Simmons v. Mortgage

Decision Date21 January 2011
Docket NumberNo. 09–2147.,09–2147.
Citation634 F.3d 754
PartiesMa'lissa SIMMONS, on behalf of themselves and all others similarly situated; Monterrus Marshall, on behalf of themselves and all others similarly situated; Yolanda Carraway, on behalf of themselves and all others similarly situated; Delana Pruitt, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,v.UNITED MORTGAGE AND LOAN INVESTMENT, LLC; Arthur E. Kechijian; Larry E. Austin; Austin Investments, L.P.; Kechijian Investments, L.P.; UMLIC Consolidated, Inc.; UMLIC–Seven Corporation; UMLIC Holdings, LLC; United Mortgage Holdings, LLC; United Mortgage Loan and Investment, LLC, Defendants–Appellees.
CourtU.S. Court of Appeals — Fourth Circuit

OPINION TEXT STARTS HERE

ARGUED: Narendra K. Ghosh, Patterson Harkavy, LLP, Chapel Hill, North Carolina, for Appellants. Kevin V. Parsons, Smith, Parsons & Vickstrom, PLLC, Charlotte, North Carolina, for Appellees. ON BRIEF: Ann E. Groninger, Patterson Harkavy, LLP, Charlotte, North Carolina; Burton Craige, Patterson Harkavy, LLP, Raleigh, North Carolina, for Appellants. Aaron M. Christensen, Smith and Christensen, LLP, Charlotte, North Carolina, for Appellees.Before MOTZ and KEENAN, Circuit Judges, and HAMILTON, Senior Circuit Judge.Affirmed in part; vacated and remanded in part by published opinion. Senior Judge HAMILTON wrote the opinion, in which Judge MOTZ and Judge KEENAN joined.

OPINION

HAMILTON, Senior Circuit Judge:

The primary question presented in this appeal is whether the district court erred in holding that the contents of a particular letter from defense counsel to counsel for the plaintiffs, as clarified by a follow-up letter from defense counsel thirteen days later, rendered moot the plaintiffs' claims for unpaid overtime wages in a collective action under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201–219, such that a live case or controversy no longer existed with respect to such claims, requiring their dismissal for lack of subject matter jurisdiction. We answer this question in the affirmative, and therefore, vacate the district court's dismissal of the plaintiffs' FLSA claims and remand for further proceedings consistent with this opinion.

I

Defendant United Mortgage and Loan Investment, LLC (United Mortgage), headquartered in Charlotte, North Carolina, is in the business of buying and servicing distressed mortgages, business loans, and consumer loans. Defendants Arthur Kechijian and Larry Austin are both corporate officers of United Mortgage. At various times, United Mortgage employed Ma'lissa Simmons, Monterrus Marshall, Yolanda Carraway, and Delana Pruitt (the Named Plaintiffs) as Junior Asset Managers.

As a general rule, the FLSA prohibits an employer from requiring “any of his employees” to work more than forty hours per workweek unless the employee receives overtime compensation “at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). However, “any employee employed in a bona fide executive, administrative, or professional capacity ... (as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor] ...),” is exempt from this general rule. Id. at § 213(a)(1). “An employer bears the burden of proving that a particular employee's job falls within [this] exemption.” Darveau v. Detecon, Inc., 515 F.3d 334, 337 (4th Cir.2008). An employer who violates the FLSA's overtime provision is “liable to the employee or employees affected in the amount of their ... unpaid overtime compensation ... and in an additional equal amount as liquidated damages....” 29 U.S.C. § 216(b).

On October 17, 2007, the Named Plaintiffs filed their initial complaint (the Complaint) in North Carolina state court against United Mortgage, Arthur Kechijian, and Larry Austin (the Original Defendants). The Complaint alleged the Original Defendants: (1) paid their Junior Asset Managers as “salaried ‘exempt’ employees,”; (2) routinely required Junior Asset Managers to work in excess of forty hours per week; (3) “refused to pay them for hours worked in excess of 40 hours per week,”; (4) in August 2004, began requiring Junior Asset Managers to fill out time cards documenting the hours they had worked; and (5) following an investigation by the United States Department of Labor in 2006, instructed Junior Asset Managers to stop filling out the time cards. (J.A. 24). Under the heading FIRST CLAIM FOR RELIEF, the Complaint alleged [t]he position of Junior Asset Manager does not meet the standards for exemption under the FLSA, 29 U.S.C. § 213(a)(1) and alleged the Original Defendants violated the FLSA by willfully: (1) failing to pay the Named Plaintiffs and other similarly situated employees overtime wages for hours worked in excess of forty hours per week; (2) regularly and routinely requiring the Named Plaintiffs and other similarly situated employees to work off the clock; (3) failing to make, keep, and preserve accurate time records sufficient to determine the wages and hours of the Named Plaintiffs and other similarly situated employees; and (4) other practices. Additionally, the Complaint alleged that the Original Defendants were “employer[s],” within the meaning and definition of the FLSA, 29 U.S.C. § 203(d), and that the Named Plaintiffs were “employee[s] of the Original Defendants, within the meaning and definition of the FLSA, id. at § 203(e).

The Named Plaintiffs brought this portion of the case as an opt-in collective action, pursuant to 29 U.S.C. § 216(b), on behalf of themselves and “on behalf of all persons ... who were, are, or will be employed by United Mortgage in the position of Junior Asset Manager on or after the date that is three years before the filing of this complaint.” (J.A. 20). Specifically, 29 U.S.C. § 216(b) provides that an FLSA action for overtime compensation “may be maintained against any employer ... in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.” Id. However, unlike in a class action filed pursuant to Federal Rule of Civil Procedure 23 or a comparable state court rule, in a collective action under the FLSA, a named plaintiff represents only himself until a similarly-situated employee opts in as a party plaintiff by giving “his consent in writing to become such a party and such consent is filed in the court in which such action is brought.” Id. See Sandoz v. Cingular Wireless, LLC, 553 F.3d 913, 919 (5th Cir.2008) ([U]nlike in a Rule 23 class action, in a FLSA collective action the plaintiff represents only him- or herself until similarly-situated employees opt in.”). Also notable is the fact that, in an action to recover unpaid overtime and liquidated damages under the FLSA, [t]he court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b).

As relief, the Named Plaintiffs sought, on behalf of themselves and any opt-in collective action plaintiffs, “the amount of their respective unpaid wages and overtime compensation, and liquidated damages, as provided by the FLSA, 29 U.S.C. § 216(b); injunctive relief requiring defendants to cease and desist from their violations of the FLSA described herein and to comply with the FLSA; and such other legal and equitable relief as the Court deems just and proper.” (J.A. 27). Additionally, the Named Plaintiffs sought to recover, on behalf of themselves and the opt-in collective action plaintiffs, “their attorneys' fees and the costs, as provided by the FLSA, 29 U.S.C. § 216(b).” Id.

Based upon the same set of facts underlying the Named Plaintiffs' FLSA claims, under the heading SECOND CLAIM FOR RELIEF, the Complaint alleged the Original Defendants violated various provisions of the North Carolina Wage and Hour Act (NCWHA), N.C. Gen.Stat. § 95–25.1 et seq. Pursuant to Rule 23 of the North Carolina Rules of Civil Procedure, this part of the case was styled as a purported class action in which the Named Plaintiffs sought to represent a class of “all persons ... who were, are, or will be employed by United Mortgage in the position of Junior Asset Manager on or after the date that is two years before the filing of this complaint (the ‘NCWHA Class Period’).” 1 (J.A. 21). The Complaint specifically alleged the Original Defendants willfully violated the NCWHA by: (1) failing to pay the Named Plaintiffs and other members of the NCWHA Class their earned wages for all hours worked; (2) by failing to pay the same persons overtime pay; (3) by failing to make, keep, and preserve accurate time records sufficient to determine their wages and hours; (4) by failing to provide them lawful notice of company policies and practices concerning compensation or notice of any changes in such policies and practices; and (5) by other practices. With respect to relief, the Named Plaintiffs sought to recover, on behalf of themselves and the other members of the NCWHA Class, “damages in the amount of their unpaid earned compensation, plus liquidated damages, as provided by the NCWHA, N.C. GEN. STAT. § 95–25.22.” (J.A. 28). Recovery of attorneys' fees and costs, as provided by the NCWHA, were also sought.

The Original Defendants timely removed the case to the United States District Court for the Western District of North Carolina. After removal, on November 26, 2007, the Original Defendants moved to dismiss the NCWHA claims, pursuant to Federal Rule of Civil Procedure 12(b)(6), on the ground that the Complaint alleged that all overtime claims are covered by the FLSA, but failed to allege that any plaintiff worked unpaid overtime during the brief window of time when “the applicable minimum wage under the Fair...

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