Humphries et al v. Elite Force Staffing, Inc. et al, No. 3:2015cv00112 - Document 28 (E.D. Va. 2015)

Court Description: MEMORANDUM OPINION. See Opinion for complete details. Signed by Magistrate Judge Roderick C. Young on 06/24/2015. (ccol, )

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Humphries et al v. Elite Force Staffing, Inc. et al Doc. 28 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division ROBERT HUMPHRIES, et al. Plaintiffs, Civil Action No. 3:15CV112 (RCY) V. ELITE FORCE STAFFING, INC., et al, Defendants. MEMORANDUM OPINION Plaintiffs Robert Humphries, Jeffrey Liu, and Kevin O'Hara (collectively "Plaintiffs") bring this suit—on behalf of themselves and all other similarly situated individuals—^under the Fair Labor Standards Act ("FLSA") against Elite Force Staffing, Inc. ("Elite Staffing") and Steven W. Worrell ("Mr. Worrell") (collectively "Defendants"). Plaintiffs, former temporary employees of Elite Staffing, allege that Defendants illegally withheld overtime pay by structuring Plaintiffs' wages as "time and a half" Plaintiffs bring this actionon behalfof themselves and a putative class of employees also allegedly harmed by Defendants. The "ProposedFLSA Collective Action" has not yet been certified, and Defendants have movedto dismiss this action on the basis that this Court lacksjurisdiction. Defendants specificallyargue that this Court lacksjurisdiction because Defendants presented Plaintiffs with a valid Rule 68 Offerof Judgment ("Defendants' Offer"), thus mooting any claims that Plaintiffs had. Plaintiffs counter that Defendants' Offer was not valid' under Rule 68 and, therefore, that their claims were not rendered moot by Defendants' Offer. Accordingly, Plaintiffs argue that this Court retainsjurisdiction over Plaintiffs' claims. This matter is now before the Court by consent of the parties pursuant to 28 U.S.C. § 636(c)(1) on Defendants' Rule 12(b)(1) Motion to Dismiss Plaintiffs' Complaint (Defs.' Rule ' Forpurposes of this Opinion, references to the"validity" or"invalidity" of Defendants' Offer aremade solely with regard to whether or not Defendants' Offer is "valid" such that it would render Plaintiffs' claims moot. Dockets.Justia.com 12(b)(1) Mot. to Dismiss Pis.' Compl. ("Defs.' Mot. to Dismiss"), ECF No. 19). Defendants' Motionto Dismisshas been fully briefed and is ripe for review. Having considered the parties submissions, and finding it appropriate to do so, the CourtDENIES Defendants' Motion to Dismiss (ECF No. 19) for the reasons set forth below. 1. BACKGROUND A. Plaintiffs' Employment Elite Staffing operates as a temporary staffing agency that "provid[es] workers to construction contractors at various locations and projects on an as-needed basis." (Collective Action Compl. - Fair Labor Standards Act ("Compl."), ECF No. 1 K1!•) Mr. Worrell is Elite Staffing's owner, president, and director. (Compl. K8.) Each named Plaintiff worked for Defendants for temporary periods and varying lengthsof time betweenOctober2013 and January 2015. (5ee Compl. IK 29-43.) Plaintiffs allege that, during the course of their employment. Defendants paid Plaintiffs under a "SplitPay System," which Plaintiffs describe as follows. (Compl. HI 23-27.) Plaintiffs specifically allege that Defendants split Plaintiffs' paychecks into a Tax Portion and a Non-Tax Portion. (Compl. 123.) Plaintiffs allege that federal and state taxes were withheldfrom the Tax Portion, whereas there were no withholdings from the Non-Tax Portion. (Compl. ^ 25.) For overtimehours. Plaintiffs allege that this Split Pay System resulted in Plaintiffs being paid at one and on-half times their regularly hourly rate on the Tax Portion of their paychecks, but only "straight time" on the Non-Tax Portion of their paychecks. (Compl. 126.) Throughout their Complaint, Plaintiffs bring claims for unpaid overtimecompensation based on approximate regular hours worked and approximate overtime hours worked. (Compl. IIK 30, 31, 33, 34, 37, 39,41,43.) B. Plaintiffs' Allegedly Underpaid Overtime Work Mr. O'Hara alleges that, from October to November 2013, he "accru[ed] approximately 80 hours of overtime." (Compl. %30.) Mr. O'Hara further alleges that, from March to April 2014, he "accru[ed] approximately 16 hours of overtime." (Compl. K33.) Due to Defendants' allegedly illegal Split Pay System, Mr. O'Hara alleges that he "is owedapproximately $480 in unpaid overtime wages" for his work in 2013 and '^approximately $72 in unpaid overtime wages" for his work in 2014. (Compl. 30-31,33-34 (emphasis added).) Mr. Liu alleges that, in January 2015, he "accru[ed] approximately 12.5 hours of overtime." (Compl. ^37 (emphasis added).) Dueto Defendants' allegedly illegal Split Pay System, Mr. Liu alleges thathe "is owed approximately $62.50 in unpaid overtime wages." (Compl. f 39 (emphasis added).) Mr. Humphries alleges that, in January 2015, he "accru[ed] approximately 12.5 hours of overtime." (Compl. K41 (emphasis added).) Dueto Defendants' allegedly illegal Split Pay System, Mr. Liu alleges that he "is owedapproximately $62.50 in unpaid overtime wages." (Compl. f 43 (emphasis added).) While Plaintiffs allege approximate damages basedon approximations of the overtime hours they worked. Plaintiffs specifically allege that"[t]heexact amount of hours worked by andwages owedto Plaintiffs and similarly situated individuals will only be known throughdiscovery." (Compl. 1120.) C. Defendants' Rule 68 Offer of Judgment Defendants arguethat "Plaintiffs' Complaint allege[s] specific monetary damages ... based on alleged overtime hours." (Defs.' Mem. Supp. Mot. Dismiss Pis.' Compl. ("Defs.' Mem. Supp."), ECFNo. 20 at 3.) On May 13,2015, Defendants made a Rule 68 Offer of Judgment ("Defendants' Offer") to Plaintiffs? Inthe Offer, Defendants offered to pay Mr. O'Hara $1,110.00; to pay Mr. Liu $130.00; and, to pay Mr. Humphries $130.00. (Defs.' Mem. Supp. Ex. A ("Offer"), ECF No. 20-1 1-3.) Defendants also offered to pay Plaintiffs' reasonable costs, attorneys' fees, and prejudgmentinterest in an amount to be determined by the Court. (Offer ^ 4.) In exchange for these payments, DefendantElite Staffing offered "to allow judgment to be taken against it for all pending claims in the above styled action for the full amount claimed by Plaintiffs, including wages, liquidated damages, costs, prejudment interest, and attorneys' fees." (Offer at 1.) Defendants intended the Offer to resolve the claims raised by Plaintiffs, but not to be "an admission that Defendants are liable in this action to Plaintiffs or any other person or as an admission that Plaintiffs or any other person has suffered any damages as alleged." (Offer^ 8.) The Offeralso provided that it would"have no preclusive effect againstDefendants regarding the matters alleged by Plaintiffs." (Offer18.) Finally, the Offerprovided that it "shall not constitute adjudication on the merits" and that it "shall not operate as resjudicata or collateral estoppel against Defendants in any lawsuit, arbitration, administrative proceeding, government action, or other proceeding." (Offer ^ 9.) Under the terms of the Offer, Plaintiffs had until May 27,2015, to respond. (Offerfl 6-7.) On May26,2015, Plaintiffs rejected the Offer. (Opp'n to Defs.' Mot. to Dismiss and Mot. to Strike Def.'s Rule 68 Offer of JudgmentEx. A ("PL's Rejection Letter"), ECF No. 23-1 at 1-2.) On May 28, 2015, Defendants moved to dismiss Plaintiffs' Complaint on the grounds that their individual and collective claims were rendered moot by the Offer, despite Plaintiffs' rejection of the Offer. ^The Court notes thatPlaintiffs argue thattheOffer was only made by Defendant Elite Staffing, rather than both Defendants collectively. (See Pis.' Opp'n., ECF No. 23 at 5.) However, because the Court finds thatthe Offer was invalid dueto its incompleteness in the face of the currently approximate nature of Plaintiffs' alleged damages, the Court need notdecide whether the Offerwas brought by one or both Defendants or the efficacy of such a Rule 68 offer that was hypothetically otherwise valid. 4 (Defs.' Mot. to Dismiss at 1; see Defs.' Mem. Supp. Mot. to Dismiss Pis.' Compl. ("Defs.' Mem. Supp."), ECF No. 20 at 1,4-7.) Plaintiffs respond by arguing that Defendants' Offer cannot serve to moot their claims because the Offer was not unequivocal and was not a "complete offer of relief." (Opp'n to Defs.' Mot. to Dismiss and Mot. to StrikeDefs Rule 68 Offer of Judgment ("Pis.' Opp'n."), ECF No. 23 at 2-6.) II. STANDARD OF REVIEW Federal courts are courts of limited subject matter jurisdiction. ExxonMobil Corp. v. Allapatah Servs. Inc., 545 U.S. 546, 552 (2005). Theyonlypossess jurisdiction as authorized by the U.S. Constitution or federal statute. Bowles v. Russell, 551 U.S. 205, 211 (2007). Federal courts specifically lackjurisdiction overmootclaims as theirjurisdiction is limited to actual cases and controversies. Simmons v. UnitedMortg. & Loan Invs., 634 F.3d 754, 763 (4th Cir. 2011) (citation omitted). A party, or a federal courtby its owninitiative, may objectthat the court lacks subject matter jurisdiction "at anystage of the litigation, even aftertrial and entry of judgment." Fed. R. Civ. P. 12(b)(1); Arbaugh v. Y&HCorp., 546 U.S. 500, 506 (2006). "Whenever it appears by suggestion of the parties or otherwise thatthe court lacks jurisdiction of the subject matter, the court shall dismiss the action." Fed. R. Civ. P. 12(h)(3); see also Arbaugh, 546 U.S. at 506-07. When the defendant makes a facial challenge to subject matterjurisdiction via a Rule 12(b)(1) motion to dismiss, "the plaintiff, in effect, is afforded the sameprocedural protection as he would receive under a Rule 12(b)(6) consideration." Kerns v. United States, 585 F.3d 187,192 (4th Cir. 2009) Adams v. Bain, 697 F.2d 1213,1219 (4th Cir. 1982)). As such, "the facts alleged in the complaint are taken as true, and the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction." Id, When the defendant challenges the factual predicate of subject matterjurisdiction, the plaintiffis afforded less procedural protection. Id. at 193. The court "may then go beyondthe 5 allegations of the complaint and in an evidentiary hearing determine if there are facts to support the jurisdictional allegations... [and] may consider evidence by affidavit, depositions or live testimony withoutconverting the proceeding to one of summary judgment." Adams^ 697 F.2d at 1219. The plaintiffbears the burdenof establishing subjectmatterjurisdiction beyond a preponderance of the evidence. Demetres v. East West Const., Inc., 776 F.3d 271,272 (4th Cir. 2015). III. ANALYSIS Defendants have moved to dismiss Plaintiffs' Complaint on the grounds that the Court lacks subjectmatterjurisdiction over both Plaintiffs' individual claims and their collective action claim. (Defs.' Mem. Supp. at 4-7.) Defendants argue that Plaintiffs' claims are moot because the Offer served to extinguish any live dispute, and therefore any case or controversy, among Defendants and Plaintiffs. (Defs.' Mem. Supp at 5.) Plaintiffs argue that the Offer did not render their claims moot because the Offer failed to offer Plaintiffs complete relief (Pis.' Opp'n at 3.) Plaintiffs specifically argue that their Complaint only alleged approximate damages; that Defendants' Offer was predicated on these approximate values; and that, without discovery. Defendants' Offer"is invalid because there is no way for Plaintiffs to knowwhether or not they are receiving full relief" (Pis.' Opp'n at 3.) For the reasons discussed below, the Court agrees with Plaintiffs. A. Mooting Effect of a Valid Offer of Judgment Defendants correctly argue that a valid offerofjudgment—one that offers a plaintiffthe/w// relief sought—^moots a plaintiff's claim, even where that plaintiffrejects the offer. In the Fourth Circuit, "[w]hen a Rule 68 offer unequivocally offers a plaintiffall the relief she soughtto obtain, the offer rendersthe plaintiffs action moot." Warren v. Sessoms & Rogers, P.A., 616 F.3d 365, 371 (4th Cir. 2012) (citations omitted)(internal quotation marks omitted). Accordingly, even "[w]hen an individual plaintiffrejects a defendant'scomplete Rule 68 offer of judgment,that plaintiffno longer has a 'stake in the outcome' and there is no longer a justiciable case or controversy." 6 Milbourne v. JRK Residential Am., LLC, No. 3:12CV861,2014 WL 1369378, at *3 (E.D. Va. Apr. 7,2014) (citing Zimmerman v. Bell, 800 F,2d 386, 390 (4th Cir. 1986)); see also Fariasantos v. Rosenberg & Assocs., LLC, No. 3:13CV543, 2015 WL 868090, at *2 (E.D. Va. Fed. 27, 2015) ("This theory is not based on the idea that the plaintiff actually obtainedthe full amountof damages pled, but rather that the plaintiff 'could have obtained through acceptance of the offer all that he could have hoped to obtain through litigation.'" (citingAmrhein v. RegencyMgmt. Servs., LLC, No. SKG-13-1114,2014 WL 1155356, at * 5 (D. Md. Mar. 20, 2014))). Moreover, the Supreme Court has held that, for claims under the FLSA, "the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied." Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1529(2013) (holdingthat, prior to the filing of a motion for conditional certification, the mooting of plaintiffs individual claims served to moot plaintiffs putative collective action claims). In short, controllinglaw in the Fourth Circuit clearly holds that a valid Rule 68 offer ofjudgment will render a plaintiffs claims moot. See Warren, 676 F.3dat37l. Nonetheless, as this Court has previously stated, "courts have been increasinglyreticent to adopt or extend this theory in the wake of Justice Kagan's dissent in Genesis Healthcare Corp.'' Fariasantos, 2015 WL 868090, at *2. In Genesis Healthcare Corp., the Supreme Court noted a circuit split as to whether a valid Rule 68 offer ofjudgment renders a plaintiffs claim moot. Genesis Healthcare Corp., 133 S. Ct. at 1528-29. However, the majority did not ultimately resolve the circuit split, as the issue was not properly before the Court on appeal. Id. The four-justice dissent, however, emphatically wrote that an unaccepted offer ofjudgment cannot render a plaintiffs claims moot and further suggested that the courts of appeals "[r]ethink [the] mootnessby-unaccepted-offer theory." Genesis Healthcare Corp., 133 S. Ct. at 1533-34 (Kagan, J., dissenting). Regardless of the dissent's position in Genesis Healthcare Corp. and the reluctance of 7 district courtsto extend the "mootness-by-unaccepted-offer theory," that theory is still controlling law in the Fourth Circuit. It is not within this Court's province to decide whether this theory is still good law. See Fariasantos, 2015 WL 868090, at *2. This Court, however, may determine the validity of Defendants' Offer and, accordingly, whether it renders Plaintiffs' claims moot. For the reasons discussed below, the Court finds that Defendants' Offer is not valid as it does not offer Plaintiffs full relief. Therefore, even assuming the continuedvalidity of the rule set forth in Warren, the Court finds that Defendants' Offer has not rendered Plaintiffs' claims moot. B. ^'Invalidity" of Defendants' Offer of Judgment Plaintiffs argue that Defendants' Offer of Judgment is invalid"because there is no way for Plaintiffs to know whether or not they are receiving full relief." (Pis.' Opp'n at 3.) Accordingly, Plaintiffs argue that Defendants' Offer has not rendered this action moot. (Pis.' Opp'n at 3.) Defendants assert that their Offer has rendered this action moot because it offered Plaintiffs the full relief they requested in their Complaint. (Defs.' Mem. Supp. at 3,5-6.) i. Definition of Full Relief As discussed above, "[w]hen a Rule 68 offer unequivocally offers a plaintiff all the relief she sought to obtain, the offer renders the plaintiffs action moot." Warren, 676 F.3d at 371 (citing Friedman's, Inc. v. Dunlap, 290 F.3d 191, 197 (4th Cir. 2002)) (emphasis added). This theory is based on the idea that a plaintiff "cow/flf/zave obtained through acceptance of the offer all that he could have hoped to obtain through litigation." Amrhein, 2014 WL 1155356, at * 5 (second emphasis added). In determining whether a defendant has offered a plaintiff "all the relief she sought to obtain," courts have looked to "specific demands" in the complaint and specific damages quantified following discovery. See Warren 676 F.3d at 372 (collecting cases); see also, e.g., Amrhein, 2014 WL 1155356, at *6 (noting that a full offer of all specifically demanded damages will render a plaintiffs claim moot). These analyses contemplate that onlythe rejection of a Rule 68 offer that completely offers a specific sum of damages, the ceiling of which is either explicitly enunciated in a complaint's prayer for relief or determined through discovery, will moot a claim. On the contrary, where a plaintiff has not prayed for specific damages—and the court is therefore unable to hold that a defendant's offer provides the complete relief sought—Rule 68 offer ofjudgment cannot moot a claim. See Amrhein, 2014 WL 1155356, at * 8. ii. Relief Sought by Plaintiffs Here, Plaintiffs argue that they are unable to know whetherDefendants' Offer provides them full relief (Pis.' Opp'n at 3.) At this early stage in the litigation, the Court agrees with Plaintiffs. In their Complaint, Plaintiffs do allege particular dollar amounts for unpaid overtime wages that they are allegedly owed. (CompL 31, 34,39,43.) Plaintiffs also requested that the Court grant liquidated damages in an "equal amount" to "unpaid overtime wages." (Compl. at 9.) Throughout their Complaint, however, Plaintiffs repeatedly allege that these particular dollar amounts are "approximate" and that they are based on "approximate" hours worked. (Compl. 30, 31, 33, 34, 37, 39,41,43.) Moreover, Plaintiffs specificallyallege that "[t]he exact amount of hours worked by and wages owed to Plaintiffs and similarly situated individuals will only be known through discovery.(Compl. ^ 20 (emphasis added).) Throughout their Complaint, therefore, Plaintiffs consistently maintained that they do not at present know the full amount of allegedly unpaid overtime wages that they are allegedly owed. Indeed, in their Prayer for Relief, Plaintiffs do not provide specific figures for damages, but rather ask the Court to "[a]ward Plaintiff and all similarly situated individuals: unpaid overtime wages, and an equal amount as liquidated damages, pursuant to 29 U.S.C. § 216." (Compl. at 9.) In short, 9 Plaintiffs have specificallyalleged that they do not know the extent of their potential "full relief and that they cannot know the extent without proceeding through discovery. iii. Defendants' Offer of Judgment Regardingdamages, Defendants offered to pay Mr. O'Hara $1,110.00; to pay Mr. Liu $130.00; and, to pay Mr. Humphries $130.00. (Offer 1-3.) Defendants calculated these figures by roughly doubling the approximate figures given in Plaintiffs' Complaint. (See Defs.' Mem. Supp. at 3.) Defendants argue that these values are "more than [each Plaintiffs] maximum recovery as identified in the Complaint," because they are the summations of specificallyidentified values and potential liquidated damages. (See Defs.' Mem. Supp. at 3.) iv. Defendants' Offer of Judgment Does Not Offer Full Relief The Court finds that Defendants have not offered Plaintiffs "all the relief [they] sought to obtain." Warren, 676 F.3d at 371 (citation omitted). Whereas Defendants offered to pay certain fixed sums based on approximate figures in Plaintiffs' Complaint, the face of Plaintiffs' Complaint specifically indicates that Plaintiffs contemplate damages beyond those approximately raised in their Complaint. Indeed, Plaintiffs explicitly state that the amount of overtime they worked, and accordingly the amount of overtime wages they are allegedly owed, can "only be known through discovery." (Compl. K20.) While Plaintiffs have presented approximate figures in their Complaint, the Court cannot consider this to be a case wherein Plaintiffs have made "a specific demand" for unpaid overtime wages. Milbourne, 2014 WL 1369378, at *3 (citing Warren, 616 F.3d at 372). As noted above. Plaintiffs allege that discovery is necessary to determine the extent of their alleged damages. (Compl. f 20.) Moreover, Plaintiffs consistently refer to their alleged overtime hours and alleged damages in "approximate" terms. (Compl. 30, 31, 33, 34, 37, 39,41, 43.) Finally, in their Prayer for Relief, Plaintiffs do not ask the court to award a specific amount of damages. Rather, 10 Plaintiffs ask simply for "unpaid overtime wages[] andan equal amount as liquidated damages." (Compl. at 9.) The Court finds the facts of the instant case analogous to those in Milbourne. Milbourne dealt withan "unspecified demand for actual damages" under the FairCredit Reporting Act, which does not establish a cap for actual damages. See Milbourne, 2014 WL 1369378, at *3. In the instant case, Plaintiffs havealleged approximate damages basedon approximate overtime hours worked. They have not alleged a specific, concrete amount of damages. Rather, Plaintiffs have explicitly stated that discovery is necessary to determine the full extent of theiralleged damages. (Compl. K20.) Because Plaintiffs' demands are approximate, ratherthan specific, "it is not possible to ascertain (certainly noton a facial challenge tojurisdiction) whether [Defendants'] offer is complete for Rule 68 purposes." Milbourne, 2014 WL 1369378, at *3 (citing Warren, 616 F,3d at 372 n. 4) (denying the defendant's Rule 12(b)(1) motion to dismiss for lackof subject matter jurisdiction). Therefore, "at this stage in the proceedings, particularly before anyformal discovery has taken place or the parties have agreed upon the scope of Plaintiffs' alleged damages, the Court simply cannothold that the ... Plaintiffs could not possibly recover more than Defendants' Rule 68 offerQ." Amrhein, 2014 WL 1155356, at * 8 (finding that a Rule 68 offer did not moot the plaintiffs' claims); see Warren, 616 F.3d at 372 ("[A]t this stage of the proceedings, before any evidentiary hearing orjudicial fact finding ... [the Court] simply cannot hold that [the plaintiff] could notpossibly recover more than [the amount offered in the defendant's Rule 68 offer of judgment] if her caseproceeded to a jury trial.") Accordingly, the Court finds that Defendants' Offer does not offer full relief to Plaintiffs and, therefore, that Defendants' Offer has not rendered Plaintiffs' claims moot. 11 IV. CONCLUSION Plaintiffs did not demand specific damages in their Complaint. Rather, they alleged approximate figures and explicitly made a Prayer for Relief that was unbounded by those approximate figures. Therefore, Defendants' Offer—^which is based on Plaintiffs' approximately alleged damages—does not offer the full relief to which Plaintiffs are possibly entitled at trial. Accordingly, Defendants' Offer cannot render Plaintiffs' claims moot. Therefore, the Court DENIES Defendants' Rule 12(b)(1) Motion to Dismiss Plaintiffs' Complaint (ECF No. 19). An appropriate Order shall issue. Let the Clerk file this Opinion electronically and notify all counsel accordingly. /s/ Roderick C. Young United States Magistrate Judge Richmond, Virginia Date: 12

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