Employment Law Daily Collective action wage claims by exotic dancers revived; proof of employee status not jurisdictional
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Tuesday, August 20, 2019

Collective action wage claims by exotic dancers revived; proof of employee status not jurisdictional

By Ronald Miller, J.D.

When determining whether a statutory threshold is a jurisdictional barrier, the Ninth Circuit asks whether Congress clearly labeled the requirement as jurisdictional and whether the requirement is located in a jurisdictional-granting provision; if so, Congress likely intended it to be jurisdictional.

A federal district court erred in dismissing with prejudice a suit brought by exotic dancers for alleged minimum wage and overtime violations against the club where they worked for lack of subject matter jurisdiction because the dancers did not prove at the outset of the case that they were employees rather than independent contractors, ruled the Ninth Circuit. The appeals court pointed out that Congress did not clearly label the FLSA employment status provision as jurisdictional, and Sections 203(e) and 216(b) are not located in jurisdictional-granting provisions of the statute. Moreover, courts have not historically treated the employment status provision as jurisdictional. Noting that the dancers alleged numerous facts supporting their claims that the club owed them wages because they are employees, the appeals court found their claims were not so patently without merit as to warrant dismissal for lack of subject matter jurisdiction (Tijerino v. Stetson Desert Project, LLC dba Le Girls Cabaret, August 16, 2019, Tashima, A).

Wage claims by exotic dancers. Three exotic dancers brought claims under the FLSA and Arizona state law against the strip club at which they worked. Initially, each dancer filed a separate complaint against the club. They alleged the club failed to pay them any wages in violation of the Arizona Minimum Wage Act (AMWA). Separately, two of the dancers alleged that the employer failed to pay them overtime wages in violation of the FLSA and willfully failed to pay their wages for labor in violation of the Arizona Wage Law.

One of the dancers filed her complaint as a collective action. The dancer later filed a motion to consolidate the dancers’ cases, which the district court granted. She also filed a motion for conditional certification and to authorize notice to putative class members.

The district court denied the dancers’ motion to conditionally certify an opt-in class and dismissed the suit with prejudice for lack of subject matter jurisdiction because the dancers did not prove at the outset of the case that they were employees rather than independent contractors.

Subject matter jurisdiction. The Ninth Circuit found the district court erred in concluding that it lacked subject matter jurisdiction. In order to determine whether the district court had subject matter jurisdiction, the appeals court asked two questions. First, whether the employment status provision, 29 U.S.C. § 203(e), is a jurisdictional limitation on the FLSA’s coverage such that it prevents the dancers from moving forward with their claims. Second, it asked whether the dancers’ complaints survive the well-pleaded complaint rule to invoke federal question subject matter jurisdiction.

Here, the appeals court ruled that the dancers’ employment status was a merits-based determination, not an antecedent jurisdictional issue. In determining whether a statutory provision constitutes a jurisdictional limitation or an “essential ingredient” of a claim, the Supreme Court has set forth a bright-line test. A limitation on a statute’s scope counts as a jurisdictional limitation only if Congress clearly “intended” it to be jurisdictional such that courts should raise the issue “on their own motion.” Otherwise courts should treat the statutory threshold as nonjurisdictional.

In Arbaugh v. Y & H Corp., a 2006 decision, the Supreme Court held that, “if subject matter jurisdiction turns on contested facts, the trial judge may be authorized to review the evidence and resolve the dispute on her own. If satisfaction of an essential element of a claim for relief is at issue, however, the jury is the proper trier of contested facts.” Subsequently, in Reed Elsevier, Inc. v. Muchnick, a 2010 decision, the Court reasoned that courts should determine whether a statutory provision is jurisdictional by looking at the provision’s “text and structure,” as well as “context, and relevant historical treatment.”

Employment status provision. In this case, the appeals court concluded that Congress did not clearly label the FLSA employment status provision as jurisdictional. Section 216(b)’s requirement that employers be liable to employees for violations of the FLSA is not clearly labeled jurisdictional. Moreover, the court pointed that the Congress defined the term “employee” in Section 203(e) to mean “any individual employed by an employer.” There was no indication that the criterion of a plaintiff being an “employee” is in any way related to subject matter jurisdiction. Further, Section 203(e) and Section 216(b) are not located in jurisdiction-granting provisions of the statute.

Moreover, courts have not historically treated Section 203(e) and Section 216(b)’s employment status provisions as jurisdictional. Thus, there was no support for the district court’s theory that the employment status provision constitutes an antecedent jurisdictional issue, and the Ninth Circuit found no reasons that necessitate the provision be construed as jurisdictional.

In summary, the Ninth Circuit concluded that under the Arbaugh test, it is clear that the FLSA’s employment status provision in Section 203(e) and Section 216(b) should be construed as nonjurisdictional. Importantly, Congress did not state that the statute’s employment status provision was jurisdictional, and Sections 203(e) 216(b) are not located in jurisdictional-granting provisions of the statute. Finally, courts have not historically treated the employment status provision as jurisdictional.

Substantial issue of federal law. Additionally, the appeals court determined that the dancers’ complaints facially alleged substantial issues of federal law: whether they could collectively recover damages under Section 216(b) for the club’s failure to pay them the required minimum wage and the required overtime rate for hours worked in excess of 40 per week. The dancers alleged numerous facts supporting their claims that the club owes them wages because they are employees under the FLSA, and Arizona state law. Further, the claims of the dancers were not “wholly insubstantial and frivolous,” and were not so patently without merit as to warrant dismissal for lack of subject matter jurisdiction.

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