KATHLEEN M. TAFOYA, Magistrate Judge.
This matter is before the court on "Plaintiff's Motion and Memorandum in Support of Her Motion for Partial Summary Judgment" (Pl. Mot.) [Doc. No. 103] filed August 1, 2017 and on "Defendant Maxim Healthcare Services, Inc.'s Cross-Motion for Summary Judgment and Opposition to Plaintiff's Motion for Summary Judgment" (Cross Mot.) [Doc. No. 108] which was filed on September 1, 2018. "Plaintiff's Response to Defendant's Cross-Motion for Summary Judgment and Reply to Defendant's Opposition to Plaintiff's Motion for Partial Summary Judgment" (Pl. Resp.) [Doc. No. 109] was filed on October 2, 2017 and "Defendant Maxim Healthcare Services, Inc.'s Reply in Support of Cross-Motion for Summary Judgment" (Df. Reply) [Doc. No. 111] was filed on October 20, 2017.
The crux of this case involves unpaid overtime for employees employed by a third party agency. More specifically, Plaintiff was a certified nursing assistant employed by Defendant from February 2007 to December 2013. (Doc. No. 4 ["Comp."] at 2). The parties agree that Plaintiff was a home health care worker ("HHCW") who would be classified as a provider of companionship services. (Pl. Mot. at 5-6.) Defendant is a for-profit healthcare services company that provides its customers with in-home personal care and management and/or treatment of a variety of medical and non-medical conditions. (Compl. at 2.) While employed by Defendant, Plaintiff was paid on an hourly basis and was not paid overtime compensation. (Id. at 4-5.) On May 27, 2015, Plaintiff sued Defendant alleging that it failed to pay her, and the Rule 23 class of HHCWs she represents, overtime wages under Colorado's Wage Act, C.R.S. §§ 8-4-101, et seq. ("CWA"), Minimum Wage Order ("MWO"), and 7 Colo. Code Regs 1103-1, § 5 ("CCR"). Id.
To date, the case has turned on the interpretation of the CWA's companion exemption, 7 Colo. Code Regs. § 1103-1.5, which exempts certain employees providing home health care services from overtime protections. In a previous motion to dismiss under Fed. R. Civ. P. 12(b), Defendant contended that the exemption applies to Plaintiff and the potential class members. Plaintiff contended that, according to the plain language of the exemption, it applies only to companion employees that are employed by households or family members—and not those employed by third parties, such as Defendant. The court disposed of the statutory interpretation of the companion exemption on March 17, 2016. (Doc. No. 59.) That order adopted Plaintiff's preferred interpretation.
In the parties' instant motions, however, Defendant seeks to re-litigate interpretation of the companion exemption.
The court largely adopts Plaintiff's preferred positions on these issues albeit with one exception: the two-year Statute of Limitations defense. The court finds this defense applicable here because any alleged overtime violations were not willful under the CWA.
Summary judgment is appropriate 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). The moving party bears the initial burden of showing an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). "Once the moving party meets this burden, the burden shifts to the nonmoving party to demonstrate a genuine issue for trial on a material matter." Concrete Works, Inc. v. City & County of Denver, 36 F.3d 1513, 1518 (10th Cir. 1994) (citing Celotex, 477 U.S. at 325). The nonmoving party may not rest solely on the allegations in the pleadings, but must instead designate "specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324; see also Fed. R. Civ. P. 56(c). A disputed fact is "material" if "under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute is "genuine" if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Thomas v. Metropolitan Life Ins. Co., 631 F.3d 1153, 1160 (10th Cir. 2011) (citing Anderson, 477 U.S. at 248).
Where a court is satisfied that the only genuine issue is a question of law, the court may determine the question and grant summary judgment.
It is worth noting, as here, that Defendant indicates that the "material facts of this case are straightforward and undisputed"—making for ease of disposition as to most of the issues before the court. (Doc. No. 108 at 3.)
There is utility in first setting out the statutory framework and addressing why re-litigation of the statutory interpretation issue in the court's March 17, 2016 opinion is inappropriate. (Doc. No. 59.)
For the purposes of background, the CWA does not contain a specific overtime requirement. Instead, Colorado's overtime requirements are established by the Colorado Division of Labor ("DOL") through a regulatory enactment known as a Minimum Wage Order ("CMWO"). See Colo. Rev. Stat. §§ 8-6-104, -106, -108.5. The current version, CMWO, became effective on January 1, 2018. 7 C.C.R. § 1103-1.
Id. (emphasis provided).
In contrast to the wording of the CWA, the FLSA explicitly provided, up until its amendment on January 1, 2015, that its companionship services exemption specifically did apply to third party employers of such providers. Title 29 C.F.R. § 552.109(a) stated:
Title 29 C.F.R. § 552.109(a) (emphasis added). In contrast, the FLSA now provides, as of January 1, 2015:
Id. (emphasis added). In other words, through careful and thoughtful wording, the federal lawmakers made themselves abundantly clear concerning the exemption's application in connection with companionship services when the companions were employed by third party employers rather than by households or family members directly. Colorado DOL rulemakers, however, did not take their cue from the wording of the federal Rule if mirroring the federal law was their intent. Since Colorado had guidance from a carefully worded federal rule, the inference drawn by this court is that Colorado did not intend for the CWMO to mirror the FLSA, but was instead choosing a path more protective of the individual worker by excluding third party employers from the exemption.
59 at 4-11)—an opinion that was bolstered by the decision of Judge Christina M. Arguello addressing the same statutory interpretation issue. See Kennett v. Bayada Home Health Care, Inc., 135 F.Supp.3d 1232 (D. Colo. 2015). Notwithstanding the decision of this court (and that of Kennett), Defendant again reloads with a bevy of statutory interpretation arguments to support its preferred position, most of which repeat what has been argued before. (Doc. No. 108 at 10-17.) Embedded on page 12 is the following request for review:
Id. at 10.
Contrary to Defendant's protestations, the court declines to revisit the very issue it decided earlier in these proceedings. (Doc. No. 59.) First, the statutory issue in Defendant's motion was resolved by the court's March 17, 2016 opinion. Id. Disposition of that issue addressed a pivotal battleground (i.e., statutory interpretation of the relevant controlling law). The parties have thus proceeded on the basis of that disposition. Second, because statutory interpretation is a pure question of law, see Smith v. Desautels, 183 Vt. 255 (2008), there are no factual disputes that interplay with the analysis at the Rule 56 stage. Defendant has conceded as much, stating that material facts are undisputed as confirmed on page 4 of this opinion. Indeed, because there are no factual disputes to disturb the interpretation of the statute at this juncture— and because the issue before the court on March 17, 2016 was a pure question of law (as it remains so here)—there is no reason to disturb the court's interpretation from earlier stages in the litigation. (Doc. No. 59) (adjudicating the statutory issue in Plaintiff's favor).
That said, Defendant has possibly raised a new argument based on post-March 17, 2016 law. See Lockhart v. United States, 136 S.Ct. 958 (2016).
Accordingly, the court's Rule 12(b)(6) opinion dated March 16, 2017 (Doc. No. 59) remains the law of the case—and provides the predicate for the analysis that follows.
Notwithstanding the above, Defendant challenges any liability under the statute based on a safe-harbor defense. A safe-harbor defense is "[a] provision (as in a statute or regulation) that affords protection from liability or penalty." Black's Law Dictionary (10th ed. 2014).
Relevant to disposition of this issue is the fact that Defendant concedes that the CWA and MWO do not have a safe-harbor provision. Based on this concession, Plaintiff then makes two counter arguments regarding any application of a safe-harbor defense.
The first is that Defendant failed to plead a safe-harbor affirmative defense. The court agrees. When Defendant's affirmative defenses are scrutinized, it is notable that there is no express reference to a safe-harbor defense. Yet Defendant points to paragraph 12 of its Answer as providing factual content to support its position—specifically:
Id. at ¶ 12.
Nowhere in this paragraph is a safe-harbor pleading averred under the CWA or related regulations. Nor can it be inferred without more. Given the novelty of the defense, and the absence of any reference to safe-harbor in paragraph 12, the court has little choice but to waive Defendant's argument. Bently v. Cleveland County Bd. of County Comm'rs, 41 F.3d 600, 604 (10th Cir. 1994). And while such an outcome seems harsh, Defendant should have appreciated that the content in paragraph 12 provides factual content to support Defendant's statute of limitations defense. Had Defendant sought to have paragraph 12 carry both (1) the safe-harbor defense, and (2) the Statute of Limitations defense, it should have said as much (expressly). Defendant's failure to do so cuts against its position.
Alternatively, even if the court is wrong on waiver, Defendant's substantive position fares no better. Defendant argues that although the CWA does not have an express safe-harbor provision, this court should still interpret the CWA in harmony with the FLSA and hold that Defendant can avail itself of a safe-harbor defense on these facts. Said another way, Defendant contends that the court should graft federal law into a state statute without any express written support in the CWA itself. The court rejects this invitation.
First, the FLSA's relationship to the CWA is a protective floor—not a ceiling—for employee rights. States can, therefore, through statutory verbiage (or no verbiage at all), use their police powers to add to worker protections above and beyond the federal right. See generally, Pacific Merchant Shipping Ass'n v. Aubry, 918 F.2d 1409, 1419-20 (9th Cir. 1990); Pettis Moving Co., Inc. v. Roberts, 784 F.2d 439 (2d Cir. 1986); DeKeyser v. Thyssenkrupp Waupaca, Inc., 589 F.Supp.2d 1026, 1030 (E.D. Wis. 2008) ("It is clear that in enacting the FLSA, Congress did not explicitly preempt state wage and hour laws . . . the FLSA contains a "savings clause" that expressly allows states to provide workers with more beneficial minimum wages and maximum workweeks than those mandated by the FLSA itself.")
Second, the cases that Defendant cites to supporting its position are incongruent with the statutory context of this case—i.e., Salazar v. Butterball, LLC, No. 08-CV-02071-MSK-CBS, 2009 WL 6048979, at *15 (D. Colo. Dec. 3, 2009) and Chase v. Farmers Ins. Exch., 129 P.3d 1011, 1015 (Colo. App. 2004). These cases have nothing to do with employee rights as applied to the case in suit, nor constitutional policies regarding the protective floor that federal law provides (and which state law can build upon). The Chase case, for example, deals with burdens of proof—not the wholesale creation of a novel defense (a safe-harbor), which infuses state law with a defense not expressed in CWA's statutory language.
As such, because states can add to worker protections under state law, and because the imposition of a safe-harbor defense would dramatically impact those protections, this court sees no reason to adopt such a defense in this case.
Defendant argues that even if safe-harbor does not apply, the court's March 17, 2016 opinion should only be applied prospectively. To counter, Plaintiff argues that because that decision is a judicial one, the law should be applied retroactively. The court subscribes to Plaintiff's view.
At the onset, Defendant faces an uphill battle because, as a general rule, "statutes operate prospectively, while judicial decisions are applied retroactively." Martin Marietta Corp. v. Lorenz, 823 P.2d 100, 111 (Colo. 1992) (citing United States v. Security Industrial Bank, 459 U.S. 70, 79 (1982)). To prevail under the exception to judicial decisions being applied retroactively, Defendant must meet a three-part test: (1) "the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied . . . or by deciding an issue of first impression whose resolution was not clearly foreshadowed"; (2) the court must determine whether retroactive application will advance or impede the new rule's "purpose and effect"; and (3) the court must consider "the inequity imposed by retroactive application" and strive to avoid "substantial inequitable results." Id. at 112 (quoting Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07 (1971)).
Here, even if the court were to determine that its March 17, 2016 opinion was a new principle of law or decided an issue of first impression whose resolution was not clearly foreshadowed, prongs (2) and (3) still cut against Defendant's position.
Compounding the position against it, Defendant's response (Doc. No. 108) does not meaningfully deal with the second prong of the Martin Marietta framework—i.e., that the court must determine whether retroactive application will advance or impede the new rule's "purpose and effect." 823 P.2d 100, 111-12. There is no reference to policy—let alone its impact—in Defendant's briefing until the reply. (Doc. No. 111 at 12-13.) As the parties are well aware, at this point of briefing any new arguments are waived. See Doolin Sec. Sav. Bank v. Office of Thrift Supervision, 156 F.3d 190, 191 (D.C.Cir. 1998) (refusing to consider arguments raised only in the reply brief). And even if this conclusion as to waiver is faulty (which it is not), to the extent that Defendant's reliance argument bleeds into factor (2) from factor (3), the court finds that it does not outweigh Plaintiff's position that retroactive application is consistent with the CWA. See Fang, 91 P.3d at 421 (discussing the employee centered policies of the statute).
As to factor (3), Defendant's primary position is rooted in reliance theory (albeit wrongful reliance). Defendant argues that "it would be fundamentally unjust to impose overtime liability on Maxim during a time when the Colorado DOL expressly informed Maxim that its companions were subject to the overtime exemption." (Doc. No. 108 at 24.)
While not completely aligned with Defendant's argument, a similar argument was made in a Southern District of Ohio decision—and rejected. See Dillow v. Home Care Network, Inc., No. 1:16-CV-612, 2017 WL 749196, at *4 (S.D. Ohio Feb. 27, 2017) (Black J.) ("Defendant . . . states that retroactive application is inequitable in that it requires Defendant to go back in time to comply with regulations that had technically not gone into effect.")
Just as Judge Timothy S. Black rejected Defendant's position in Dillow, so too here. Indeed, "[i]t is disingenuous to suggest that Defendant, or any other similarly situated party, could not anticipate that there was a significant possibility" that interpretation of the CWA could turn against Defendant's preferred statutory interpretation (as it did) —particularly when the instant case commenced in June 2015.
To counter, Defendant contends that it relied on the Colorado DOL for interpretative purposes. But that adjudication was not a judicial one, nor correct. The Colorado DOL's faulty interpretation constituted a hollow victory for Defendant against those companion employees it then employed (and who were not paid overtime). And because of its paucity, that victory should not now shield Defendant from retroactive liability; ever more when the Colorado DOL got it wrong. As a matter of principle (and commonsense), reliance on a wrongful executive interpretation as a shield could "create a perverse incentive for a party" to lengthen out an appellate process with a defendant knowing that a shield could exist during the time period up until final judicial disposition by the judiciary at the appellate level . Id. This leads to delay tactics—and hardly constitutes an equitable result that conforms with the underlying purposes of the Martin Marietta framework.
This view is only reinforced because, under the CWA, Defendant was always required to pay overtime. Unlike the FLSA, the verbiage of the CWA has remained static. And despite past opportunities to amend the statute—restricting worker protections—the state legislature has remained silent, thereby keeping the rule in place. Granted, the Colorado DOL has sent mixed messages and Defendant has mistakenly relied on those messages. But to now deviate from the law that the state legislature promulgated would not just reflect whimsical law-making, it would run counter to the policy of the CWA—leading to inconsistent and unjust outcomes.
Critically, Defendant's business decision to rely upon the obviously flawed DOL interpretation (being a non-judicial interpretation) does not show a change in the law; rather, it only shows, as Plaintiff posits, that Colorado DOL chose not to enforce the law the way it was written under its flawed interpretation of the exemption. The law, that is the language of the CWA itself, never changed. And nor did its meaning: the language requires Defendant to pay the Plaintiff (and the class) overtime for their overtime hours worked. While Defendant argues that it has relied upon DOL's executive branch interpretations; employees of Defendant have relied on the language of the statute and the court's judicial interpretation. The equities clearly favor the latter—thus factor (3), like factor (2), cuts against Defendant. Cf. Marbury v. Madison, 5 U.S. 137, 177, 2 S.Ct. 60 (1803) ("It is emphatically the province and duty of the judicial department to say what the law is.")
One final point is worth noting: fortifying the court's holding of retroactive application of the March 17, 2016 interpretation is the fact that Defendant never, really, acknowledges that Martin Marietta's framework is an exception—not the rule.
Based on the previous analysis, the next issue to determine is whether Defendant is liable for overtime wages to Plaintiff based on the court's statutory interpretation of the companion exemption in its previous order. (Doc. No. 59.)
To eliminate any question on this issue, the parties have each conceded that liability under the statute rises and falls on the statutory interpretation of the companion exemption— specifically, "[w]hoever wins . . . on the question of whether a third party employer—like Maxim—can utilize the companionship services exemption of the CWA will also win the District Court class action.") (See Doc. No. 83 at 2 n.2). Save its safe-harbor and retroactivity arguments—being arguments that have been unsuccessful—Defendant also agrees with Plaintiff regarding the binary outcome of statutory interpretation. (Doc. No. 108 at 19).
Accordingly, since Plaintiff was successful on the statutory interpretation issue in earlier proceedings (Doc. No. 59), Defendant is liable under the CWA for violations of same.
As held above, Defendant is liable under the CWA. In an attempt to mitigate the loss against it, however, Defendant raises the issue of whether Plaintiff's claim is subject to a two-year Statute of Limitations period. Defendant's argument holds merit.
In Colorado, the limitations period for state-law wage claims is ordinarily two years. Colo. Rev. Stat. § 8-4-122. That period can only be extended to three years where a plaintiff proves that a violation was willful. See Farley v. Family Dollar Stores, Inc., No. 12-00325, 2013 WL 500446, at *1 (D. Colo. Feb. 11, 2013) ("The [CWA] has a two year statute of limitations for all actions unless the violation was willful[.]"). To establish that a wage violation was willful, "plaintiffs must prove that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute." Bayles v. Am. Med. Response of Colo., Inc., 937 F.Supp. 1477, 1489 (D. Colo. 1996) (applying the "willful" component of the FLSA) (quotations omitted.)
While Defendant's reliance theory did not gain traction on the issues previously addressed in this opinion, it does so with respect to its two-year Statute of Limitation defense. Defendant's reliance on Colorado DOL establishes that it has not willfully violated the CWA. The willful standard is a high threshold—essentially a punitive one—making it near-impossible for a plaintiff employee to prove because even where "an employer acts unreasonably, but not recklessly, then its conduct is not willful." Barber v. Marjon Corp., 791 P.2d 1192, 1194 (Colo. App. 1989) (emphasis added.) Here, by relying on the DOL's interpretation, while wrong, Defendant still took a non-negligent step in determining whether the companion exemption applied (or not). This is not reckless behavior, let alone willful intent to violate—rising to the need for punitive sanction. Id.; see also Bayles, 937 F. Supp. at 1489.
Notwithstanding the facts of this case, however, had Defendant failed to take this step, and simply relied on the lack of Colorado case law on this issue, then the story could well have been different given how wrong the DOL's interpretation has turned out to be. Both this court and Judge Arguello's decision in Kennett confirms this. In the latter, the court was struck by the fact that "Defendant's reading of the Companion Exemption . . . fail[ed] to account for its grammatical structure; specifically . . . (1) the placement of commas after the terms companions and casual babysitters, and (2) the fact that the word
Sealing the case against Defendant, the court's holding on Statute of Limitations defense squares with disposition of the other issues in this opinion. For instance, where the safe-harbor argument did not provide solace for Defendant—because it is not expressed in the statute—the two-year Statute of Limitation provision does allow Defendant to prevail on this issue. See Colo. Rev. Stat. § 8-4-122. That section expressly provides: "All actions brought pursuant to this article shall be commenced within two years after the cause of action accrues and not after that time; except that all actions brought for a willful violation of this article shall be commenced within three years after the cause of action accrues and not after that time." Id. So too here.
Because Defendant's actions do not rise to the heady heights of willfulness under the statute, Defendant succeeds in restricting the period of liability to a two-year period.
In sum, the court largely subscribes to Plaintiff's positions with the exception of the two-year Statute of Limitations defense consistent with the reasoning in this opinion.
Congress passed the FLSA to protect workers from substandard wages and oppressive working hours. Hein v. PNC Fin. Servs. Group, Inc., 511 F.Supp.2d 563, 569 (E.D.Pa. 2007). The FLSA is intended primarily to benefit low-wage workers rather than managers or administrators; managers or administrators are less susceptible to employer abuse. Id.; Maestas v. Day & Zimmerman, LLC, 972 F.Supp.2d 1232, 1236 (D.N.M. 2013). The same can be said of state minimum wage regulations such as the CWA and the accompanying CMWO.