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Guerra v. Guadalajara

United States District Court, W.D. Virginia, Charlottesville Division

July 7, 2016

REYNA GUERRA, et al., Plaintiffs,


          Hon. Glen E. Conrad Chief United States District Judge

         In the instant action, Reyna Guerra and Cecelia Serrato assert claims under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, and Virginia common law against their former employer, Guadalajara, IV ("Guadalajara"). Guadalajara has moved for judgment on the pleadings with respect to the plaintiffs' common law conversion claim. The court held a hearing on the motion on June 20, 2016. For the following reasons, the motion will be denied.


         The following facts, taken from the plaintiffs' complaint, are accepted as true for purposes of the defendant's motion for judgment on the pleadings. See W.C. & A.N. Miller Dev. Co. v. Cont'l Cas. Co., 814 F.3d 171, 176 (4th Cir. 2015).

         Guadalajara is a Mexican restaurant in Albemarle County, Virginia. The plaintiffs worked as servers at the restaurant for varying periods between 2009 and 2015. They normally worked at least five days a week for a total of more than forty hours.

         The plaintiffs were paid $2.15 per hour by the defendant. They also received an amount in tips each day that was equivalent to approximately 15 to 18% of their total daily sales. At the end of the day, the plaintiffs were allowed to keep part of the tips that they received from restaurant patrons. However, the defendant took a portion of the plaintiffs' tips -- specifically, 3% of the plaintiffs' daily sales - and "kept it for itself." Compl. ¶ 5; see also id. at ¶¶ 32-33 ("Out of the total gross sales each of them brought into the restaurant each night, Mses. Guerra and Serrato had to pay back three percent to Defendant out of their tips .... They never received back any of the three percent retained by the restaurant."). The plaintiffs allege that the defendant "did not distribute this money through a valid tip pool to other employees who customarily and regularly receive tips, " and that the defendant "offered them different explanations for the purpose of the three percent deduction throughout their employment." Id. at ¶¶ 34-35.

         On February 25, 2016, the plaintiffs filed the instant action against Guadalajara. In Count I of the complaint, the plaintiffs claim that the defendant was not entitled to a tip credit under § 203 (m) of the FLSA, and thus violated § 206 of the FLSA by paying them less than the statutory minimum wage.[1] The plaintiffs also claim that the defendant violated § 207 of the FLSA by failing to pay them proper overtime wages.[2] In Count II of the complaint, the plaintiffs assert a claim for conversion based on the defendant's retention of tips earned by the plaintiffs.

         Guadalajara has moved for judgment on the pleadings as to Count II. The defendant argues that the conversion claim is preempted by the FLSA and must be dismissed.

         Standard of Review

         Rule 12(c) of the Federal Rules of Civil Procedure permits a party to move for judgment on the pleadings. In reviewing a Rule 12(c) motion filed by a defendant, the court applies the same standard that would apply to a Rule 12(b)(6) motion to dismiss for failure to state a claim. Independence News. Inc. v. City of Charlotte. 568 F.3d 148, 154 (4th Cir. 2009). The court must accept all of the factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiffs. Burbach Broad. Co. v. Elkins Radio Corp., 278 F.3d 401, 406 (4th Cir. 2002). To survive a motion for judgment on the pleadings, the complaint must contain sufficient facts "to raise a right to relief above the speculative level" and "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).


         The Supremacy Clause of the Constitution renders federal law "the supreme Law of the Land." U.S. Const. Art. VI, cl. 2. "As a result, federal statutes and regulations properly enacted and promulgated can nullify conflicting state or local actions." College Loan Corp. v. SLM Corp., 396 F.3d 588, 595 (4th Cir. 2005). There are three ways in which federal law may preempt state law under the Supremacy Clause: (1) by "express preemption, " which occurs when "Congress expressly declares its intent to preempt state law"; (2) by "field preemption, " which occurs "when federal law so thoroughly occupies a legislative field as to make reasonable the inference that Congress left no room for the states to supplement it"; and (3) by "conflict preemption, " which occurs "when compliance with both federal and state regulations is a physical impossibility, or when state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Pinney v. Nokia, Inc., 402 F.3d 430, 453, 457 (4th Cir. 2005) (internal citations and quotation marks omitted). In this case, Guadalajara invokes the third class of preemption, particularly as it was analyzed and applied by the United States Court of Appeals for the Fourth Circuit in Anderson v. Sara Lee Corporation, 508 F.3d 181, 191 (4th Cir. 2007).[3]

         In Anderson, the Fourth Circuit concluded that FLS A-based claims for breach of contract, negligence, and fraud were preempted under the subset of conflict preemption referred to as "obstacle preemption, " which exists when '"state law stands as an obstacle to the accomplishment of the full purposes and objectives of federal law.'" Anderson, 508 F.3d at 191-192, 194 (quoting Worm v. Am. Cyanamid Co., 970 F.2d 1301, 1305 (4th Cir. 1992)). The plaintiffs in Anderson alleged that, by failing to compensate workers for time spent complying with the company's mandatory uniform policy, "Sara Lee violated the 'applicable wage and hour law, ' i.e., the FLSA." 508 F.3d at 184. Rather than pleading claims directly under the FLSA, the plaintiffs "invoke[d] state law... as the source of remedies for the alleged FLSA violations." Id. at 193. For instance, the plaintiffs alleged, as part of their negligence claim, that Sara Lee carelessly failed to pay wages due under the FLSA; they alleged, as part of their contract claim, that Sara Lee breached a promise to pay FLSA-mandated wages; and they alleged, as part of their fraud claim, that Sara Lee willfully failed to pay for compensable time under the FLSA. Id. Thus, the plaintiffs' state law claims "essentially require[d] the same proof as claims asserted under the FLSA itself." Id.

         In analyzing whether the plaintiffs' claims stood as an obstacle to the accomplishment of the FLSA's purposes and objectives, the Fourth Circuit emphasized that "the FLSA provides an unusually elaborate enforcement scheme, " which, "with respect to the minimum wage and overtime compensation requirements, " includes "the authorization for workers to file private actions, in state or federal court, to recover unpaid wages, liquidated damages, and costs and attorney's fees." Id. at 192. In light of this enforcement scheme, the Fourth Circuit noted that there could not be the exceptionally strong presumption against preemption of state remedies that would be warranted if the FLSA did not provide federal remedies. Id. Nonetheless, because "the mere existence of a federal regulatory or enforcement scheme . . . does not by itself imply preemption of state remedies, " the Court looked for "special features warranting preemption, " such as "the provision of exclusive remedies for enforcing rights expressly guaranteed by the federal statute." Id. at 193-94 (internal citations and quotation marks omitted). Relying on its previous decision in Kendall v. City of Chesapeake, 174 F.3d 437 (4th Cir. 1999), in which it had held that plaintiffs could not use a § 1983 action to enforce their rights to overtime compensation under the FLSA, the Fourth Circuit concluded that the FLSA provides "exclusive remedies ... for violations of its mandates." Id. at 194. "Because the FLSA's enforcement scheme is an exclusive one, " the Fourth Circuit further concluded that the plaintiffs' "FLSA-based ...

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