Scholzen v. Scholzen Prods. Co.

• Decision Date: 22 December 2020
• Docket Number: Case No. 4:20-cv-00019-DN-PK
• Parties: TIMOTHY J. SCHOLZEN, Plaintiff, v. SCHOLZEN PRODUCTS COMPANY d/b/a SCHOLZEN PRODUCTS COMPANY, INC., a Utah corporation, BRUCE BALLARD, an individual and REGGIE CAMPOS, an individual, Defendants.
• Court: U.S. District Court — District of Utah

TIMOTHY J. SCHOLZEN, Plaintiff, v. SCHOLZEN PRODUCTS COMPANYd/b/a SCHOLZEN PRODUCTS COMPANY, INC.,a Utah corporation, BRUCE BALLARD, an individualand REGGIE CAMPOS, an individual, Defendants.

Case No. 4:20-cv-00019-DN-PK

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

December 22, 2020

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

District Judge David Nuffer

Magistrate Judge Paul Kohler

Plaintiff Timothy J. Scholzen ("Mr. Scholzen") asserts claims against Defendants Scholzen Products Company, Inc. ("Scholzen Products"), Bruce Ballard ("Ballard"), and Reggie Campos ("Campos") for: (1) failure to pay overtime in violation of the Fair Labor Standards Act ("FLSA"); (2) violation of the Utah Payment of Wages Act ("UPWA"); (3) breach of contract; (4) violation of the duty of good faith and fair dealing; (5) conversion; (6) civil conspiracy; and (7) vicarious liability.¹ Defendants filed a motion seeking dismissal for failure to state a claim of the following claims: conversion, civil conspiracy, and violation of the duty of good faith and fair dealing as to Campos and Ballard.² Defendants also argue that the remaining claims should be limited by relevant statutes of limitations.

Because Mr. Scholzen fails to state a claim against Defendants for conversion and against Ballard and Campos for violation of the duty of good faith and fair dealing, Defendants' Motion is GRANTED as to those claims. Defendants' motion is also GRANTED as to some statute of limitations bars. Because the civil conspiracy claim is adequately pled, it is not dismissed.

Table of Contents

Standard of review .......................................................................................................................... 2

BACKGROUND ............................................................................................................................ 3

DISCUSSION ................................................................................................................................. 4

I. The Conversion Claim Fails ............................................................................................ 4

II. The Civil Conspiracy Claim Is Adequately Pled ............................................................. 5

III. Ballard and Campos Cannot Be Liable for Violation of the Contractual Duty of Good Faith and Fair Dealing ................................................................................................................ 6

IV. Statutes of Limitation Operate to Limit Several Claims .................................................. 7

A. The FLSA claim is untimely to the extent it is based on unpaid overtime that should have been paid before March 2, 2017 ......................................................................... 8

B. The UPWA claim is timely ....................................................................................... 11

C. The FLSA and UPWA limitations periods do not limit the remaining claims ......... 11

ORDER ......................................................................................................................................... 12

STANDARD OF REVIEW

Dismissal is appropriate under Fed. R. Civ. P. 12(b)(6) when the complaint, standing alone, is legally insufficient to state a claim on which relief may be granted.³ Each cause of action must be supported by sufficient, well-pleaded facts to be plausible on its face.⁴ "In determining facial plausibility, the Court's function 'is not to weigh potential evidence that theparties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient' when the asserted 'factual allegations are accepted as true.'"⁵ In reviewing the complaint, factual allegations are accepted as true and reasonable inferences are drawn in a light most favorable to the plaintiff.⁶ However, "assertions devoid of factual allegations" that are nothing more than "conclusory" or "formulaic recitation" of the law are disregarded.⁷

BACKGROUND

Mr. Scholzen is a current employee of Scholzen Products and has been employed by Scholzen Products for approximately 31 years.⁸ Scholzen Products employs Campos as its controller and Campos's actions, including payroll, are approved by Ballard.⁹ Mr. Scholzen alleges that Defendants have intentionally misclassified him as an exempt employee in order to avoid paying him overtime wages due and have otherwise unlawfully withheld wages over the course of the past seven years as part of a conspiracy to convert the wages to their own use.¹⁰ Mr. Scholzen further alleges that Defendants "required" him "to sign over his disability checks to convert to Defendants' own uses and purposes."¹¹ Additionally, he alleges that he "did not know the extent of Defendants' unlawful and unconscionable actions until August 2019,"¹² and that Defendants "intentionally concealed the reductions in Mr. Scholzen's wages by enteringincorrect information on Mr. Scholzen's paystub."¹³ On March 2, 2020, Mr. Scholzen filed this action.¹⁴ On July 21, 2020, he filed the Amended Complaint asserting a variety of statutory, contract, and tort claims against Defendants, and seeking compensatory and punitive damages for each cause of action.¹⁵

DISCUSSION

I. The Conversion Claim Fails.

"In Utah, a cause of action for conversion exists when: (i) there is willful interference with personal property; (ii) without lawful justification; (iii) by which the person entitled to the property is deprived of its use or possession; and (iv) the party alleging conversion was entitled to immediate possession of the property at the time of conversion."¹⁶ However, "[c]onversion of monies is not treated the same as the conversion of standard chattels. Rather, an action for conversion 'may be maintained for the recovery of money physically taken by Defendant from Plaintiff's possession,' but it 'will not lie to enforce a mere obligation to pay.'"¹⁷

Here, Mr. Scholzen's conversion claim is based on Defendants allegedly "withh[olding] and retain[ing] [his] lawful wages for their own uses and purposes."¹⁸ The conversion claim is thus clearly an attempt "to enforce a mere obligation to pay" and accordingly fails as a matter of law.¹⁹

Mr. Scholzen also alleges that Defendants "required" Mr. Scholzen to sign over his disability checks while Mr. Scholzen was on disability for a workplace injury.²⁰ But Mr. Scholzen does not mention this allegation in connection with his conversion claim.²¹ And even if this additional allegation is considered, Mr. Scholzen does not explain how, when, or why Defendants "required" this of him, or provide any additional facts to support the conclusion that Defendants' conduct was "wrongful[]"²² or "without lawful justification"²³ as required for a conversion claim. Therefore, Mr. Scholzen does not submit "well-pleaded facts" to make this cause of action "plausible on its face."²⁴

Because Mr. Scholzen fails to state a legally sufficient claim for conversion, that claim is dismissed without prejudice.²⁵

II. The Civil Conspiracy Claim Is Adequately Pled.

"Under Utah law, civil conspiracy requires proof of five elements: '(1) a combination of two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result thereof.'"²⁶ "[T]o satisfy the fourth element of a civil conspiracy, case law requires that a plaintiff show that the defendant participated in an underlying tort."²⁷ Defendants argue thatbecause Mr. Scholzen's conversion claim fails (as stated above), the civil conspiracy claim must fail as well. That is incorrect.

In support of his civil conspiracy claim, Mr. Scholzen alleges, in relevant part, as follows:

Ballard and Campos, with permission from Scholzen Products, engaged in civil conspiracy with the continued plans to commit the unlawful acts of failing to pay Mr. Scholzen overtime compensation, withholding money from Mr. Scholzen's paychecks to which they had no right and forging documents associated with Mr. Scholzen's commissions and wage to issue paychecks that were intentionally incorrect.²⁸

The underlying tort requirement is satisfied by the alleged conspiracy to violate Mr. Scholzen's statutory rights to overtime compensation and to be paid the full amount of wages earned.²⁹ Therefore, the civil conspiracy claim is not dismissed.

III. Ballard and Campos Cannot Be Liable for Violation of the Contractual Duty of Good Faith and Fair Dealing.

In Utah, "a covenant of good faith and fair dealing inheres in most, if not all, contractual relationships."³⁰ When parties sign a contract, "each party impliedly promises that he will not intentionally or purposely do anything which will destroy or injure the other party's right to receive the fruits of the contract."³¹

Here, Ballard and Campos are not alleged to be parties to the employment contract between Scholzen Products and Mr. Scholzen,³² so they (Ballard and Campos) cannot be liable for violation of the duty of good faith and fair dealing arising under that contract.

Mr. Scholzen's arguments to the contrary are unpersuasive. He contends that his "[Amended] [C]omplaint, read as a whole, and given a specific cause of action for vicarious liability, does allege contract claims against Defendants Ballard and Campos."³³ But the referenced "vicarious liability" claim seeks to hold Scholzen Products liable for the actions of Ballard and Campos, not the reverse.³⁴ He also argues that "[a]s agents of Defendant Scholzen Products, and in fiduciary roles, Ballard and Campos absolutely have contractual obligations."³⁵ But he cites no authority and engages in no significant analysis to support this vague contention, or to show the applicability of any exception to "[t]he general rule . . . that a corporation is an entity separate and distinct from its officers, shareholders and directors and that they will not be held...