United States District Court, D. Nevada
June 17, 2014
Anabel Ruiz, et al., individually and on behalf of other persons similarly situated, Plaintiffs,
APCO Construction et al., Defendants.
ORDER [Doc. 108,
JENNIFER A. DORSEY, District Judge.
Plaintiffs Alfredo Damudio, Juan Magallenes, and Vicente Cuevas allege they were employees of All-American and Associates who performed work on the Atrium project, a City of Las Vegas public-works construction project. Plaintiffs contend that All-American failed to pay them, and they seek to hold APCO Construction-the general contractor who subcontracted with their employer All-American-responsible for their unpaid wages under the Federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"), the Nevada labor code, and Nevada common law.
This case began as an action by numerous former All-American employees against the subcontractor,  its purported owners Jim and Donna Spallitta, and Penta Building Group, Inc. (the general contractor on the Hilton Grand Vacations project, which All-American was a subcontractor on). Doc. 38. Default was entered against the All-American entities, Docs. 13, 102, Jim Spallitta is deceased, and Donna Spallitta filed for bankruptcy protection. Docs. 16, 17, 18, 24-11, 88. The Court dismissed the claims against Penta in 2011 and permitted Plaintiffs leave to add APCO as a defendant. Doc. 37. These developments have left an active dispute only between three of the Plaintiffs who claim they worked for All-American on the Atrium project (Zamudio, Magallanes, and Cuevas) and general contractor APCO.
APCO now moves the Court for various relief under the umbrella of a summary-judgment motion. Doc. 108. The Court has exercised jurisdiction over this case on federal-question and supplemental jurisdiction based on the Plaintiffs' pleading of FLSA claims. APCO asks the Court to grant summary judgment in its favor on the FLSA claims because APCO was not Plaintiffs' employer-a prerequisite for a viable FLSA claim-and then decline to continue to exercise supplemental jurisdiction over the remaining state-law claims. APCO also contends that Plaintiffs have no private right of action for their prevailing-wage, overtime, or waiting-time-penalty claims, and their sole remedy is an administrative one with Nevada's Labor Commissioner under NRS Chapter 338. And, finally, APCO seeks judgment in its favor on Plaintiffs' contract claims arguing that Plaintiffs are not parties to, or beneficiaries of, any contract with APCO.
Having considered the parties' papers on file and the oral arguments presented at the hearing on this matter, the Court concludes that Plaintiffs have failed to demonstrate that APCO was Plaintiffs' employer for purposes of the FLSA and grants summary judgment in APCO's favor on Plaintiffs' FLSA claims. The Court then declines to continue to exercise supplemental jurisdiction over Plaintiffs' remaining state-law claims against APCO and dismisses those claims under 28 U.S.C. § 1367(c). And finding that Plaintiffs' supplemental brief exceeds the scope of the Court's permission for Plaintiffs to submit citations to additional authorities after the summary-judgment hearing, the Court strikes the Plaintiffs' unsolicited 10-page brief.
A. APCO's Emergency Motion to Strike [Doc. 128]
At the oral argument on APCO's motion for summary judgment, the Court authorized Plaintiffs to submit, via letter, several citations not provided in the original briefing, as well as authority for the proposition that the Court should certify a question to the Nevada Supreme Court. Plaintiffs exceeded those directions and submitted a 10-page supplemental brief that added a sevenpage discussion of NRS § 608.150. Doc. 127 at 1-7. The unsolicited brief also raises new issues. Id. at 7. APCO moves to strike it as a fugitive document, Doc. 128 at 2-3, and Plaintiffs dispute that it exceeds the Court's instructions and ask, alternatively, to permit it. Doc. 130 at 1-3.
Having reviewed the transcript of the hearing, the Court finds it did not "impliedly authorize" Plaintiffs to engage in a carte blanche revision of the arguments they chose to raise-or not raise-in their response to the motion for summary judgment or during the oral argument. This motion was pending for more than a year before the hearing convened, and Plaintiffs had more than sufficient time to seek to supplement their filings with additional points during that time. Plaintiffs have not offered good cause for this Court to consider their additional authorities (none of which are very recent) now. The supplemental brief (Doc. 127) will be disregarded.
B. APCO's Renewed Motion for Summary Judgment [Doc. 108]
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." See Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986) (citing Fed.R.Civ.P. 56(c)). When considering the propriety of summary judgment, the court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986). If reasonable minds could differ on the material facts at issue, summary judgment is not appropriate because the purpose of summary judgment is to avoid unnecessary trials when the facts are undisputed. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995); Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994).
"A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record... or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c). Once the moving party satisfies Rule 56 by demonstrating the absence of any genuine issue of material fact, the burden shifts to the party resisting summary judgment to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Celotex, 477 U.S. at 323. The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts, " Bank of Am. v. Orr, 285 F.3d 764, 783 (9th Cir. 2002) (internal citations omitted); he "must produce specific evidence, through affidavits or admissible discovery material, to show that" there is a sufficient evidentiary basis on which a reasonable fact finder could find in his favor. Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991); Anderson, 477 U.S. at 248-49. The Court may only consider properly authenticated, admissible evidence in deciding a motion for summary judgment. Fed.R.Civ.P. 56(c); Orr, 285 F.3d at 773-74.
1. Plaintiffs' FLSA Claims-Counts 1 and 2
Plaintiffs allege that they were not paid at least a minimum wage in violation of 29 U.S.C. § 206 (Count 1), and overtime wages in violation of 29 U.S.C. § 207 (Count 2). Doc. 38 at 9-11. Plaintiffs acknowledge that they were employed by All-American, not APCO, at the time All-American failed to pay them. Doc. 38 at ¶¶ 14-15, 42. While they allege that All-American's owners are Plaintiffs' "employers or joint employers for purposes of the FLSA, " id. at ¶ 23, they make no similar allegations against APCO. Instead, they allege that APCO is liable with their defunct employer by operation of NRS § 608.150, which provides that "Every original contractor... for the... construction... of any building... shall assume and is liable for the indebtedness for labor incurred by any subcontractor...." Nev. Rev. Stat. § 608.150(1); Doc. 38 at ¶ 60; Doc. 112 at 4.
A defendant must be an "employer" of the plaintiff in order to be liable under the FLSA. Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1468 (9th Cir. 1983), disapproved of on other grounds by Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985). FLSA defines "employer" as "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). Whether an entity is an employer under the FLSA is a question of law. Torres-Lopez v. May, 111 F.3d 633, 638 (9th Cir. 1997).
Plaintiffs do not even attempt to demonstrate that APCO was an "employer" for purposes of their FLSA claim; they instead rely on NRS § 608.150 and try to bootstrap this statutory state law provision into a federal claim under the FLSA. But whether a defendant qualifies as an employer under FLSA does not turn on state statutory provisions. "[D]etermination of whether an employer-employee relationship exists does not depend on isolated factors but rather upon the circumstances of the whole activity.'" Bonnette, 704 F.2d at 1469 (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947)). "The touchstone is the economic relationship." Boucher v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009). This "economic relationship" is analyzed through a number of factors, most importantly "whether the alleged employer (1) had the power to hire and fire employees, (2) supervised and controlled employee work schedules or conditions of payment, (3) determined the rate and method of payment, and (4) maintained employment records." Moreau v. Air France, 356 F.3d 942, 946-47 (9th Cir. 2004); Bonnette, 704 F.2d at 1470.
Plaintiffs make no effort to demonstrate that APCO was their employer, and the Court's independent review of the admissible evidence in the record finds no evidence to support APCO's FLSA liability as an "employer" of All-American's laborers. While the subcontract between APCO and All-American contains standard provisions permitting APCO to specify the pace and scheduling of subcontractors' work, nothing suggests that APCO had the power to hire and fire All-American's employees, supervise or control this subcontractor's laborers' work schedules or conditions of payment by All-American, or determined the rate or method of payment. And although NRS § 338.070 required APCO to "keep or cause to be kept" certain employment records provided by its subcontractors, the subcontractors had primary responsibility for collecting and preparing those records. See id. at § 338.370(6); see also Doc. 108-3 at ¶ 4.3 (cataloging documentary items that All-American was required to prepare, maintain, and provide to APCO). The Subcontract Agreement also clearly states "It is the Subcontractor's responsibility to maintain an adequate work force to complete the project on schedule." Doc. 108-3 at ¶ 3.4. Considering the totality of these factors, the Court finds that the evidence in this case could not cause a reasonable jury to conclude that APCO was Plaintiffs' employer for purposes of their FLSA claim. Indeed, in their stricken supplement, they note that the Nevada Legislature considered-but rejected-attempts to use this legislation to make general contractors "employers" of their subcontractors, opting instead for a surety-like relationship. Doc. 127 at 2 (quoting 1929-1930 Nev. Comm'r Labor Biennial Rep. 7, reprinted in 1 Appx to Journals S. & Assemb., 35th Sess. (Nev. 1931)).
Even if employer status could be established by state statute, NRS 608.150 would not do the job. As Plaintiffs themselves concede, this statute essentially turns general contractors into "sureties for the labor-related debts of their subcontractors, " not into employers. Doc. 112 at 7. And although courts have applied NRS § 608.150 to hold contractors responsible for amounts due under collective bargaining agreements, see, e.g., Trustees of Constr. Indust. v. Hartford Fire Ins., 578 F.3d 1126 (9th Cir. 2009); Tobler & Oliver Constr. Co. v. Board of Trustees of the Health and Ins. Fund for Carpenters Local Union No. 971, 442 P.2d 904 (Nev. 1968), Plaintiffs offer nothing to suggest that this surety-liability statute alone can supply the economic relationship required to hold APCO directly liable as an employer under the FLSA.
As Plaintiffs have failed to demonstrate that APCO was their employer or joint employer or that NRS 608.150 can substitute for the employment relationship the FLSA requires, Plaintiffs' FLSA claims against APCO fail as a matter of law. Summary judgment is granted in APCO's favor on Plaintiffs' FLSA claims (counts 1 & 2).
2. Nevada State Law Claims against APCO-Counts 3-8
Before turning to Plaintiffs' remaining claims against APCO-all of which arise (if at all) under Nevada state law-the Court first considers its jurisdiction over these claims. Federal jurisdiction in this case is premised on the pendency of the FLSA claims and the Court's ability to exercise supplemental jurisdiction over Plaintiffs' state law claims. See Doc. 38 at ¶ 17; 28 U.S.C. § 1367. Supplemental jurisdiction is a doctrine of discretion, not of a plaintiff's right. City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 172 (1997); United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966). A federal district court may nonetheless decline to exercise supplemental jurisdiction over a state law claim if "(1) the claim raises a novel or complex issue of State law; (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction; (3) the district court has dismissed all claims over which it has original jurisdiction; or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction." 28 U.S.C. § 1367(c). The decision whether to decline to exercise supplemental jurisdiction under Section 1367(c) should be informed by the values of economy, convenience, fairness, and comity as explained by the Supreme Court in Gibbs. Acri v. Varian Associates, Inc., 114 F.3d 999, 1001 (9th Cir. 1997) (en banc).
Economy, convenience, fairness, and comity compel this Court to decline to exercise supplemental jurisdiction over Plaintiffs' remaining claims against APCO under 28 U.S.C. § 1367(c)(1) & (2). The entry of summary judgment in APCO's favor on the FLSA claims leaves Plaintiffs with only state law claims against APCO. Little else remains in this case. Plaintiffs' claims against Penta were dismissed; Jim Spallitta is deceased; and clerk's defaults were entered against the All-American entities years ago. See Docs. 12, 102. Although Plaintiffs retain claims against Donna Spallitta, the vitality of those claims remains unclear after her bankruptcy filing. Doc. 83. And although Donna Spallitta pled crossclaims against APCO in May 2011,  nothing in the record suggests that she has made any effort to prosecute those crossclaims or actively participate in this case in recent years. As a result of the entry of summary judgment on the FLSA claims against APCO, the only actively litigated claims remaining in this case are the state law claims against APCO (counts 3-8). At a minimum, these claims "substantially predominate over the stayed FLSA claims remaining against or by Donna Spallitta (which do not appear to be actively litigated) and the FLSA claims against the All-American entities (which are no longer being actively litigated because defaults have been entered). See 28 U.S.C. § 1367(c)(2).
Plaintiffs' claims remaining against APCO also present novel or complex issues of Nevada law including: whether Plaintiffs enjoy a private right of action for prevailing wages, waiting-time penalties, and overtime payments; whether Plaintiffs' state law claims are subject to dismissal because they were not presented to the State Labor Commissioner in the first instance; whether Plaintiffs can use Nevada's minimum wage law (NRS § 608.250) to recover a portion of their pay on this public-works, prevailing-wage project; whether Plaintiffs are intended third-party beneficiaries of the public-works contract between APCO and the City of Las Vegas; whether NRS Chapter 338 preempts Plaintiffs' contract claims; and the scope of APCO's surety-like liability (if any) under NRS § 608.150. Nevada's state courts are better suited to address and resolve these uniquely statelaw issues existing between Nevada Plaintiffs and this Nevada corporate defendant. Although by declining to retain supplemental jurisdiction over these claims against APCO will not result in the complete dismissal of this action because (stayed) claims exist against Donna Spallitta, the Court finds that judicial economy will still be served because it remains to be seen what, if any, life will remain in those claims after the bankruptcy proceedings conclude. Although the decision to decline to retain jurisdiction over the remaining claims against APCO may theoretically force Plaintiffs to litigate their claims against APCO in state court while concluding this litigation against Donna Spallitta in federal court, the Court finds that, on balance, all considerations weigh in favor of declining the exercise of federal jurisdiction over the remaining APCO claims, and dismissal of these claims will most sensibly accommodate the values of economy, fairness, and comity. As the Court is declining to exercise jurisdiction over these remaining claims, APCO's motion for summary judgment on these claims is denied as moot.
Accordingly, based upon the foregoing reasons and with good cause appearing and no reason for delay,
It is HEREBY ORDERED that Defendant APCO's Emergency Motion to Strike Plaintiffs' Supplemental Brief Addressing Issued Raised at the Hearing of November 13, 2013 [Doc. 128] is GRANTED;
It is FURTHER ORDERED that Defendant's Renewed Motion for Summary Judgment [Doc. 108] is GRANTED in part. Judgment is entered in APCO's favor on Plaintiffs' Counts 1 & 2 (the FLSA claims). The Court declines to continue to exercise supplemental jurisdiction over the remaining claims against APCO and DISMISSES those claims (Counts 3, 4, 5, 6, 7, 8) without prejudice under 28 U.S.C. § 1367(c); therefore the motion for summary judgment is denied as moot on all state-law claims.