, 25 704 F.2d at 1469). 26 To determine whether an individual or entity is an “employer” under the FLSA, 27 courts consider a non-exhaustive four-factor test, including whether the alleged employer: 28 “(1) had the power to hire and fire the employees, (2) supervised and controlled employee - 10 - 1 work schedules or conditions of employment, (3) determined the rate and method of 2 payment, and (4) maintained employment records.” Bonnette, 704 F.2d at 1470. The 3 determination of whether an entity or individual is an employer under the FLSA is a 4 question of law for the Court to decide. See Senne v. Kansas City Royals Baseball Corp., 5 591 F. Supp. 3d 453, 511 (N.D. Cal. 2022) (citing Torres-Lopez, 111 F.3d at 638). 6 Summary judgment may be proper “even when some factors favor joint employment and 7 others do not.” Id. (internal citations omitted). 8 Under this test, Plaintiff argues she was an employee and Defendants argue she was 9 not. (Docs. 106 at 15; 107 at 15). Defendants argue that Defendant Orsuga is not an 10 employer under the FLSA because he did not supervise or control Plaintiff’s schedule or 11 conditions of her work and that she had highly flexible hours subject to her own personal 12 commitments and preferences. (Doc. 107 at 15). Defendants also note that Defendant 13 Orsuga did not have the power to hire or fire employees because Pinnacle never had any 14 employees, just other independent contractors. (Id.) He points to Plaintiff’s deposition, 15 where she testified that she had “flexibility of hours that [she] could work” but also stated 16 that she kept Defendant Orsuga apprised of when she would be working and that Orsuga 17 required her to “to be up at a certain time so that [she] could work.” (Doc. 107-1 at 21). 18 Viewed in the light most favorable to Defendants as the nonmovants, the Court finds 19 that Plaintiff has not met her burden to “affirmatively demonstrate that no reasonable trier 20 of fact could find other than for the moving party.” Soremekun, 509 F.3d at 984. Indeed, 21 relying on the facts Defendants present iterated above, a reasonable trier of fact could find 22 for Defendant Orsuga on this issue. Thus, because the facts are in dispute, Plaintiff is not 23 entitled to summary judgment on this issue. Fed. R. Civ. P. 56(a). 24 C. 25 Plaintiff next argues that Defendants failed to pay her the full amount of commission 26 payments owed to her. (Doc. 106 at 15 (citing Doc. 106-2 at 18–19)). Defendants contend 27 that Plaintiff was paid all of the commission payments she was owed according to the terms 28 of the Second Agreement. (Doc. 107 at 16 (citing 107-1 at 59)). Defendants also argue The Commission Allegedly Owed - 11 - 1 that the parties dispute the material facts as to this issue. (Id.) This argument relates to 2 Plaintiff’s claim for unjust enrichment. (Doc. 1 at ¶¶ 41–45). To address this issue at the 3 summary judgment stage, the Court must address any ambiguities in the Second 4 Agreement, which is a question of law. See F.B.T. Prods., LLC v. Aftermath Records, 621 5 F.3d 958, 962–63 (9th Cir. 2010) (stating that questions of contract interpretation are 6 questions of law). 7 As stated, Plaintiff was entitled to either a 20%, 30%, 40%, or 50% commission rate 8 when she placed a candidate for Pinnacle depending on how much work she did. (See Doc. 9 107-1 at 59). The Second Agreement further states that “[t]he fee schedule may be amended 10 or changed from time to time as provided in writing and acknowledged by Contractor and 11 the Company.” (Doc. 107-1 at 52). 12 First, Plaintiff states that she was entitled to $21,850 in commissions for the 13 placement of candidate Brandon Bay, yet she was paid only $13,350 because a “completely 14 separate placement, ‘Nick K,’ didn’t work out.” (Doc. 106 at 15 (citing Doc. 106-2 at 18– 15 19)). Plaintiff therefore claims that she is owed an additional $8,5004 for this placement. 16 (Id.) Second, Plaintiff states that she was entitled to a 40% commission when she sourced 17 candidate Justin Day. Thus, when Pinnacle received $28,500 for the placement, Plaintiff 18 claims she was owed $11,400.5 However, Plaintiff represents Pinnacle only paid her 19 $10,200—leaving $1,200 out of her owed commission. (Id. (citing Doc. 106-2 at 21–26)). 20 In total, Plaintiff argues that she is entitled to $9,7006 in commission payments that she 21 never received from Defendant Pinnacle for the placements of Brandon Bay and Justin 22 Day. (Id. at 16). 23 Defendants argue that Plaintiff has been paid all commission payments that she is 24 owed. (Doc. 107 at 16). Defendants state that when Pinnacle’s commission is subject to a 25 discount from an unsuccessful placement, Plaintiff only earned the applicable percentage 26 4 $21,850 - $13,350 = $8,500. 27 5 40% of $28,500 is $11,400. 28 6 $8,500 allegedly owed commissions from Brandon Bay + $1,200 allegedly owed commissions from Justin Day = $9,700. - 12 - 1 of the discounted commission, since it is what Pinnacle received. (Id.) Defendants note 2 that Mr. Orsuga testified on behalf of Pinnacle that he did not believe Plaintiff had earned 3 a 40% commission level in the parties’ agreement for the placement of candidate Justin 4 Day. (Doc. 107 at 16 (citing Doc. 107-1 at 231–235)). Defendants argue that Plaintiff did 5 not earn a 40% placement commission for candidate Justin Day. (Doc. 107 at 16). Plaintiff 6 argues that candidate Day is unrelated to this payment. (Doc. 110 at 9). 7 Upon the Court’s review of the record, Sealed Exhibit P shows that Pinnacle 8 received $13,350 for placing Brandon Bay at “Traffix.” (Doc. 109-1 at 9). It also shows 9 that Plaintiff was paid $2,670 based on a 20% rate for this placement but that Pinnacle 10 “combined the payments for Brandon Bay and Alex Giani, and the payments owed to 11 Legacy solutions were paid through [a] $6,810 transfer on 1/6/2020.” (Id.) This exhibit 12 also states that Legacy Solutions was owed $4,670 and that a total of $2,140 was overpaid. 13 (Id.) This exhibit also shows that Defendants received $28,500 for the placement of Justin 14 Day and that Plaintiff was the “source of recruiting function.” (Id. at 17). The exhibit 15 further shows that Plaintiff earned a 40% rate on this placement but was paid $0. This is 16 because “Legacy Solutions would have been owed $11,400.00, but Pinnacle had to credit 17 the client for this placement. Pinnacle still paid Legacy Solutions $10,200.00.” (Id.) 18 During his deposition, Defendant Orsuga was asked about commission payments 19 allegedly owed to Plaintiff. He testified that the commission for Brandon Bay was actually 20 $21,850 but was listed as $13,350 because there was a $8,500 credit that needed to be 21 applied for a different candidate “Nick K.” (Doc. 106-2 at 19). Defendant Orsuga also 22 stated that Plaintiff was not entitled to a 40% commission for placing candidate Justin Day, 23 but that Plaintiff asked for a 40% commission, so Defendant Orsuga “obliged.” (Doc. 107- 24 1 at 233). Defendant Orsuga further stated that the $1,200 withholding is not reflected 25 anywhere in writing, but that he and Plaintiff had a “verbal dialogue around the additional 26 payments that would more than balance that out.” (Id. at 236). 27 The record before the Court as well as the parties briefing display genuine issues of 28 material fact as to the commissions owed. While the Court may interpret ambiguities in - 13 - 1 the Second Agreement if necessary, Plaintiff does not argue why she is owed certain 2 percentages for placing certain candidates. For instance, Plaintiff leaves out what rate she 3 received, or should have received, for the placement of candidate Brandon Bay. On the 4 other hand, Defendant Orsuga testified that he did not believe Plaintiff had earned a 40% 5 commission for the placement of candidate Justin Day, but paid Plaintiff a 40% 6 commission anyway because she had asked for it. (Doc. 107 at 16 (citing Doc. 107-1 at 7 231–235)). However, Plaintiff argues that candidate Day is unrelated to this payment. 8 (Doc. 110 at 9). Defendants also state that Defendant Orsuga and Plaintiff had agreed that 9 additional future payments would make up for a $1,200 withholding. (Doc. 107 at 16). 10 Viewed in the light most favorable to Defendants as the nonmovants, the Court finds 11 that Plaintiff has not met her burden to “affirmatively demonstrate that no reasonable trier 12 of fact could find other than for the moving party.” Soremekun, 509 F.3d at 984. To find 13 either way, the Court would necessarily have to weigh this evidence to discern the truth— 14 something the Court cannot not do at the summary judgment stage. Jesinger, 24 F.3d at 15 1131. Thus, Plaintiff is not entitled to summary judgment on this issue. 16 D. 17 Finally, Plaintiff argues that the “voluntary payment doctrine” prevents Defendants 18 from withholding her commission payments to reimburse their own overpayments. 19 (Doc. 106 at 16). Arizona’s voluntary payment doctrine provides that “[e]xcept where 20 otherwise provided by statute, a party cannot by direct action or by way of set-off or 21 counterclaim recover money voluntarily paid with a full knowledge of all the facts, and 22 without any fraud, duress, or extortion.” Brown & Bain, P.A. v. O’Quinn, 2006 WL 23 449279, at *6 (D. Ariz. Feb. 22, 2006) (citing Moody v. Lloyd’s of London, 152 P.2d 951, 24 953 (Ariz. 1944)) (emphasis added). Arizona courts recognize this doctrine because, as a 25 general rule, people “have power to do as they wish with their own. They may enter into 26 contracts; they may give away their substance; they may spend it for mere baubles; they 27 may exchange it for high and riotous living; it may go to satisfy vanity or pride or ambition; 28 and the courts are helpless to say nay or to control their freedom of action in those respects.” The Voluntary Payment Doctrine - 14 - 1 Id. (citing Merrill v. Gordon, 140 P. 496 (Ariz. 1914)). This is so as long as the person is 2 not disabled in some capacity. Id. 3 Defendants argue that the voluntary payment doctrine does not apply because they 4 did not have full knowledge of all the facts that are now alleged by Plaintiff; specifically, 5 that Defendant Pinnacle owed Plaintiff money. (Doc. 107 at 17). Defendants admit that 6 Pinnacle “advanced payments” or overpaid Plaintiff on many occasions, but that “[i]f 7 Pinnacle knew that it was required to pay Plaintiff’s company additional money, it may not 8 have made the overpayments it did.” (Id.) Plaintiff argues that this “is not the sort of fact 9 that is contemplated by the voluntary payment doctrine.” (Doc. 110 at 10). 10 The parties do not cite authority that defines the “full knowledge of all the facts” 11 requirement. (See Doc. 106 at 16–17; 107 at 17). The parties instead each attempt to rely 12 on Wood v. Northwest Hospital, LLC to support their arguments. 473 P.3d 729 (Ariz. Ct. 13 App. 2020). In Wood, the plaintiff, a doctor, sued the defendant, a hospital, for failure to 14 pay $108,673.40 in earned wages because the defendant sought to recover certain 15 overpayments made to the plaintiff by the defendant. 473 P.3d at 731. The plaintiff also 16 asserted a claim for treble damages and the trial court granted summary judgment in the 17 defendant’s favor as it found there was a good-faith dispute over the withheld wages. Id. 18 at 737. The plaintiff appealed and the Court of Appeals of Arizona reversed, concluding 19 that the voluntary payment doctrine prevented the defendant from reclaiming any alleged 20 overpayments. Id. at 738. The Court of Appeals noted that “payments made out of 21 ignorance of the law are subject to the voluntary payment doctrine, even when such 22 payments exceed a statutorily imposed maximum.” Id. (citing Anthony v. Am. Gen. Fin. 23 Servs., Inc., 583 F.3d 1302, 1306 (11th Cir. 2009)). 24 The Court is also assisted by a case from this district: Hannibal-Fisher v. Grand 25 Canyon Univ., 523 F. Supp. 3d 1087 (D. Ariz. 2021). In Hannibal-Fisher, a class of 26 student-plaintiffs filed a class action against a defendant university due to its response to 27 the Covid-19 pandemic. Id. at 1091. The plaintiffs alleged the defendant university did 28 not deliver “the educational services, facilities, access, experience, and/or opportunities - 15 - 1 that [p]laintiff and the putative class contracted and paid for” because they paid for on- 2 campus in-person classes but received “subpar” online classes. Id. at 1092. The plaintiffs 3 argued that they were entitled to a refund of all tuition and fees and brought causes of action 4 for breach of contract, unjust enrichment, conversion, money had and received, and 5 accounting. Id. The defendant university moved to dismiss these claims. Id. In addressing 6 the plaintiffs’ money had and received claim, the court noted that “[t]he general rule [under 7 the voluntary payment doctrine] is that a party cannot recover money voluntarily paid with 8 a full knowledge of the facts.” Hannibal-Fisher, 523 F. Supp. 3d at 1099. However, the 9 court found that the plaintiffs “did not pay with full knowledge of the facts” because they 10 paid the defendant university “before knowing that [the university] would instruct students 11 to return home and move classes online.” Id. at 1099. 12 Here, the undisputed material facts show that Defendants voluntarily paid Plaintiff 13 with full knowledge of the facts. Nothing in the Second Agreement required Plaintiff to 14 track or refuse payments in excess of what she was owed. (Doc. 107-1 at 59). Pinnacle 15 admits that it made “generous payments” to Plaintiff because it was “invested in [their] 16 contractual relationship.” (Doc. 107 at 17). Defendants facilitated a payment structure 17 where they would consistently overpay and underpay Plaintiff at their whim—without 18 written notice to Plaintiff. (See Doc. 105 at 2–5). For example, Defendant Orsuga testified 19 in his deposition that he “was always prepaying” Plaintiff and that this was his decision to 20 do so. (Doc. 107-1 at 229). Defendant Orsuga also stated that he did not expect Plaintiff 21 to repay these overpayments if anything changed. (Id. at 230). Indeed, the parties’ First 22 and Second Agreements limited the amount of commission owed to Plaintiff, but 23 Defendant Orsuga “erroneously or without careful analysis and tracking” overpaid Plaintiff 24 and then wanted the money back. Wood, 473 P.3d at 738. In other words, when Defendant 25 Orsuga would overpay Plaintiff he would underpay later, which violated Schedule A of the 26 Second Agreement. The record reflects, and Defendant Orsuga admits, that he frequently 27 overpaid Plaintiff and did not expect Plaintiff to return these overpayments. 28 Thus, because there are no genuine issues of material facts to refute that Defendants’ - 16 - 1 overpayments were admittedly voluntary, the Court finds that the voluntary payment 2 doctrine prevents Defendants from withholding Plaintiff’s owed commission payments. 3 See Fed. R. Civ. P. 56(a) (“The Court shall grant summary judgment if the movant shows 4 that there is no genuine dispute as to any material fact and the movant is entitled to 5 judgement as a matter of law.”). In sum, the Court will grant Plaintiff’s request for 6 summary judgment regarding the voluntary payment doctrine. Therefore, Defendants 7 overpayments cannot be credited against the commission Plaintiff is otherwise owed if she 8 prevails at trial. 9 IV. Conclusion 10 For the reasons set forth above, the Court finds that Plaintiff is not entitled to 11 summary judgment regarding her AWA, FLSA or commission arguments. However, 12 Plaintiff is entitled to summary judgment on her voluntary payment doctrine argument. 13 Accordingly, 14 IT IS ORDERED that Plaintiff’s Motion for Partial Summary Judgment (Doc. 106) 15 is granted in part and denied in part. At trial, Defendants are precluded from relying on 16 the voluntary payment doctrine to offset any damages regarding overpayments to Plaintiff. 17 IT IS FURTHER ORDERED that Plaintiff’s Motion to Seal Exhibit 4 (Doc. 104) 18 as well as Defendants’ Motion to Seal Exhibits F and P (Doc. 108) are granted. 19 IT IS FINALLY ORDERED that, in light of Plaintiff’s remaining claims for 20 failure to pay overtime and unjust enrichment, the parties are directed to comply with 21 Paragraph 10 of the Rule 16 Scheduling Order (Doc. 14 at 6) regarding notice of readiness 22 for pretrial conference. Upon a joint request, the parties may also seek a referral from the 23 Court for a settlement conference before a Magistrate Judge. 24 Dated this 29th day of January, 2024. 25 26 27 Honorable Diane J. Humetewa United States District Judge 28 - 17 -
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