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Abrams v. Peppermill Casinos, Inc.

United States District Court, D. Nevada

February 15, 2017

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,
v.
PEPPERMILL CASINOS, INC., a Nevada corporation; and DOES 1 through 100, inclusive, Defendants.

          ORDER

          MIRANDA M. DU, UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         Plaintiffs, 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 denied.

         Defendant 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.

         II. BACKGROUND

          In 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.)

         The 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.)

         III. MOTION FOR STAY (ECF No. 6)

         Defendant 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.

         IV. MOTION TO REMAND (ECF No. 7)

         Defendant 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.[1] (ECF No. 7 at 2, 5.) The Court disagrees and finds that complete preemption under ERISA is satisfied.

         Under 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)).

         In 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 preemption.

         1. First Prong: could the action have been brought ...


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