United States District Court, D. Nevada
JOSHUA ABRAMS, an individual, PRESTON FORTNEY, an individual; NOE LUNA, an individual; SALESH JATAN, an individual; NANCI WIRTH, an individual; ADAM YOUNG, an individual; EMERIO BENAVIDES, an individual; JEFFREY SHARP, an individual; ANA HLEDIK, an individual; and FE HLEDIK, an individual, all on behalf of themselves and all similarly- situated individuals, Plaintiffs,
PEPPERMILL CASINOS, INC., a Nevada corporation; and DOES 1 through 100, inclusive, Defendants.
MIRANDA M. DU, UNITED STATES DISTRICT JUDGE
Joshua Abrams, Preston Fortney, Noe Luna, Salesh Jatan, Nanci
Wirth, Adam Young, Emerio Benavides, Jeffrey Sharp, Ana
Hledik, Fe Hledik ("Plainiffs") brought a class
action suit in Nevada state court against their employer,
Peppermill Casinos, Inc., ("Defendant"), alleging
that Defendant fails to provide the minimum hourly wage rate
required under Article XV, Section 16 of the Nevada
Constitution (the "Minimum Wage Amendment" or the
"Amendment") and to provide an employee health
benefit plan as required under NRS § 608.1555. (ECF No.
1-2.) Defendant removed the action on the basis of federal
question jurisdiction under 28 U.S.C. §§ 1331,
1441(c), and 1446. (ECF No. 1.) In response, Plaintiffs moved
to remand, alleging that their state-law claims are not
preempted by the Employee Retirement Income Security Act
("ERISA"). Defendant filed a response (ECF No. 10),
arguing that ERISA preemption applies to the second state-law
claim in Plaintiffs' amended class action complaint and
requires removal. Plaintiff then filed a reply (ECF No. 11).
For the reasons discussed below, the Motion to Remand is
also filed a Motion for Temporary Stay of Proceedings
("Motion for Stay") pending the disposition of
three issues relating to the Minimum Wage Amendment. (ECF No.
6.) The Motion to Stay is denied as moot.
their amended class action complaint, Plaintiffs advance two
claims based on allegations that Defendant has violated and
continues to violate the Minimum Wage Amendment by failing to
pay the required upper-tier minimum wage or to provide
qualified health benefit plans that have the same benefits as
those listed in NRS § 608.1555 and chapters 689A and
689B by reference. (ECF No. 1-2 at 7-11.)
Minimum Wage Amendment establishes a two-tier minimum wage
with the hourly rates increasing overtime. The higher-tier
minimum hourly rate was initially set in 2006 at $6.15 while
the lower-tier rate was set at $5.15. (ECF No. 1-2 at 3.) By
2016, under the Amendment's index, the higher-tier hourly
minimum wage has increased to $8.25 and the lower-tier rate
is set at $7.25 (Id.) The Amendment provides
employers with the option to (1) pay the higher-tier minimum
wage or (2) pay the lower-tier minimum wage and offer health
insurance to employees and their dependents and do so at a
total cost to the employee for premiums of not more than 10
percent of the employee's gross taxable income from the
employer. Nev. Const, art. XV, Section 16(A). This subsection
of the Amendment also states that if there is a health
benefit plan provided by an employer, the employer must
provide "health benefits as described herein."
Plaintiffs take this statement - "health benefits as
described herein" -to argue that any qualified health
plan under the Amendment must be compliant with NRS §
608.1555, which states that "any employer who provides
benefits for health care to his or her employees shall
provide the same benefit and pay providers of health care in
the same manner as a policy of insurance pursuant to chapters
689A and 689B of NRS." NRS § 608.1555. Based on
this interpretation, Plaintiffs claim that Defendant is
improperly paying them the lower-tier wage because Defendant
fails to provide health benefits as required by NRS §
608.1555. (ECFNo. 1-2 at 7.)
MOTION FOR STAY (ECF No. 6)
moved for a temporary stay of the proceedings pending review
of three issues of law before the Nevada Supreme Court: (1)
whether "providing" health benefits as stated in
the Amendment requires employers to make insurance available
to their employees or, in the alternative, whether it
requires employers to actively enroll their employees in
offered health insurance plans; (2) whether an employee's
tip-income should be factored into an employee's gross
taxable income for calculating insurance premiums; and (3)
whether the Amendment's silence as to a statute of
limitations means there is a "limitless" statute of
limitations for claims brought under the Amendment or if
instead NRS § 608.260's two-year statute of
limitations applies. (ECF No. 6 at 2.) The Nevada Supreme
Court resolved these issues in two en banc decisions. See
MDC Restaurants, LLCetalv. The Eighth Judicial Dist.
Court, 132 Nev. Op. 76 (Oct. 27, 2016); Perry v.
Terrible Herbst, Inc., 132 Nev. Adv. Op. 75 (Oct. 27,
2016). The court ruled that: (1) the Amendment's
direction to "provide" health insurance requires
that employers offer health insurance, not enroll their
employees in plans; (2) a two-year statute of limitation
applies to claims brought under the Amendment; and (3)
employers may not factor in the employee's tip-income
when calculating insurance premiums. Because these issues
have been decided, Defendant's Motion for Stay (ECF No.
6) is denied as moot.
MOTION TO REMAND (ECF No. 7)
seeks removal on the basis that Plaintiffs' second claim
- that under NRS § 608.1555 Defendant failed to provide
the same benefits and pay health care providers in the same
manner as a policy of insurance pursuant to NRS Chapters 689A
and 689B - is completely preempted by § 514 of ERISA
because it references an employee benefit plan. (ECF No. 1 at
2.) Defendant reasons that this Court must exercise federal
question jurisdiction over the second claim and may also
exercise supplemental jurisdiction over the first claim.
(Id. at 4.) In their Motion to Remand, Plaintiffs
argue that Defendant has not demonstrated
"complete" preemption but has, at best, shown only
"conflict" preemption, which cannot form a basis
for federal question jurisdiction or removal from state
court. (ECF No. 7 at 2, 5.) The Court disagrees
and finds that complete preemption under ERISA is satisfied.
the well-pleaded complaint rule, "federal question
jurisdiction cannot be based on a defense or counterclaim
asserted by a defendant." (ECF No. 7 at 2.) However,
Plaintiffs aptly point out that there is an exception to this
rule when a federal statute wholly displaces state-law cause
of action through complete preemption. See Marin General
Hosp. v. Modesto & Empire Traction Co., 581 F.3d
941, 944 (9th Cir. 2009); see also Aetna Health Inc. v.
Davlla, 542 U.S. 200, 207 (2004). More specifically, the
Ninth Circuit has held that this exception applies to
state-law causes of action that are completely preempted by
the civil enforcement provisions in § 502(a) of ERISA.
Id. Complete preemption under § 502(a) is
"really a jurisdictional rather than a preemption
doctrine, [as it] confers exclusive federal jurisdiction in
certain instances where Congress intended the scope of a
federal law to be so broad as to entirely replace any
state-law claim." Marin General Hosp., 581 F.3d
at 945 (citing Franciscan Skemp Healthcare, Inc. v. Cent.
States Joint Bd. Health & Welfare Trust Fund, 538
F.3d 594, 596 (7th Cir. 2008)).
Aetna Health Inc. v. Davila. 542 U.S. 200 (2004),
the Supreme Court held that a state-law claim is completely
preempted by ERISA where (1) the plaintiff could have brought
his claim under § 502(a) and (2) no other legal duty
supports the plaintiffs claim. Davila, 542 U.S. at 210. The
Court will apply this two-prong test to determine whether
Plaintiffs' second claim is subject to complete ERISA
First Prong: could the action have been brought ...