Boucher v. Shaw

• Court: U.S. Court of Appeals — Ninth Circuit
• Writing for the Court: Cudahy
• Citation: Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009)
• Decision Date: 27 July 2009
• Docket Number: No. 05-15454.,No. 05-15702.,05-15454.,05-15702.
• Parties: Thelma BOUCHER, Ardith Ballard, Joseph W. Kennedy III and Local 226, AFL-CIO, Plaintiffs-Appellants, v. Dan SHAW, Michael Villamor, James Van Woerkom, Does 1-50, Defendants-Appellees.

572 F.3d 1087

Thelma BOUCHER, Ardith Ballard, Joseph W. Kennedy III and Local 226, AFL-CIO, Plaintiffs-Appellants, v. Dan SHAW, Michael Villamor, James Van Woerkom, Does 1-50, Defendants-Appellees.

No. 05-15454.

No. 05-15702.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 15, 2007.

Filed July 27, 2009.

Richard G. McCracken, McCracken, Stemerman, Bowen and Holsberry, Las Vegas, NV, and Kristin L. Martin, Davis, Cowell & Bowe, LLP, San Francisco, CA, for the plaintiffs-appellants.

Constance L. Akridge and Matthew T. Milone, Jones Vargas, Las Vegas, NV, for the defendants-appellees.

Appeal from the United States District Court for the District of Nevada, Philip M. Pro, District Judge, Presiding. D.C. No. CV-04-01738-PMP.

Before: J. CLIFFORD WALLACE, RICHARD D. CUDAHY,^* and M. MARGARET McKEOWN, Circuit Judges.

CUDAHY, Circuit Judge:

Three former employees of the Castaways Hotel, Casino and Bowling Center (the Castaways) and their local union sued the Castaways' individual managers for unpaid wages under state and federal law. The district court dismissed the plaintiffs' claims. This appeal raises three issues: (1) whether the Castaways' individual managers can be held liable for unpaid wages under Nevada law; (2) whether the union has standing to raise the state law claim; and (3) whether the managers can be held liable under the Fair Labor Standards Act (FLSA). We certified the first issue to the Nevada Supreme Court as a question of first impression under Nevada law. The state court held that individual managers cannot be held liable as "employers," and therefore that claim was properly dismissed by the district court, making the issue of the union's standing moot. The only remaining issue is whether a claim exists under federal law. We hold that it does, and therefore reverse and remand the FLSA claim to the district court.

I. Background

The Castaways filed for Chapter 11 bankruptcy protection on June 26, 2003.¹ The individual plaintiffs were discharged in January 2004, when the Castaways was operating as the debtor-in-possession. On February 10, 2004, after the plaintiffs were discharged, the Chapter 11 petition was converted to a Chapter 7 liquidation, and the Castaways ceased operations. The individual plaintiffs, Ardith Ballard, Thelma Boucher and Joseph Kennedy III, filed suit in Nevada state court seeking to recover unpaid wages for themselves and for a class of Castaways employees.² Ballard alleges that she has not been paid for the last pay period that she worked at the Castaways. Boucher alleges that she was not paid for the final pay period until two weeks after her employment was terminated. All three individual plaintiffs allege that they have not been paid their accrued vacation and holiday pay. Culinary Workers Union, Local 226 (Local 226 or the union) seeks to recover wages that were withheld as dues from the paychecks of Thelma Boucher and other employees. The plaintiffs assert claims under Chapter 608 of the Nevada Revised Statutes and the FLSA, 29 U.S.C. § 206(a).

The defendants are three Castaways' managers. Dan Shaw was the Chairman and Chief Executive Officer of the Castaways at the time the plaintiffs were discharged. Michael Villamor was responsible for handling labor and employment matters at the Castaways. And James Van Woerkom was the Castaways' Chief Financial Officer. Shaw had a 70 percent ownership in the Castaways, and Villamor had a 30 percent ownership interest. The plaintiffs allege that each defendant had custody or control over the "plaintiffs, their employment, or their place of employment at the time that the wages were due."

The plaintiffs filed this lawsuit in Nevada state court on October 14, 2004. On December 21, 2004, Defendant Shaw removed the case to the United States District Court for the District of Nevada and filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Villamor and Van Woerkom separately filed motions to dismiss, alleging the same grounds for dismissal as Shaw. The district court granted the defendants' motions and dismissed all of the plaintiffs' claims. Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D.Nev. Jan. 25, 2005); Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D.Nev. Feb. 18, 2005); Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D.Nev. Apr. 11, 2005). The district court concluded that the defendants were not "employers" under Nevada law, Local 226 lacks standing to bring a claim under Nevada law and the plaintiffs cannot maintain a cause of action under the Fair Labor Standards Act against the defendants. Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL), slip op. at 1-2 (D.Nev. Jan. 25, 2005). The plaintiffs challenge each of these conclusions on appeal. We certified the state law question to the Nevada Supreme Court, and stayed the case pending its resolution. The Nevada Supreme Court has answered the state law question, and we incorporate that court's reasoning into our decision.

II. Discussion

This court reviews de novo dismissals for failure to state a claim under Fed. R.Civ.P. 12(b)(6). See Simon v. Hartford Life, Inc., 546 F.3d 661, 663-64 (9th Cir. 2008) (citation omitted). All allegations of material fact shall be taken as true and construed in the light most favorable to the nonmoving party. See id. at 664.

A. Whether Managers Can Be "Employers" Under State Law

Chapter 608 of the Nevada Revised Statutes provides a statutory scheme for wage protection. "An employer shall pay to the employee wages for each hour the employee works." Nev.Rev.Stat. § 608.016. "Whenever an employer discharges an employee, the wages and compensation earned and unpaid at the time of such discharge shall become due and payable immediately." Nev.Rev.Stat. § 608.020. "If an employer fails to pay: (a) Within 3 days after the wages or compensation of a discharged employee becomes due ... the wages or compensation of the employee continues at the same rate from the day he ... was discharged until paid or for 30 days, whichever is less." Nev. Rev.Stat. § 608.040(1).

The application of these statutes to the present case depends on whether the defendants were "employers" under Chapter 608. "`Employer' includes every person having control or custody of any employment, place of employment or any employee." Nev.Rev.Stat. § 608.011. Whether the defendants as individual managers can be held to be "employers" under § 608.011 is a question of first impression. Neither the Nevada Supreme Court nor the Ninth Circuit had published an opinion analyzing the definition of employer under Nevada Revised Statutes § 608.011. Because this question has significant implications for Nevada's wage protection law and because we could not be certain how the Nevada Supreme Court would resolve the matter, we certified the question to the Nevada Supreme Court. See Boucher v. Shaw, 483 F.3d 613 (9th Cir.2007).

The Nevada Supreme Court held that individual managers could not be found liable as "employers" under Chapter 608. Boucher v. Shaw, 124 Nev. 96, 196 P.3d 959, 960 (2008). The court explained that it would not expand the common law definition of "employer" to include individual managers without a clear expression of legislative intent. "At common law, an employment relationship was defined by agency principles, under which, unless otherwise agreed, an agent (e.g., a manager) for a disclosed principal (e.g., the employing company) does not become party to the employment contract for the principal's debts." Id. at 961. As stated above, the Nevada legislature has enacted a statutory definition of "employer," but that definition does not "unequivocally indicate[ ]" the legislature's intent to depart from the common law rule. Id. at 963. In particular, Nevada's statutory definition of "employer" does not include corporate "managers," "agents" or "officers" in an enumerated list of "employers," as is the case in the statutes of other states. Instead, the statute ambiguously provides that "`[e]mployer' includes every person having control or custody of any employment, place of employment or any employee," Nev.Rev.Stat. § 608.011, without defining "person," or offering guidance on what constitutes "control or custody." In the absence of clear legislative intent, the Nevada court refused to presume that the Legislature meant to equate individual managers with "employers." Id.

It follows that the managers in the present case cannot be held personally liable as "employers" under Chapter 608. The plaintiffs' state law claims were properly dismissed. Because the union is a plaintiff only with respect to the state law claim, the issue of the union's standing is moot and we do not reach it.

B. Whether Managers Can Be "Employers" Under the FLSA

The only remaining claim seeks unpaid wages under the FLSA. Ballard is the only named plaintiff who has sued under the FLSA. The FLSA provides that "[e]very employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce," a minimum wage. 29 U.S.C. § 206(a). "Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages." 29 U.S.C. § 216(b). Ballard alleges that the Castaways managers are individually liable for unpaid wages as "employers" under the FLSA. The FLSA defines "employer" as "any person acting directly or indirectly in the interest of an employer in relation to an employee ...." 29 U.S.C. § 203(d).

We have held that the definition of "employer" under the FLSA is not limited by the common law concept of "employer," but "`is to be given an expansive interpretation in order to effectuate the FLSA's...