Camp v. Bimbo Bakeries USA, Inc., Case No. 18-cv-378-SM
| Decision Date | 03 April 2019 |
| Docket Number | Case No. 18-cv-378-SM |
| Citation | 2019 DNH 063 |
| Parties | David Camp and Keith Hadmack, on behalf of themselves and all others similarly situated, Plaintiffs v. Bimbo Bakeries USA, Inc. and Bimbo Foods Bakeries Distribution, LLC, Defendants |
| Court | U.S. District Court — District of New Hampshire |
Pending before the court are several motions for both substantive and procedural relief. The court will address each in turn.
In response to plaintiffs' claims that defendants (collectively "Bimbo Bakeries") improperly classified them as independent contractors, Bimbo Bakeries filed a counterclaim seeking damages for "unjust enrichment." In it, Bimbo Bakeries assert that:
if the Court finds that Counterclaim Defendants were employees of BFBD or its affiliates (which it should not), it should find that Counterclaim Defendants were enriched as a result of their status as independent contractors, including but not limited to, the revenue they generated and retained by selling certain products to their customers, the profits generated from the sale and/or partial sale of their distribution rights to other IBPs, the revenue generated pursuant to the Advertising Agreements they entered into with BFBD or its predecessor, and the tax deductions they took for the costs of operating their businesses.
Answer and Counterclaim (document no. 48) at 30 (emphasis supplied). In their memorandum of law (document no. 53), defendants more specifically identify the ways by which they claim plaintiffs were enriched (presumably, unjustly) by virtue of their relationships with Bimbo Bakeries.
Defendants' Objection (document no. 53) at 3.
That is likely an accurate summary of the benefits plaintiffs realized as a consequence of their relationships withBimbo Bakeries. Plaintiffs were "enriched" as a result of their efforts to sell Bimbo Bakeries' products. Plaintiffs were also "enriched" as a result of their agreements to perform various advertising services on behalf of Bimbo Bakeries. And, plaintiffs likely were able to avail themselves of various tax deductions available to independent contractors. But, none of that inured to Bimbo Bakeries' detriment. Indeed, Bimbo Bakeries were also "enriched" as a result of their relationships with plaintiffs and benefited financially from plaintiffs' efforts to both advertise and sell Bimbo Bakeries' products. And, by classifying plaintiffs as independent contractors Bimbo Bakeries no doubt avoided substantial employer tax (and perhaps insurance) obligations. That's typically how business relationships work - each side receives some benefit.
The problem with Bimbo Bakeries' counterclaim is that it fails to plausibly allege how plaintiffs (if properly viewed as employees) were unjustly enriched, at the expense of Bimbo Bakeries. Nor does it plausibly allege that plaintiffs obtained some benefit from Bimbo Bakeries that would be unjust or inequitable for them to retain if they are deemed to have been employees. See generally, Estate of Mortner v. Thompson, 170 N.H. 625, 631-32 (2018); Clapp v. Goffstown Sch. Dist., 159 N.H.206, 210, 977 A.2d 1021, 1025 (2009); Kowalski v. Cedars of Portsmouth Condo. Ass'n, 146 N.H. 130, 133 (2001).
Many of the cases upon which Bimbo Bakeries rely in support of their unjust enrichment claim are readily distinguishable and of minimal persuasive value. For example, in Parham v. Wendy's Co., 2015 WL 1243535, at *1 (D. Mass. Mar. 17, 2015), the court noted that the employer's counterclaim for unjust enrichment arose "from an allegation that [the plaintiff] recorded work hours when he was not actually performing work for Wendy's, causing Wendy's to pay him for time when he was not working." There is no similar claim in this case.
In a case somewhat analogous to this one (and upon which Bimbo Bakeries rely), exotic dancers claimed they were improperly treated as independent contractors rather than employees. The employer filed a counterclaim, asserting that if the dancers are properly viewed as employees, they should not be permitted to retain "private and semi-private performance fees." Ruffin v. Entm't of the E. Panhandle, 845 F. Supp. 2d 762, 766 (N.D. W. Va. 2011). Specifically, if the dancers were employees entitled to an hourly wage, the performance fees they charged customers (which were characterized as "service fees," rather than "tips") should have gone to their employer. Thus, whencalculating damages, the court concluded that those performance fees would be treated as an "offset" against the dancers' entitlements as employees. Id. at 769. See also McFeeley v. Jackson St. Entm't, LLC, 2012 WL 5928769, at *4 (D. Md. Nov. 26, 2012).
The persuasive value of cases like those involving the exotic dancers is, however, limited. The law is well-established that employees are entitled to retain "tips," while employer's are entitled to retain "service fees" when they are entered into the employer's gross receipts. It was also established in those cases (or at least assumed at the dismissal stage) that the performance fees the dancers charged customers of their employer were "service fees." Consequently, if the dancers were properly viewed as employees, they would not, as a matter of law, be entitled to retain their performance fees. See generally 29 C.F.R. § 531.55 (). See also McFeeley v. Jackson St. Entm't, LLC, supra; Doe v. Cin-Lan, Inc., 2010 WL 726710, at *6 (E.D. Mich. Feb. 24, 2010).
Here, however, there is no established principle of employment law that provides employees are not entitled to retain sums paid to them by their employer to advertise theemployer's goods and/or services. Nor is there any established principle of employment law precluding employees from retaining any profits made when they purchase an employer's products and re-sell them at a profit. Nor, of course, is there a principle of law establishing that an employer is entitled to an amount equal to any tax deductions that an employee may have erroneously taken.
"Unjust enrichment" is simply a poor fit to the facts alleged in this case. Nevertheless, the same principle of "offset" discussed in Ruffin will apply in this case should plaintiffs ultimately prevail. If it is determined that plaintiffs were employees of Bimbo Bakeries, and not independent contractors, their final recovery (if any) will take into account compensation they actually received from Bimbo Bakeries for their labor, as well as sums they should have received had they been properly treated as employees. Their recovery (if any) will likely amount to the difference between the two, and obviously not the total of the two. In the simplest of terms, suppose it is ultimately determined that, for all his labor on behalf of Bimbo Bakeries (advertising, selling, and delivering products) a plaintiff actually received $1,400 in a particular workweek. If it is also determined that, had he been compensated in accordance with the law, he would have received$1,500 in wages and overtime, he will be entitled to recover $100 in damages.
But, that there will likely be various offsets when calculating the total damages to which plaintiffs are entitled (should they ultimately prevail) does not compel the conclusion that Bimbo Bakeries have stated a viable common law claim for "unjust enrichment." They have not.
Bimbo Bakeries' counterclaim fails to plausibly allege the essential elements of a viable common law claim for unjust enrichment against plaintiffs. Accordingly, Bimbo Bakeries' unjust enrichment claim must be dismissed.
Bimbo Bakeries move for "partial reconsideration" of a "narrow aspect" of the court's order granting plaintiffs' motion for conditional certification. Specifically, Bimbo Bakeries assert that it would be inappropriate to send notice of a pending collective action under the FLSA to individuals who are subject to arbitration agreements. In support of that view, Bimbo Bakeries rely upon an opinion of the Court of Appeals for the Fifth Circuit that was issued approximately two weeks after this court's order of conditional certification. See In ReJPMorgan Chase & Co., 916 F.3d 494 (5th Cir. 2019). According to Bimbo Bakeries, the Fifth Circuit's opinion "is the first decision by an appellate court interpreting the text of the FLSA and the Supreme Court's controlling precedent in Hoffmann-LaRoche as it relates to the propriety of sending notice to individuals with binding arbitration agreements." Defendants' Memorandum (document no. 63-1) at 4. Thus, Bimbo Bakeries implicitly suggest that opinion is entitled to substantial deference.
In JPMorgan Chase, the collective of potential plaintiffs consisted of approximately 42,000 current and former JPMorgan Chase employees. But, the parties did not dispute that approximately 35,000 (or 85%) of those potential members of the collective were subject to binding arbitration agreements (and were thus precluded from participating in the collective action). Id. at 498. Given the absence of any disagreement about the existence or enforceability of those arbitration agreements, it is not surprising that the court held that "[w]here a preponderance of the evidence shows that the employee has entered into a valid arbitration agreement, it is error for a...
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