SAUNDRA BROWN ARMSTRONG, United States District Judge.
Plaintiffs,
Because the parties are familiar with the facts of this case, the Court will only recite those facts which are relevant to the resolution of the instant motion. The Court finds that the following facts are undisputed.
Plaintiffs are former employees of Factor 5, a software and video game developer. Helton was employed by Factor 5 as a Senior/Lead Programmer from on or about May 15, 2006 until on or about December 19, 2008. Lowe was employed by Factor 5 as a Producer from on or about December 24, 2005 until on or about December 19, 2008. Piccirillo was employed by Factor 5 as a Senior Technical Artist from on or about August 2002 until on or about December 19, 2008. The individual Defendants founded Factor 5 and were the owners, directors, and officers of Factor 5 at all relevant times.
On November 1, 2008, Factor 5 stopped paying its employees earned wages. On December 19, 2008, Factor 5 terminated all of its employees. Factor 5 did not pay Plaintiffs for the work they performed for Factor 5 from November 1, 2008 to December 19, 2008.
On January 21, 2009, Plaintiffs filed a class action complaint in the Superior Court of California, County of Marin, to recover earned wages and other benefits due under California law. On October 13, 2010, Plaintiffs filed a first amended complaint ("FAC"), adding the individual Defendants as well as claims under the FLSA. On October 29, 2010, the individual Defendants removed the action to this Court on the basis of federal question jurisdiction. The parties are presently before the Court on Plaintiffs' motion for partial summary judgment against the individual Defendants on their minimum wage claim under the FLSA.
"A party may move for summary judgment, identifying each claim ... or the part of each claim ... on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(a). A material fact is one that could affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). For a dispute to be "genuine," a reasonable jury must be able to return a verdict for the nonmoving party. Id.
Once the moving party has met its burden, the burden then shifts to the nonmoving party to designate specific facts showing a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Anderson, 477 U.S. at 256, 106 S.Ct. 2505 ("a party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial."). A party asserting that a fact is genuinely disputed must support the assertion by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1)(A).
To carry its burden, the nonmoving party must show more than the mere existence of a scintilla of evidence, Anderson, 477 U.S. at 252, 106 S.Ct. 2505, and "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the nonmoving party must come forward with affirmative evidence from which a jury could reasonably render a verdict in the nonmoving party's favor. Anderson, 477 U.S. at 252, 257, 106 S.Ct. 2505. In determining whether a jury could reasonably render a verdict in the nonmoving party's favor, the court must view the evidence in the light most favorable to the nonmoving party and draw all justifiable inferences in its favor. Id. at 255, 106 S.Ct. 2505. Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Dias v. Nationwide Life Ins. Co., 700 F.Supp.2d 1204, 1214 (E.D.Cal.2010).
To establish a genuine dispute of material fact, a Plaintiff must present affirmative evidence; bald assertions that genuine issues of material fact exist are insufficient. Galen v. County of Los Angeles, 477 F.3d 652, 658 (9th Cir.2007); see also F.T.C. v. Stefanchik, 559 F.3d 924 (9th Cir.2009) ("A non-movant's bald assertions or a mere scintilla of evidence in his favor are both insufficient to withstand summary judgment."). Further, evidence that is merely colorable or that is not significantly probative, is not sufficient to withstand a motion for summary judgment. Anderson, 477 U.S. at 249-250, 106 S.Ct. 2505 (citations omitted). "Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment." Soremekun v. Thrifty Payless, Inc., 509 F.3d 978,
The FLSA requires employers to pay employees certain minimum hourly wages. 29 U.S.C. § 206(a). 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. Id. Any employer who violates § 206 "shall be liable to the employee or employees affected in the amount of their unpaid minimum wages... and in an additional equal amount as liquidated damages." 29 U.S.C. § 216(b).
In the instant motion, Plaintiffs move for summary judgment on their FLSA minimum wage claim against the individual Defendants on the ground that there is no genuine dispute as to any material fact and that they are entitled to judgment as a matter of law because the individual Defendants admit that they (1) knew that Plaintiffs were working for Factor 5 without pay in November and December 2008, and (2) did not pay Plaintiffs for work performed during those months. Pls.' Mot. at 8-12. In addition, Plaintiffs contend that they are entitled to an award of liquidated damages in an amount equal to their unpaid wages because the individual Defendants did not act in "good faith" in failing to comply with the FLSA's minimum wage requirements. Id. at 12-15.
In response, the individual Defendants concede that they were the owners and managers of Factor 5, and that they are "employers" for purposes of liability under the FLSA.
The individual Defendants contend that partial summary judgment is inappropriate because Plaintiffs' FLSA minimum wage claim is moot under Genesis Healthcare as Plaintiffs refused to accept a Rule 68
The individual Defendants contend that Plaintiffs' motion for partial summary judgment should be denied because Plaintiffs are exempt employees that are not subject to the FLSA's minimum wage requirements as they were "creative professionals" and/or managers. Defs.' Mot. at 8-9.
The FLSA requires employers to pay its employees a certain minimum wage for any hours worked. 29 U.S.C. § 206(a). However, the FLSA exempts from the statute's protection employees who are "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). The FLSA grants the Secretary of Labor broad authority to promulgate regulations to define and delimit the scope of exemptions. Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1112 (9th Cir.2001).
An exempt "professional employee" is an employee "[c]ompensated on a salary or fee basis at a rate of not less than $455 per week ... [w]hose "primary duty is the performance of work ... "[r]equiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor." 29 C.F.R. § 541.300(a). "The exemption does not apply to work which can be produced by a person with general manual or intellectual ability and training." 29 C.F.R. § 541.302(a). "[T]he work performed must be `in a recognized field of artistic or creative endeavor.' This includes such fields as music, writing, acting and the graphic arts." 29 C.F.R. § 541.302(b). "[E]xemption as a creative professional depends on the extent of the invention, imagination, originality or talent exercised by the employee. Determination of exempt creative professional status, therefore, must be made on a case-by-case basis." 29 C.F.R. § 541.302(c).
29 C.F.R. § 541.100(a)(1)-(4). In order to be an exempt executive employee, an employee's primary duty "must be the performance of exempt work." See 29 C.F.R. § 541.700(a).
An employee's "primary" duty is "the principal, main, major or most important duty that the employee performs. Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole."
FLSA exemptions are construed narrowly against the employer who seeks to assert them. Cleveland v. City of Los Angeles, 420 F.3d 981, 988 (9th Cir.2005) (noting that the FLSA is construed liberally in favor of employees). Further, an FLSA exemption will not be found except in contexts "plainly and unmistakably" within the given exemption's terms and "spirit." Id. An employer has the burden of proving that an employee fits "plainly and unmistakably" within the terms and spirit of an FLSA exemption. Id.; see Corning Glass Works v. Brennan, 417 U.S. 188, 196-197, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974) ("[A]n exemption under the Fair Labor Standards Act is a matter of affirmative defense on which the employer has the burden of proof."); Hertz v. Woodbury County, Iowa, 566 F.3d 775, 783
As an initial matter, Plaintiffs argue that the individual Defendants have waived their FLSA exemption defense because it was not asserted in their answer to the FAC, and because they will be prejudiced if the individual Defendants are allowed to assert such a defense at this late stage of the litigation. While the general rule is that a defendant should assert affirmative defenses in its first responsive pleading, Fed.R.Civ.P. 8(c), the Ninth Circuit has "liberalized" the requirement that a defendant must raise affirmative defenses in their initial responsive pleading. Magana v. Com. of the Northern Mariana Islands, 107 F.3d 1436, 1446 (9th Cir. 1997); see also Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1023 (9th Cir.2010). In the Ninth Circuit, a defendant "may raise an affirmative defense for the first time in a motion for summary judgment only if the delay does not prejudice the plaintiff." Magana, 107 F.3d at 1446 (holding the district court erred in granting summary judgment for defendants without determining whether their delay in raising the FLSA exemption for employees "employed in a bona fide executive, administrative, or professional capacity" prejudiced the plaintiff).
Here, the individual Defendants attempt to assert an FLSA exemption defense for the first time approximately two years and nine months after the complaint was amended to assert FLSA claims. The Court finds that the individual Defendants' unexplained, inordinate delay in raising this defense is prejudicial because Plaintiffs had no opportunity to conduct discovery on this issue. The individual Defendants could have raised their FLSA exemption defense long before the instant motion was filed in their answer to the FAC or in a motion to dismiss or motion for summary judgment. Instead, they waited until this late juncture to provide Plaintiffs notice of the defense. The individual Defendants offer no justification for their failure to raise the defense in a timely manner. Under these circumstances, the Court finds that the individual Defendants are prohibited from asserting an FLSA exemption defense. See Ulin v. Lovell's Antique Gallery, 2010 WL 3768012, at *13 (N.D.Cal.2010) (prohibiting defendants from raising FLSA exemption defense for the first time at the summary judgment stage).
Moreover, even if the individual Defendants were not prohibited from asserting an FLSA exemption defense, they have failed to sustain their burden to establish a genuine issue of material fact for trial. The only evidence relied upon by the individual Defendants in support of this defense are statements made in the declarations submitted by Plaintiffs in connection with the instant motion. See Defs.' Mot. at 9. Specifically, the individual Defendants argue that Helton is an exempt "creative professional" and/or "executive" employee because he avers that he "was responsible for writing code to implement game features, as well as working with designers and other content creators to define features, requirements, and workflow," citing Helton Decl. ¶ 2. Additionally, the individual Defendants argue that Lowe is an exempt "creative professional" and/or "executive" employee because he avers that, "[a]s a Producer, [he] was responsible for overall project management for Defendants' game title/project, including supervising and tracking assignments," citing Lowe Decl. ¶ 2. Finally, the individual Defendants argue that Piccirillo is an exempt "creative professional" because she
The Court finds that the individual Defendants' showing is wholly inadequate to withstand Plaintiffs' motion for partial summary judgment. The individual Defendants have not come forward with affirmative evidence from which a jury could reasonably render a verdict in their favor on their FLSA exemption defense. See Anderson, 477 U.S. at 252, 257, 106 S.Ct. 2505. The individual Defendants did not cite any evidence establishing that the Plaintiffs were compensated on a salary basis at a rate of not less than $455 per week. Further, they failed to cite any evidence establishing the specific job duties of the Plaintiffs or the amount of time that the Plaintiffs spent on their respective duties. Nor did the individual Defendants attempt to explain how each Plaintiff's job duties satisfy the various requirements of the FLSA exemptions they invoke. Instead, the individual Defendants simply rely on the vague and generalized job descriptions provided by the Plaintiffs in their respective declarations, which is insufficient to survive summary judgment. In re Brazier Forest Prods., Inc., 921 F.2d 221, 223 (9th Cir. 1990) (Where the nonmoving party bears the burden of proof on an issue at trial, such as an affirmative defense, the nonmoving party must make a sufficient showing to establish the existence of evidence as to all elements essential to its defense to avoid summary judgment); see Ale v. Tennessee Valley Authority, 269 F.3d 680, 689 (6th Cir.2001) ("[T]he determination of whether an employee is exempt is an inquiry that is based on the particular facts of his employment and not general descriptions."); 29 C.F.R. § 541.2 ("The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee's salary and duties meet the requirements of the regulations in this part.").
Plaintiffs contend that they are entitled to an award of liquidated damages in an amount equal to their unpaid wages under § 216(b). Pls.' Mot. at 12-15. The individual Defendants disagree, arguing that they have a "good faith" defense to Plaintiffs' claim for liquidated damages. Defs.' Opp. at 10-14. According to the individual Defendants, they acted in good faith with respect to the FLSA's minimum wage requirements because they reasonably relied upon their understanding of the advice of employment counsel and "human resource experts"
Where an employer fails to pay minimum wages in violation of the FLSA, the employer is liable to the employee for an additional amount of damages equal to the minimum wages owed as liquidated damages. 29 U.S.C. § 216(b). Liquidated damages are not a penalty, but are compensation to the employee. Chao v. A-One Medical Services, Inc., 346 F.3d 908, 920 (9th Cir.2003). "If the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA] ... the court may, in its sound discretion, award no liquidated damages or" award a lessor amount. 29 U.S.C. § 260. "[T]he employer has the burden of establishing subjective and objective good faith in its violation of the FLSA." Local 246 Util. Workers Union v. S. Cal. Edison Co., 83 F.3d 292, 297 (9th Cir.1996). The employer has the burden to establish that it had "an honest intention to ascertain and follow the dictates of the FLSA, and that it had reasonable grounds for believing that its conduct complied with the FLSA." Id. at 298.
"`Good faith' in this context requires more than ignorance of the prevailing law or uncertainty about its development. It requires that an employer first take active steps to ascertain the dictates of the FLSA and then move to comply with them." Reich v. Southern New England Telecommunications Corp., 121 F.3d 58, 71 (2d Cir.1997). "To satisfy § 260, a FLSA-liable employer bears the `difficult' burden of proving both subjective good faith and objective reasonableness, `with double damages being the norm and single damages the exception.'" Alvarez v. IBP, Inc., 339 F.3d 894, 910 (9th Cir.2003). Where the employer fails to carry that burden, liquidated damages are mandatory. Id.
Here, the individual Defendants have failed to carry their burden to create a triable issue regarding their good faith defense. They have not come forward with affirmative evidence from which a jury could reasonably render a verdict in their favor on this issue. Anderson, 477 U.S. at 252, 257, 106 S.Ct. 2505. The individual Defendants did not proffer any evidence establishing that they had an honest intention to ascertain and follow the dictates of the FLSA, and that they had objectively reasonable grounds for believing that their conduct complied with the FLSA.
It is undisputed that the individual Defendants were advised by employment counsel
While courts have held that the advice of counsel can in some circumstances support a good faith defense to liquidated damages,
The individual Defendants contend that partial summary judgment is inappropriate because Plaintiffs have failed to demonstrate that there is no genuine issue of material fact for trial regarding their entitlement to liquidated damages. Defs.' Opp. at 6-8. Specifically, the individual Defendants argue that there is a triable issue "as to what legal advice the individual defendants were given as to continuing to permit [Factor 5] employees to continue working without pay." Id. at 7. According to the individual Defendants, the deposition testimony of their former employment counsel, Daijogo, is contradictory because while she testified that she never advised "anybody at Factor 5 that it was appropriate to continue to permit employees to work for no wages," she also testified that she never advised "anybody at Factor 5 that it was unlawful to continue to permit employees to work without being paid their earned wages." Id. at 7-8 (emphasis added). The Court rejects this argument.
A review of Daijogo's deposition testimony reveals that the individual Defendants' argument is frivolous. As pointed out by Plaintiffs, Daijogo made several changes to her deposition transcript following her deposition, one of which was to clarify the "contradiction" pointed out by the individual Defendants. After her deposition was taken, Daijogo clarified that she did not advise anybody at Factor 5 that it was lawful to continue to permit employees to work without being paid their earned wages. See Smith Supp. Decl., Exh. A, Statement of Changes to Deposition Testimony of Third Party Witness Daijogo & Pedersen, LLP, Dkt. 118-1. Further, Daijogo
Plaintiffs contend that they are each entitled to an award of damages in the amount of $3,353.60. Pls.' Mot. at 15. Plaintiffs reach this figure by first multiplying the federal minimum wage rate in November and December 2008 by the days and hours they worked for Factor 5 in those months: $6.55 (minimum wage)
For the reasons stated above, IT IS HEREBY ORDERED THAT:
1. Plaintiffs' motion for partial summary judgment on their FLSA minimum wage claim against the individual Defendants is GRANTED. Helton, Piccirillo, and Lowe are each awarded $3,353.60 in damages.
2. This Order terminates Docket 97.
IT IS SO ORDERED.