Kuntze v. Josh Enters., Inc.

• Decision Date: 27 February 2019
• Docket Number: Case No.: 2:18cv38
• Citation: 365 F.Supp.3d 630
• Parties: Suzanne KUNTZE, Plaintiff, v. JOSH ENTERPRISES, INC., d/b/a, Jackson Hewitt Tax Service, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

365 F.Supp.3d 630

Suzanne KUNTZE, Plaintiff,

v.JOSH ENTERPRISES, INC., d/b/a, Jackson Hewitt Tax Service, Defendant.

Case No.: 2:18cv38

United States District Court, E.D. Virginia, Norfolk Division.

Signed February 27, 2019

Matthew James Weinberg, Gunther Law Group, Virginia Beach, VA, for Plaintiff.

Brittany Marie Wrigley, Joshua Lee Jewett, Pierce McCoy, PLLC, Norfolk, VA, for Defendant.

OPINION AND ORDER

Mark S. Davis, CHIEF UNITED STATES DISTRICT JUDGE

This matter is before the Court on a motion to dismiss, for lack of subject matter jurisdiction and for failure to state a claim, filed by defendant Josh Enterprises, Inc. ("Defendant") pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Def. Mot., ECF No. 9. Plaintiff Suzanne Kuntze ("Plaintiff") claims that Defendant violated the Fair Labor Standards Act ("FLSA") by purposefully misclassifying her as exempt from overtime, failing to pay her overtime, and failing to pay her at her regular rate for mandatory training hours. Defendant contends that (1) it already paid Plaintiff the money to which she is entitled under the "fluctuating workweek" calculation for overtime pay, thus mooting Plaintiff's overtime claim and depriving the Court of jurisdiction; (2) Plaintiff failed to state a claim for unpaid regular time; and (3) even if Plaintiff amends her claim for unpaid regular time, the claim would be moot because Defendant already paid more than full relief. Plaintiff responds that (1) the fluctuating workweek method does not apply to the overtime claim advanced in this case and, therefore, her claim for overtime is not moot; and (2) she adequately alleged a violation of the FLSA for unpaid regular hours. Alternatively, Plaintiff requests that she be granted leave to amend the record, or that the Court permit the parties to conduct discovery, and that Plaintiff be granted leave to amend her complaint after discovery.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

Plaintiff began working for Defendant, a tax service company, in 2015 after Defendant acquired ownership of Plaintiff's previous employer. Plaintiff worked for her previous employer year-round since 2005. Compl. ¶ 9, ECF No. 1. In 2015, after taking over the company, Defendant gave Plaintiff the title of "Manager" and had her sign a new employment agreement. Compl. ¶ 10-11. Under the new agreement, Plaintiff worked as a seasonal employee making a bi-weekly salary of $ 1,280.00 during "tax season." Compl. ¶ 13; Pl.'s Ex. B, ECF No. 1-2. During the off season, she worked reduced hours at an hourly wage. Compl. ¶ 14-15. Plaintiff alleges that, notwithstanding her title as "Manager," Defendant took away her managerial job duties such as the ability to hire, fire, schedule, and supervise employees, reducing her responsibilities to that of a "regular customer service tax preparer." Compl. ¶ 12.

At the end of 2015, Plaintiff was required to sign a new employment agreement to keep her position. Compl. ¶ 16. The agreement kept Plaintiff on a bi-weekly salary of $ 1,280.00 during the tax season and changed her title to "Shift Supervisor." Compl. ¶ 16; Pl.'s Ex. C, ECF No. 1-3. At the end of 2016, Defendant required Plaintiff to sign a new employment agreement which set her bi-weekly salary at $ 1,330.00 for the tax season. Compl. ¶ 20; Pl.'s Ex. D, ECF No. 1-4. None of the agreements capped Plaintiff's tax season hours, but all three required Plaintiff to clock-in and out. Pl.'s Exs. B, C, D. The agreements also noted that Defendant would schedule Plaintiff's hours "to meet [Defendant's] customer demands because customer demand fluctuates throughout Tax Season." Pl.'s Exs. B, C, D.

In a letter dated August 11, 2017, Plaintiff requested a $ 60,000 payment from Defendant to compensate her for unpaid overtime and regular time. Def.'s Ex. A, ECF No. 10-1. Defendant responded via counsel on November 18, 2017, with a letter stating that, while Defendant maintained that Plaintiff was exempt from overtime, it would nonetheless compensate Plaintiff for overtime based on the fluctuating workweek methodology. Def.'s Ex. C, ECF No. 10-3. With the letter, Defendant issued two checks purportedly "in full satisfaction of [Plaintiff's] claims against [her] employer." Def.'s Ex. C. The letter explained that one check, in the amount of $ 5,977.72, was for uncompensated overtime calculated based on half of her regular hourly rate under the fluctuating workweek method, plus an additional, equal amount, for liquidated damages. Def.'s Ex. C. The second check, which was in the amount of $ 267.78, was intended to compensate Plaintiff at her regular hourly rate for the sixteen and a half regular hours that she spent completing mandatory training. Def.'s Ex. C. Plaintiff did not cash the two checks and instead filed her complaint in this case on January 19, 2018. Mem. in Support of Def.'s Mot. to Dismiss, ECF No. 10 ; Compl., ECF No. 1.

The day before Plaintiff filed her complaint, counsel for Defendant sent a letter to Plaintiff's counsel highlighting issues raised during an earlier phone conversation. Def.'s Ex. D, ECF No. 10-4. The letter again emphasized that Defendant believed Plaintiff was exempt from overtime pay, but claimed that even if she was not, Defendant had already given Plaintiff every dollar to which she was entitled under the proper calculation method in this jurisdiction. Def.'s Ex. D. Counsel for Plaintiff replied to Defense counsel's letter on January 19, 2018. Def.'s Ex. E, ECF No. 10-5. The letter from Plaintiff's counsel alleged that Defendant willfully misclassified Plaintiff as "exempt" from overtime payment, argued that the fluctuating workweek method was not applicable in this case, and demanded that Plaintiff be paid based on a time-and-a-half calculation of overtime. Def.'s Ex. E. The letter claimed Plaintiff sought a total of $ 29,298.90 as a settlement payment, which covered overtime calculated at the time-and-a-half rate, unpaid training time at her regular rate, liquidated damages, and attorney's fees. Def.'s Ex. E.

On April 12, 2018, counsel for Defendant sent Plaintiff's counsel two cashier's checks, one for $ 267.78 as payment for training hours at Plaintiff's regular hourly rate, and one for $ 5,980.10 as payment for Plaintiff's overtime hours plus liquidated damages.¹ Def.'s Ex. F, ECF No. 10-6. The facts in the record do not state whether Plaintiff cashed or deposited the cashier's checks.

B. Procedural Background

Defendant filed the instant motion to dismiss on April 16, 2018. Def. 's Mot., ECF No. 9. On July 11, 2018, the Court issued an order directing the parties to schedule oral argument on the motion to dismiss and to address controlling case law of the United States Court of Appeals for the Fourth Circuit that applied the half-time calculation of the fluctuating workweek method to misclassification cases. Order, ECF No. 17. The Court also directed Plaintiff to be prepared to address how discovery could alter the amount of damages recoverable, and whether willful misrepresentations of entitlement to overtime have any relevance to civil damages, in light of the FLSA's provision regarding criminal prosecution for willful violations. Order, ECF No. 17. The Court then held a hearing on the motion to dismiss on September 25, 2018.

II. LEGAL STANDARD

A. 12(b)(1) Motion to Dismiss

1. Facial v. Factual Challenge

A motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction may attack a complaint on its face, insofar as the complaint fails to allege facts upon which the court can base jurisdiction, or, as is the case here, it may attack the truth of any underlying jurisdictional allegations contained in the complaint. Beck v. McDonald, 848 F.3d 262, 270 (4th Cir. 2017) ; Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). In the former situation, known as a facial challenge, the court is required to accept all of the complaint's factual allegations as true, "and the plaintiff, in effect, is afforded the same procedural protection as he would receive under a 12(b)(6) consideration." Adams, 697 F.2d at 1219.

In the latter situation, known as a factual challenge, "the district court may regard the pleadings as mere evidence² on the issue and may consider evidence outside the pleadings." Velasco v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004) (citing Adams, 697 F.2d at 1219 ). In explaining how district courts should evaluate evidence presented in a factual challenge, the United States Court of Appeals for the Fourth Circuit has indicated that it depends on whether the jurisdictional facts are intertwined with the merits facts. Kerns v. United States, 585 F.3d 187, 196 (4th Cir. 2009). Both scenarios are discussed below.

2. Facts Not Intertwined

When jurisdictional facts are not intertwined with the merits, the trial court may weigh evidence and resolve factual disputes to determine its jurisdiction.³ See Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) ; Adams, 697 F.2d at 1219 ; 2 Milton I. Shador & Mary P. Squiers, Moore's Federal Practice - Civil § 12.30 (2018); 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (3d ed. 2004). But see Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (applying a summary judgment standard in a case where jurisdictional facts were not intertwined with merits facts, rather than weighing the evidence and resolving factual disputes).⁴ When such jurisdictional and merits facts are not intertwined, the plaintiff bears the burden of proving jurisdiction by a preponderance of the evidence and may present "affidavit[s], depositions or live testimony" to meet its burden. Adams, 697 F.2d at 1219 ; accord United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 337-48 (4th Cir. 2009).

As footnote 3 notes, there are published Fourth Circuit cases that apply a summary judgment...