Opinion
Case No. 3:18-cv-00372-SB
07-18-2018
CAROL FERGUSON and LYNDA FREEMAN, on behalf of themselves and, in addition, on behalf of other similarly situated, Plaintiffs, v. MARIA SMITH, an individual; ALL STAR AUTO GROUP, INC., a Delaware corporation; the SMITH AUTO GROUP, an unregistered conglomeration of entities owned by Maria Smith; GLADSTONE AUTO, LLC, an Oregon limited liability company; and CARROS, INC., an Oregon corporation, Defendants.
FINDINGS AND RECOMMENDATION
BECKERMAN, U.S. Magistrate Judge.
This matter comes before the Court on a motion to dismiss filed by Defendants Maria Smith ("Smith"), All Star Auto Group, Inc. ("All Star"), the Smith Auto Group ("Smith Auto") (collectively, the "Smith Defendants"), Gladstone Auto, LLC ("Gladstone Auto"), and Carros, Inc. ("Carros") (collectively with the Smith Defendants, "Defendants"). The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331. For the reasons explained below, the Court recommends that the district judge grant in part and deny in part Defendants' motion to dismiss.
BACKGROUND
Plaintiffs Carol Ferguson ("Ferguson") and Lynda Freeman ("Freeman") are Oregon residents who worked in the automotive sales industry. Smith has a direct ownership interest in two Oregon-based auto dealerships, Gladstone Auto and Carros, and oversees the operation of those dealerships. On March 1, 2018, Plaintiff brought this suit, individually and on behalf of others similarly situated, alleging that Defendants willfully failed to pay them, and other similarly situated individuals, minimum and overtimes wages in violation of the Fair Labor Standards Act ("FLSA") and Oregon state law. On May 3, 2018, Defendants filed a motion to dismiss, wherein the Smith Defendants argued that Plaintiffs' complaint should be dismissed for lack of personal jurisdiction and Defendants collectively argued that Plaintiffs fail to state a plausible claim for relief.
ANALYSIS
I. STANDARD OF REVIEW
A. Lack of Personal Jurisdiction
"When a defendant moves to dismiss for lack of personal jurisdiction, 'the plaintiff bears the burden of demonstrating that jurisdiction is appropriate.'" Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1141 (9th Cir. 2017) (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). "Where, as here, the motion is based on written materials rather than an evidentiary hearing, 'the plaintiff need only make a prima facie showing of jurisdictional facts.'" Schwarzenegger, 374 F.3d at 800 (quoting Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). In determining whether the plaintiff has made such a showing, the court must accept uncontroverted allegations in the complaint as true and resolve any factual conflicts in affidavits in the plaintiff's favor. Id. (citing AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).
"Written materials may include pleadings, declarations, affidavits, deposition testimony, and exhibits." Helicopter Transp. Servs., LLC v. Sikorsky Aircraft Corp., 253 F. Supp. 3d 1115, 1119 n.1 (D. Or. 2017) (citing Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 268 (9th Cir. 1995)).
B. Failure to State a Claim
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (internal quotation marks omitted) (citing Iqbal, 556 U.S. at 678)).
II. DISCUSSION
A. Personal Jurisdiction
The Smith Defendants move to dismiss Plaintiffs' complaint for lack of personal jurisdiction. See FED. R. CIV. P. 12(b)(1). It is well settled that "[p]ersonal jurisdiction over each defendant must be analyzed separately." Harris Rutsky & Co Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003) (citation omitted). Accordingly, the Court will individually consider whether it may exercise personal jurisdiction over Smith, All Star, and Smith Auto.
"Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over [defendants]." Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Daimler AG v. Bauman, 571 U.S. 117, 125 (2014)). "Oregon law authorizes personal jurisdiction over defendants to the full extent permitted by the United States Constitution." Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (citation omitted). The Court must therefore inquire whether its exercise of jurisdiction over Smith, All Star, and Smith Auto "comports with the limits imposed by federal due process." See id. ("We therefore inquire whether the District of Oregon's exercise of jurisdiction over [defendant] 'comports with the limits imposed by federal due process.'").
"Due process requires that the defendant 'have certain minimum contacts' with the forum state 'such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Picot, 780 F.3d at 1211 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "The strength of contacts required depends on which of the two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general jurisdiction." Ranza, 793 F.3d at 1068. In this case, Plaintiffs invoke specific jurisdiction. (See Pls.' Resp. at 2, stating that "plaintiffs contend that this Court has specific jurisdiction over [the Smith] defendants rather than general jurisdiction"). The Ninth Circuit employs the following three-prong test to determine if a defendant has sufficient minimum contacts to be subject to specific personal jurisdiction:
(1) [t]he non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.Picot, 780 F.3d at 1211 (quoting Schwarzenegger, 374 F.3d at 802). Plaintiffs bear the burden of proving the first two prongs. Id. If Plaintiffs fail "'to satisfy either of these prongs, personal jurisdiction is not established in the forum state.'" Morrill, 873 F.3d at 1142 (citation omitted). If Plaintiffs satisfy both of the first two prongs, the burden shifts to the Smith Defendants to "'set forth a compelling case that the exercise of jurisdiction would not be reasonable.'" Picot, 780 F.3d at 1212 (quoting CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011)).
1. Prong One
Under the first prong of the specific jurisdiction test, Plaintiffs must show that the Smith Defendants "purposefully direct[ed]" their activities toward Oregon, or "purposefully avail[ed]" themselves of the privilege of conducting activities in Oregon. In the Ninth Circuit, courts "generally apply the purposeful availment test when the underlying claims arise from a contract, and the purposeful direction test when they arise from alleged tortious conduct." Morrill, 873 F.3d at 1142 (citing Schwarzenegger, 374 F.3d at 800). The latter test applies here given the nature of the underlying claims. See, e.g., Huddleston v. John Christner Trucking, LLC, No. 1:17-cv-00925, 2017 WL 4310348, at *4 (E.D. Cal. Sept. 28, 2017) ("'Although a FLSA claim for relief ostensibly arises from an employment contract, courts have likened FLSA claims to tort claims and have applied the purposeful direction standard.'") (citations omitted).
The "purposeful direction" or "effects" test is derived from Calder v. Jones, 465 U.S. 783 (1984). See Axiom Foods, Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1069 (9th Cir. 2017) (noting that the purposeful direction test is "often referred to as the 'effects' test," which is derived from Calder). "Under this test, a defendant purposefully directed his activities at the forum if he: '(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.'" Picot, 780 F.3d at 1215 (quoting Schwarzenegger, 374 F.3d at 803). Application of this test requires the court to focus on the defendant's contacts with the forum state itself, not on the defendant's contacts with persons who reside in the forum state, because "a 'mere injury to a forum resident is not a sufficient connection to the forum'" state to establish personal jurisdiction. Id. (citation omitted); see also Walden v. Fiore, 571 U.S. 277, 290 (2014) (explaining that "an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum State," and that "[t]he proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way").
a. Smith
With respect to Smith, Plaintiffs have met their burden of satisfying the first prong of the specific jurisdiction test.
The term "intentional act" means "the defendant must act with the 'intent to perform an actual, physical act in the real world.'" Picot, 780 F.3d at 1214 (citation omitted). Here, Smith committed intentional acts by setting "all of [the] pay and bonus structures," signing paychecks, reviewing "payroll on a regular basis," making business and personnel decisions, and "personally" running the "weekly or biweekly management meetings" at the Oregon-based auto dealership that employed Plaintiffs and allegedly failed to pay them their earned wages. (See Doan Decl. ¶¶ 1-3, describing Smith's involvement in the operation of Gladstone Auto; Smith Decl. ¶ 6, stating that Smith has "a direct ownership interest" in Gladstone Auto, Carros, and All Star, and that Gladstone Auto employed "the plaintiffs in this case"; Compl. ¶ 6, alleging that "Defendants frequently failed to pay plaintiffs and the class and collective members anything on payday"; see also Freeman Decl. ¶¶ 1-3, indicating that Smith "was physically present" at Gladstone Auto and Carros "at least weekly," that Smith almost "always showed up to run the Thursday morning management meetings," and that Smith decided whether Freeman would receive a pay raise). Thus, the first part of the purposeful direction test is satisfied. See Huddleston, 2017 WL 4310348, at *4 (holding that the defendant's "setting [of] employment policies and wages" was an "intentional act" that satisfied the first part of the purposeful direction test).
The second and third parts of the purposeful direction test are also satisfied as to Smith. Indeed, by operating auto dealerships in Oregon and engaging in allegedly unlawful employment practices here, Smith targeted Oregon and could have reasonably suspected that Oregon employees would be harmed by her conduct. See Holliday v. Lifestyle Lift, Inc., No. 09-cv-04995, 2010 WL 3910143, at *3 (N.D. Cal. Oct. 5, 2010) ("As to express aiming and harmful effects in the forum, these requirements are easily satisfied. By operating medical centers in California and applying the allegedly unlawful employment practices here, defendants both targeted California and, as a consequence, could reasonably have suspected that California employees would be harmed by such conduct. Indeed, . . . [the defendant corporate officer] signed some of [the plaintiff's] paychecks, which indicates a connection between [that officer] and California employees. In this sense, [the plaintiff's FLSA] claim is intimately related to the defendants' contacts with California.").
In their reply brief, Defendants argue that: (1) "even though plaintiffs now submit evidence purportedly linking Smith to Oregon, the allegations in their complaint are still insufficient to establish jurisdiction over Smith," and (2) "Plaintiffs should be required to plead the facts necessary to state a prima facie case for jurisdiction rather than force defendants to guess as [to] the basis for asserting jurisdiction against Smith personally." (Defs.' Reply at 5.) The Court is not persuaded by Defendants' arguments. Plaintiffs are entitled to rely on affidavits, and were not permitted to simply rest on bare allegations. See Schwarzenegger, 374 F.3d at 800 (explaining that where, as here, a motion to dismiss for lack of personal jurisdiction is based on written materials rather than an evidentiary hearing, the court "'only inquire[s] into whether [the plaintiff's] pleadings and affidavits make a prima facie showing of personal jurisdiction," and stating that a "plaintiff cannot 'simply rest on the bare allegations of its complaint'") (citations omitted).
For these reasons, Plaintiffs have met their burden of satisfying the first prong of the specific jurisdiction test with respect to Smith.
b. Smith Auto and All Star
The Court need not address whether Plaintiffs have satisfied the first prong with respect to Smith Auto and All Star because, as discussed below, Plaintiffs have failed to demonstrate that their claims arise out of or relate to Smith Auto and All Star's contacts with the forum state. See generally Morrill, 873 F.3d at 1142 (stating that personal jurisdiction is not established in the forum state if the plaintiff fails to meet its burden of satisfying "either of [the first two] prongs").
2. Prong Two
"The second prong of the Ninth Circuit's specific jurisdiction test requires a showing of 'but for' causation—that is, a showing that the [plaintiff's] claims would not have arisen but for [the] [d]efendant's contacts with [the forum state]." Webb v. Marlon Recreational Prods. USA, Ltd., No. 3:15-02380-SB, 2016 WL 7155807, at *5 (D. Or. Oct. 4, 2016) (citing Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001), and Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995)).
///
///
a. All Star
Plaintiffs have failed to meet their burden of satisfying the second prong of the specific jurisdiction test with respect to All Star. Defendants' materials demonstrate that: (1) Plaintiffs were employed by Gladstone Auto, (2) All Star is a Delaware corporation with its principal place of business in Washington, (3) All Star is not registered to do business in Oregon, (4) All Star does not engage in any business in Oregon, does not have any offices in Oregon, and does not maintain an address or telephone number in Oregon, (5) All Star does not have any ownership interest in Gladstone Auto or Carros, which "are separate corporations," and (6) All Star does not employ, nor is it "responsible for," any individuals who work for Gladstone or Carros. (Smith Decl. ¶¶ 4-7.)
Plaintiffs do not attempt to explain how their claims would have arisen but for All Star's contacts with Oregon, and they acknowledge Defendants' representation that All Star is "really only a Washington dealership." (See Pls.' Resp. Br. at 6-7.) Instead, Plaintiffs argue that jurisdictional discovery is necessary to determine who employed Plaintiffs because Carros and Gladstone Auto's employee handbook is "entitled 'All Star Dealerships Employee handbook,' with entries covering both Oregon and Washington law[.]" (Pls.' Resp. Br. at 6, citing Egan Decl. Ex. 1.) Plaintiffs argue that, "[i]f there is one common set of policies and procedures intended to cover all outposts in the Maria Smith Empire, then we need to conduct further discovery into the length, breadth, and borders of that Empire (and internal divisions between kingdoms, if any) for purposes of personal jurisdiction." (Pls.' Resp. Br. at 6-7.)
Plaintiffs' counsel's declaration suggests that an unnamed employee took screenshots of Gladstone Auto's employee handbook, which is only "accessible on one dedicated supervised [computer] terminal," and provided them to Plaintiffs' counsel. (See Egan Decl. ¶ 2.) Given that these screenshots were taken by an unidentified employee, not by Plaintiffs' counsel, it does not appear that Plaintiffs' counsel has sufficient personal knowledge to authenticate the screenshots of the handbook. See Shakur v. Schriro, 514 F.3d 878, 890 (9th Cir. 2008) (noting that "'conclusory affidavits that do not affirmatively show personal knowledge of specific facts are insufficient'") (citation omitted); see also Thompson v. Bank of Am. Nat'l Ass'n, 783 F.3d 1022, 1027 (5th Cir. 2015) (explaining that "[i]n the case of an exhibit purported to represent an electronic source, . . . testimony by a witness with direct knowledge of the source, stating that the exhibit fairly and fully reproduces it, may be enough to authenticate"). Nevertheless, the Court considers the declaration herein, because consideration of the employee handbook does not change the Court's determination herein.
"Discovery may be appropriately granted where pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary." Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008) (quoting Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 n.1 (9th Cir. 1977)). A district court's refusal to provide jurisdictional discovery "'will not be reversed except upon the clearest showing that denial of discovery results in actual and substantial prejudice to the complaining litigant.'" Id. (citation omitted). Typically, courts in this circuit "require a plaintiff to establish a 'colorable basis' for personal jurisdiction before granting jurisdictional discovery." Chapman v. Krutonog, 256 F.R.D. 645, 649 (D. Haw. 2009) (quoting Mitan v. Feeney, 497 F. Supp. 2d 1113, 1119 (C.D. Cal. 2007)). A "colorable" showing can "be equated [to] requiring the plaintiff to come forward with 'some evidence' tending to establish personal jurisdiction over the defendant." Id. (citation omitted).
Here, Plaintiffs' request for jurisdictional discovery appears to be based on a hunch that All Star either employed Plaintiffs or acted as a joint employer (contrary to the declaration Smith signed under penalty of perjury), because Carros and Gladstone Auto's employee handbook is titled "All Star Dealerships Employee handbook" and references Oregon law. (Compare Pls.' Resp. Br. at 2, 11, stating that "[t]here is a disturbing and ongoing fact question in this case as to exactly [who] . . . employed the plaintiffs," citing only excerpts from screenshots of Gladstone Auto's employee handbook in support of the proposition that there is an "ongoing fact question," and seeking leave to conduct jurisdictional discovery regarding "the Court's potential personal jurisdiction over" All Star and to take Smith's deposition, with Smith Decl. at 2-3, declaring under penalty of perjury that All Star "does not have any ownership interest" in Carros or Gladstone Auto, that All Star "does not employ and is not responsible for any employees of" Carros or Gladstone Auto, that Gladstone Auto employed Plaintiffs, that All Star is a Delaware corporation with its principal place of business in Washington, and that All Star is not registered to do business in Oregon, does not engage in any business in Oregon, does not have any offices in Oregon, and does not have an address or telephone number in Oregon). The name of the employee handbook, standing alone, does not provide a colorable basis for personal jurisdiction to open the door to jurisdictional discovery. Under these circumstances, Plaintiffs' request for jurisdictional discovery should be denied. See Boschetto, 539 F.3d at 1020 ("The denial of Boschetto's request for discovery, which was based on little more than a hunch that it might yield jurisdictionally relevant facts, was not an abuse of discretion.").
b. Smith Auto
Plaintiffs have also failed to meet their burden of satisfying the second prong of the specific jurisdiction test with respect to Smith Auto.
Plaintiffs argue that jurisdiction is proper here because Smith Auto is an unincorporated association and holds the citizenship of all its members, including the two Oregon-based dealerships being sued in this case (Carros and Gladstone Auto). (Pls.' Resp. Br. at 6.) It is true that an unincorporated association is a type of entity that holds the citizenship of all of its members. See Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) ("In cases where entities rather than individuals are litigants, diversity jurisdiction depends on the form of the entity. For example, an unincorporated association such as a partnership has the citizenships of all of its members.") (citation omitted); see also OR. REV. STAT. § 62.015(7) (defining a "[d]omestic limited liability company" as "an entity that is an unincorporated association that has one or more members and that is organized under ORS chapter 63"); id. § 62.015(14) (defining a "[f]oreign limited liability company" as "an entity that is an unincorporated association organized under laws other than the laws of this state and that is organized under a statute under which an association may be formed that affords to each of the entity's members limited liability with respect to liabilities of the entity"). Defendants' written materials, however, demonstrate that (1) "Smith Auto is not an actual entity, but is merely the marketing name of Smith's collection of dealerships in Oregon and Washington" (Defs.' Mot. Dismiss at 4, citing Smith Decl. ¶ 7); and (2) Smith's dealerships are "distinct corporation[s] with separate managers" and are not part of "an actual group." (Smith Decl. ¶ 7.) Nothing in Plaintiffs' written materials refutes these facts. In addition, Plaintiffs' written materials fail to demonstrate that their claims would not have arisen but for Smith Auto's marketing activities in Oregon. Accordingly, Plaintiffs have failed to meet their burden of satisfying the second prong of the minimum contacts test with respect to Smith Auto.
Plaintiffs premise this argument on Smith Auto's website, which refers to "Smith Auto Group" and lists dealerships in Oregon and Washington, including Gladstone Auto and Carros. See https://www.seedrivesmile.com (last visited July 18, 2018). Defendants do not challenge the accuracy of the content presented on the website, nor is there a dispute as to whether Smith Auto created and maintained the website. Accordingly, the Court may consider the information provided on Smith Auto's website in ruling on the motion to dismiss for lack of jurisdiction. See Almquist v. Synergo, LLC, No. 3:15-cv-01281-SB, 2016 WL 8732503, at *4 n.4 (D. Or. May 20, 2016) (considering the information provided on websites in ruling on a motion to dismiss for lack of personal jurisdiction, and noting that the websites were created and maintained by the defendants and that there was "no challenge to the accuracy of the content presented on the websites").
Plaintiffs also seek leave to conduct jurisdictional discovery with respect to Smith Auto. (See Pls.' Resp. Br. at 2, 11, stating that "more discovery is needed for the two Auto Groups," and that "Plaintiffs seek leave . . . to conduct such discovery, including the deposition of Ms. Smith and representatives of the Smith and All Star Auto Groups, as well as document and information discovery directed towards the Court's potential personal jurisdiction over those entities"). Plaintiffs, however, fail to present any evidence tending to establish jurisdiction over Smith Auto. (See Pls.' Resp. at 6-7, asserting only that the Court may exercise jurisdiction over Smith Auto because it is an unincorporated association and thus has the citizenship of its Oregon-based members, but failing to explain how discovery might yield jurisdictionally relevant facts when Smith has stated under penalty of perjury that Smith Auto is not an entity and is merely a marketing name). Accordingly, Plaintiffs' request for jurisdictional discovery should be denied.
c. Smith
Plaintiffs have met their burden of satisfying the second prong of the test as to Smith. As discussed above, Plaintiffs' materials demonstrate that Smith set all of the pay and bonus structures at Gladstone, signed paychecks, made decisions on compensation matters, and reviewed payroll on a regular basis. Clearly, then, Plaintiffs' federal and state law claims for unpaid minimum and overtime wages would not have arisen but for Smith's contacts with Oregon.
3. Prong Three
The third prong requires the defendant to come forward with a compelling case that the exercise of jurisdiction would not be reasonable here. See Boschetto, 539 F.3d at 1016. Smith has not done so, and counsel acknowledged at oral argument that exercising personal jurisdiction would be appropriate here if Plaintiffs satisfied the first two prongs of the test. See also Ballard, 65 F.3d at 1500 (indicating that when the first two prongs are met, the defendant carries a "heavy burden of rebutting the strong presumption in favor of jurisdiction").
4. Conclusion
For the reasons stated, Plaintiffs have met their burden of demonstrating that the Court has specific jurisdiction over Smith. Plaintiffs, however, have not met their burden of showing that the Court has specific jurisdiction over All Star and Smith Auto. Accordingly, the Court recommends that the district judge grant in part and deny in part the Smith Defendants' motion to dismiss.
The Court declines Defendants' request to dismiss Plaintiffs' claims against All Star and Smith Auto with prejudice. (See Defs.' Mot. Dismiss at 4, 7, arguing that the Court should "dismiss all claims against [the Smith Defendants] with prejudice under Rule 12(b)(2)"); cf. Fiorani v. Berenzweig, 441 F. App'x 540, 541 (9th Cir. 2011) (noting that dismissals for lack of personal jurisdiction "must be without prejudice" and thus vacating and remanding "to the district court for the limited purpose of entering dismissal without prejudice as to the claims dismissed" on that basis).
B. Pleading Sufficiency
Defendants also collectively argue that the Court should dismiss Plaintiffs' complaint because they have failed to state a plausible claim for relief under the FLSA or Oregon law. The Court agrees.
1. FLSA
In Landers v. Quality Communications, Inc., 771 F.3d 638 (9th Cir. 2014), the Ninth Circuit "addressed the degree of specificity required to state a claim for failure to pay minimum or overtime wages under the FLSA" post-Twombly and Iqbal. Id. at 640. In that case, the plaintiff alleged, among other things, that the defendants "implemented a 'de facto piecework no overtime' system and/or failed to pay minimum wages and/or overtime wages for the hours worked by [him]," and "falsified payroll records to conceal their failure to pay required wages." Id. at 646. Absent from the plaintiff's complaint, however, "was any detail regarding a given workweek when [he] worked in excess of forty hours and was not paid overtime for that given workweek and/or was not paid minimum wages." Id. The Ninth Circuit held that, under the post-Twombly and Iqbal standard, the plaintiff failed to state a plausible claim for relief under the FLSA. Id. In so holding, the Ninth Circuit "decline[d] to impose a requirement that a plaintiff alleging failure to pay minimum wages or overtime wages must approximate the number of hours worked without compensation." Id. However, the Ninth Circuit explained that, "at a minimum the plaintiff must allege at least one workweek when he worked in excess of forty hours and was not paid for the excess hours in that workweek, or was not paid minimum wages." Id.
In this case, Plaintiffs have failed plausibly to allege claims for relief under the FLSA, because they do not allege at least one workweek when they worked in excess of forty hours and were not paid for the excess hours in that workweek, or were not paid minimum wages. Plaintiffs acknowledge as much in their response. (See Pls.' Resp. Br. at 7, noting that Plaintiffs' counsel conferred with Defendants' counsel and offered to amend the complaint in order to allege a specific workweek when Plaintiffs worked in excess of forty hours and were not timely paid their wages). Accordingly, the Court recommends that the district judge dismiss Plaintiffs' FLSA claims, with leave to amend.
2. State Law Claims
Defendants argue, and Plaintiffs do not dispute, that their state law claims for alleged violations of Oregon Revised Statutes chapter 653 suffer from the same defect as their FLSA claims. (Compare Defs.' Mot. Dismiss at 8-10, with Pls.' Resp. Br. at 7-8.) Accordingly, the Court recommends that the district judge also dismiss Plaintiffs' state law claims. See Makaneole v. Solarworld Indus. Am. Inc., No. 3:14-cv-1528-PK, 2014 WL 8102530, at *10-11 (D. Or. Dec. 8, 2014) (concluding that Landers applied "with equal force" to the plaintiff's state law claims for failure to pay "overtime wages" and "wages due and owing," because the holding in Landers was "based on the pleading standard set forth in Federal Civil Procedure Rule 8 as construed by Twombly and Iqbal," and recommending that the plaintiff's state law claims be dismissed based on the failure to allege, inter alia, "any specific workweek in which [any of the defendants] failed to pay all wages and/or all overtime wages due and owing"), recommendation adopted as modified on other grounds, 2015 WL 1021446 (D. Or. Mar. 9, 2015); Nkrumah v. City of Portland, 261 Or. App. 365, 381 (Or. Ct. App. 2014) ("[B]ecause most of ORS chapter 653 (Oregon's minimum-wage law) is patterned after the FLSA, federal regulations and case law are 'instructive' in interpreting that chapter."); Davis v. Laurel Med. Servs. Corp., No. 3:16-cv-01973-SI, 2018 WL 2105374, at *2 (D. Or. May 7, 2018) (citing Nkrumah in support of evaluating the plaintiff's state and federal overtime claims "under the same legal standards").
3. Leave to Amend
In their response, Plaintiffs state that the following amendment would meet the Landers standard: "For example, the paycheck due on July 5, 2017 was not paid until July 6, 2017. Both named plaintiffs worked overtime in that paycheck's pay period. SMITH AUTO therefore failed to promptly pay them minimum wage or overtime for that pay period." (Pls.' Resp. Br. at 7-8.) Defendants argue that Plaintiffs are "effectively" seeking "an advisory opinion confirming that their proposed amendment would state plausible claims for overtime and minimum wage violations," and that the "Court cannot rule on a hypothetical amendment." (Defs.' Reply at 5.)
The Court will not address whether Plaintiffs' proposed amendment would remedy defects in the complaint, because: (1) Defendants do not argue that Plaintiffs should be denied leave to amend, (2) Defendants do not argue that granting leave to amend would be futile, in bad faith, create undue delay, or cause undue prejudice, (3) Defendants do not argue that Plaintiffs' claims cannot possibly be cured by amendment; in fact, Defendants appear to dispute only whether Plaintiffs' proposed amendment would remedy their current claim for a minimum wage violation under state law (see Defs.' Reply at 5, arguing that the Court cannot rule on the proposed amendment, but nevertheless arguing that the amendment does not "state a minimum wage violation under Oregon law," while failing to address whether Plaintiffs' state law minimum wage claim could be cured); and (4) Plaintiffs have not previously amended their complaint.
Defendants only argue that Plaintiffs' claims against the Smith Defendants should be dismissed with prejudice, to the extent this Court lacks personal jurisdiction. As discussed above, this argument lacks merit and does not comport with case law from the Ninth Circuit.
For these reasons, the Court recommends that the district judge dismiss Plaintiffs' claims with leave to amend, and without prejudice to any argument Defendants may advance in a second motion to dismiss. See Commercial Judgment Recovery Fund 1 LLC v. A2Z Plating Co., Inc., No. 11-0572, 2011 WL 2941029, at *5 (C.D. Cal. July 15, 2011) (granting leave to amend where, as here, the defendant did "not argue that granting leave to amend would be futile, be in bad faith, create undue delay, or cause undue prejudice"); Campos v. New Direction Equip. Co., Inc., No. 08-00286, 2009 WL 962219, at *1 (D. Nev. Apr. 7, 2009) ("Because Defendants do not argue further amendment would be futile, the court will allow the amendment as a matter of course. This leave to amend, however, is without prejudice to any arguments Defendants may make concerning whether the second amended complaint fails to state a claim."); Gompper v. Visx, Inc., 298 F.3d 893, 898 (9th Cir. 2002) ("'Dismissal without leave to amend is improper unless it is clear, upon de novo review, that the complaint could not be saved by any amendment.'") (citation omitted).
///
///
4. Statute of Limitations
Finally, Defendants argue that the Court should dismiss Plaintiffs' FLSA claims "to the extent that they are based on any violations" that fell outside the two-year statute of limitations. (Defs.' Mot. Dismiss at 10.) In support of their argument, Defendants note that: (1) "a plaintiff must commence a claim for unpaid minimum wages or unpaid overtime under the FLSA within two years, or within three years if the violations were willful," and (2) Plaintiffs allege that Defendants' FLSA violations were "willful," but they fail to plead "any facts—aside from mere conclusions—showing how [D]efendants' alleged violations of the FLSA were willful[.]" (Defs.' Mot. Dismiss at 10 & n.2.)
Defendants have "withdraw[n] their statute of limitations argument related to plaintiffs' Oregon minimum wage claim." (Defs.' Reply at 6 n.2.) Plaintiffs also do not dispute that their Oregon overtime wage claim is limited to violations occurring within the two-year statute of limitations. (See Pls.' Resp. at 9, "Oregon overtime claims are limited to two years, because there is a specific statute so providing."). Accordingly, the Court's limits its analysis to Plaintiffs' FLSA claims. --------
"When an affirmative defense is obvious on the face of a complaint, . . . a defendant can raise that defense in a motion to dismiss." Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013). In Rivera, for example, the district court dismissed the plaintiffs' FLSA claims to the extent that those claims fell outside the two-year statute of limitations. Id. at 901-02. The Ninth Circuit held that "statute of limitation issues [were] apparent on the face of the complaint" and that the district court "was correct to address them." Id. The Ninth Circuit, however, held that the "district court erred in applying a two-year statute of limitations" to the plaintiffs' FLSA claims at the motion to dismiss stage, because the plaintiffs "sufficiently alleged willfulness" by alleging that the defendants' FLSA violations were "'deliberate, intentional, and willful.'" Id. at 902-03; see also Pellegrini v. Huyssen, Inc., No. 3:17-cv-00135, 2017 WL 2908794, at *9 (S.D. Cal. July 7, 2017) (explaining that "an allegation that [a] defendant['s] [FLSA] violations were 'deliberate, intentional, and willful' [is] sufficient to survive a motion to dismiss because '[a]t the pleading stage, a plaintiff need not allege willfulness with specificity'" (quoting Rivera, 735 F.3d at 903); McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988) ("In common usage the word 'willful' is considered synonymous with such words as . . . 'deliberate,' and 'intentional.'") (citation omitted).
Here, the FLSA statute of limitations issue is apparent on the face of Plaintiffs' complaint because like the plaintiffs in Rivera, Plaintiffs allege that Defendants "willfully" violated the FLSA. (Compl. ¶¶ 14, 17.) Like the parties in Rivera, Plaintiffs and Defendants dispute whether Plaintiffs have sufficiently alleged willfulness (i.e., whether there is a factual basis for applying the three-year statute of limitations). See Rivera, 735 F.3d at 902-03. Defendants cite Rivera for the proposition that Plaintiffs cannot simply allege that Defendants' actions were willful; rather, Plaintiffs "must plead enough facts to plausibly allege that [D]efendants deliberately or intentionally violated the law." (Defs.' Reply at 6.) In Rivera, however, the Ninth Circuit held that it was sufficient to allege that the defendants' FLSA violations were "deliberate, intentional, and willful." Rivera, 735 F.3d at 903. Although Plaintiffs allege only that Defendants' FLSA violations were "willful," the Court concludes that Plaintiffs' allegations are sufficient to survive a motion to dismiss because (1) the word "willful" is considered synonymous with the words "deliberate" and "intentional" (i.e., the two other words used in the Rivera complaint); and (2) "[a]t the pleading stage, a plaintiff need not allege willfulness with specificity." Id. Accordingly, the Court recommends that the district judge deny Defendants' motion to dismiss on this ground.
CONCLUSION
For the reasons stated, the Court recommends that the district judge GRANT in part and DENY in part Defendants' motion to dismiss (ECF No. 6).
SCHEDULING ORDER
The Court will refer its Findings and Recommendation to a district judge. Objections, if any, are due within fourteen (14) days. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within fourteen (14) days. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.
DATED this 18th day of July, 2018.
/s/_________
STACIE F. BECKERMAN
United States Magistrate Judge