Reviving the FLSA claims of two house cleaners who alleged they were misclassified as independent contractors and shorted on pay, the Tenth Circuit partially reversed a district court’s order disposing of their action on timeliness grounds. Their complaint alleged that the employer knew the mandates of the FLSA and Colorado Wage Act (CWA) but willfully violated them. However, the district court said they did not allege sufficient facts to support their claim of willfulness, and so they could not avail themselves of the FLSA’s extended limitations period for willful violations. The statute of limitations is an affirmative defense though, the appeals court said, and the plaintiffs were not obliged at the pleading stage to anticipate that defense and fend it off with specific facts. Moreover, the allegations of willfulness in their pleadings were adequate anyhow (Fernandez v. Clean House, LLC, March 2, 2018, Hartz, H.).
Complaint. The plaintiffs filed suit alleging violations of the FLSA and Colorado law on August 24, 2016. They had begun working as house cleaners for the defendants in May 2013, and their employment ended in February and April of 2014, respectively. According to their complaint, they often worked 11–12 hours a day, up to 77 hours per week, but were misclassified as independent contractors and therefore were denied minimum wage pay, breaks, and overtime. The pleadings stated that the employer “knew of the FLSA and CWA’s requirements that it pay at least the minimum wage to all employees” and later, that the employer “willfully violated the mandates of the laws at issue here.”
Dismissed as untimely. Their claims would be time-barred under the FLSA’s two-year limitations period, but they argued the three-year limitations period applied because the employer’s violation of the Act was willful. Nonetheless, the court dismissed their FLSA claims as untimely (along with their state-law claims, which they did not challenge on appeal). Citing both Twombly and Iqbal, the court held that the willfulness allegation was not supported by sufficient factual allegations to be plausible.
The pleadings sufficed. Willfulness is not relevant to the elements of the employees’ wage claims, the Tenth Circuit noted, but only to the statute of limitations defense—an affirmative defense which the defendant must raise. The plaintiffs were not required to assert any facts at the pleading stage related to that defense; in fact, the appeals court pointed out, the federal rules impose no obligation on the plaintiff to file a responsive pleading even after the defendant has pleaded an affirmative defense. The district court erred in imposing such an obligation on the employees here.
There are occasions in which it was proper to dismiss a claim on the pleadings based on an affirmative defense, the appeals court acknowledged, but only when the complaint itself admits all the elements of this defense by alleging the factual basis for those elements. That principle didn’t apply in this case. The complaint did not include an admission that the FLSA violations were not willful. To the contrary, it asserted willfulness.
In some circumstances, a complaint might require more specific factual allegations to support a claim of willfulness, the appeals court also conceded. On this point, though, the Tenth Circuit looked favorably upon the Ninth Circuit’s fairly low hurdle, and rejected the notion that the pleadings at hand were inadequate. The complaint indicated that the defendant was a small enough company that it would know about the facts of the underlying conduct that allegedly violated the Act. Did it know about the pertinent requirements of the law, too? The appeals court thought such knowledge was plausible.
Policy argument fails. But if the plaintiffs’ argument holds sway, the employer warned, the three-year statute of limitations exception will swallow the two-year limitations period rule. And the result would be increased litigation costs to parties, as courts let unmeritorious claims sneak past the pleading stage into discovery. The appeals court wouldn’t hazard a guess as to how frequently this happens—that FLSA claims are brought within the sweet spot of more-than-two, but less-than-three years after an alleged violation. And it offered sympathy to defendants that are burdened with meritless claims. Yet it still found this argument unavailing. The holding here “does not represent a departure from the usual practice when defendants raise affirmative defenses, however meritorious they may be,” the court wrote. In such instances, the “first line of defense” would ordinarily be summary judgment, not dismissal on the pleadings.
Ultimately, the plaintiffs will have the burden of persuasion on the willfulness issue, the appeals court said. But not yet.
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