Salgado v. Flowers Foods Incorporated ( 2023 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 James Salgado, No. CV-22-00420-TUC-JGZ 10 Plaintiff, ORDER 11 v. 12 Flowers Foods Incorporated, et al., 13 Defendants. 14 15 Pending before the Court is Flowers Foods, Inc. and Holsum Bakery’s Partial 16 Motion to Dismiss Plaintiff’s First Amended Complaint. (Doc. 16.) Defendants seek 17 dismissal of Plaintiff’s state-law claim for overtime wages, arguing state law does not 18 provide for overtime, does not incorporate federal overtime provisions, and, if it did, the 19 state law would be preempted by federal law. (Id. at 4-14.) The Motion is fully briefed. 20 (Docs. 16, 18, 21, 22.) For the reasons that follow, the Court will deny the Motion. 21 BACKGROUND 22 In 2016, James Salgado began working for Holsum Bakery and its parent company, 23 Flowers Foods, as a bakery distributor. (Doc. 13 ¶ 10.) As a distributer, Salgado delivers 24 fresh baked goods to local retailers, operating out of a Tucson distribution center run by 25 Holsum. (Id.) In addition to delivery, distributors stock and arrange merchandise, remove 26 damaged goods, and place advertising materials in retail locations. (Id. at ¶ 43.) 27 In his First Amended Complaint (FAC), Salgado alleges that, over the past three 28 years, Defendants have misclassified their distributors as independent contractors and 1 failed to pay regular and overtime wages. (Id. ¶¶ 82–84, 97, 122-23.) The FAC asserts five 2 counts against Defendants. (Doc. 13 at 16-26.) Counts One and Three are relevant to the 3 Motion to Dismiss. In Count One, Salgado, individually and on behalf of other distributors, 4 alleges Defendants violated the Fair Labor Standards Act (FLSA) by failing to pay 5 overtime wages. (Id. ¶¶ 90-103.) In Count Three, Salgado, individually and on behalf of 6 Arizona class members, alleges that Defendants violated the Arizona Wage Act (AWA) by 7 failing to timely pay overtime wages.1 (Id. ¶¶ 118-126.) Salgado seeks certification of his 8 FLSA claim as a collective action under the FLSA, (id. ¶ 103(a)), and certification of his 9 AWA claim as a class action under Federal Rule of Civil Procedure 23, (id. ¶ 126(a)). 10 DISCUSSION 11 I. APPLICABLE LAW AND LEGAL STANDARDS 12 A. Rule 12(b)(6) Motion to Dismiss 13 To survive a challenge under Federal Rule of Civil Procedure 12(b)(6), a plaintiff 14 must state a claim that is “plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 15 544, 570 (2007). The law only requires “a short and plain statement of the claim showing 16 that the pleader is entitled to relief in order to give the defendant fair notice of what the 17 claim is and the grounds upon which it rests.” Id. at 555 (cleaned up). Under Rule 12(b)(6), 18 dismissal for failure to state a claim can be based on a lack of a cognizable legal theory. 19 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). 20 B. Fair Labor Standards Act 21 The FLSA requires an employer to pay its employee time and a half for any hours 22 worked above forty in a workweek. 29 U.S.C. § 207(a)(1); see Ader v. SimonMed Imaging 23 Inc., 465 F. Supp. 3d 953, 960 (D. Ariz. 2020) (“The FLSA mandates that employers pay 24 overtime compensation for time worked in excess of 40 hours in a week unless an 25 exemption applies.”). An employer who violates § 207 is liable for double damages. 29 26 U.S.C. § 216(b). The principal purpose behind the FLSA is “to protect all covered workers 27 1 Count Three also alleges Defendants failed to timely pay regular wages in violation of 28 the AWA. Defendants’ Motion to Dismiss pertains only to the overtime portion of the AWA claim. 1 from substandard wages and oppressive working hours.” Barrentine v. Arkansas-Best 2 Freight Sys., Inc., 450 U.S. 728, 739 (1981). “The FLSA's minimum wage and overtime 3 provisions are central among the protections the Act affords to workers.” Adair v. City of 4 Kirkland, 185 F.3d 1055, 1059 (9th Cir. 1999). 5 C. Arizona Wage Act 6 The AWA does not require payment of overtime, but it does require that, when due, 7 overtime pay be paid not later than sixteen days after the end of the most recent pay period. 8 A.R.S. § 23-351(C)(3). Under the AWA, an employer may not withhold or divert any 9 portion of an employee's wages. Id. § 23-352. Moreover, an employee may recover triple 10 damages for unpaid wages. See id. § 23-355(A) (“the employee may recover in a civil 11 action against an employer or former employer an amount that is treble the amount of the 12 unpaid wages”). 13 D. Preemption Doctrine 14 A fundamental principle of the Constitution is that Congress has the power to 15 replace or supersede state law. Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 16 (2000). This power is commonly known as preemption. Preemption comes in three forms: 17 express preemption, field preemption, and conflict preemption. Ass'n des Éleveurs de 18 Canards et d'Oies du Quebec v. Bonta, 33 F.4th 1107, 1113–14 (9th Cir. 2022). Only 19 conflict preemption is at issue here. Conflict preemption applies “when (1) compliance 20 with both federal and state regulations is a physical impossibility, or (2) when state law 21 stands as an obstacle to the accomplishment and execution of the full purposes and 22 objectives of Congress.” McClellan v. I-Flow Corp., 776 F.3d 1035, 1039 (9th Cir. 2015) 23 (cleaned up). Regardless of which type of preemption applies, “the purpose of Congress is 24 the ultimate touchstone of pre-emption analysis.” Nat'l Fed'n of the Blind v. United Airlines 25 Inc., 813 F.3d 718, 724 (9th Cir. 2016). Congressional intent to preempt state law, whether 26 express or implied, must be clear and manifest. Indus. Truck Ass’n, Inc. v. Henry, 125 F.3d 27 1305, 1309 (9th Cir. 1997). 28 1 II. ANALYSIS 2 Defendants seek dismissal of Salgado’s AWA overtime claim arguing that: (i) 3 Arizona law does not provide a substantive right to overtime pay; (ii) the AWA does not 4 incorporate the FLSA’s requirement of overtime pay; and (iii) even if Salgado could bring 5 a claim for overtime under the AWA, the claim would be preempted by the FLSA. (Doc. 6 16 at 4-11.) In support of the third argument, Defendants also assert that allowing Salgado 7 to avail himself of state remedies in the form of treble damages or the opportunity to certify 8 a class action under Rule 23 would undermine congressional intent. (Id. at 6-7.) These 9 arguments are interrelated and the Court addresses them in this context. 10 There is no dispute that the AWA does not require overtime payment by private 11 employers. (See Doc. 16 at 4 (“the AWA only sets forth when overtime wages must be paid 12 by an employer if they are due to an employee”); Doc. 18 at 5 (“Plaintiff properly alleges 13 a standalone claim for Defendants’ failure to timely pay all wages due”)). Rather, the issue 14 is whether, in providing a remedy for failure to timely pay overtime wages, the AWA can 15 incorporate the FLSA’s substantive requirement of overtime pay, and, if it can, whether 16 the AWA remedy is preempted by the FLSA. Defendants argue that the AWA must 17 expressly provide for the recovery of overtime wages, as a substantive right, in order for 18 Salgado to invoke its timely payment provision. In the alternative, Defendants argue that 19 the FLSA would preempt such incorporation.2 20 21 2 The Court recognizes there is an intra-District split on the issue of FLSA preemption of AWA claims. Compare e.g. Weeks v. Matrix Absence Mgmt. Inc., No. CV-20-884-PHX- 22 SPL, 2022 WL 523323, at *4 (D. Ariz. Feb. 22, 2022) (denying motion to dismiss AWA 23 overtime claim because (1) preemption does not apply where the state-law claim borrows from the FLSA making it possible to comply with both laws, and (2) the AWA claim 24 furthers the FLSA’s purpose of protecting employees) and Blazek v. Heavens Urgent Care LLC, No. CV-21-1425-PHX-DGC, 2022 WL 17361771, at *5 (D. Ariz. Dec. 1, 2022) 25 (citing Wang as persuasive authority for conclusion that FLSA’s overtime pay provision 26 does not preempt plaintiff’s claim for treble damages under the AWA), with Salazar v. Driver Provider Phoenix LLC, No. CV-19-05760-PHX-SMB, 2023 WL 2308372, at *2 27 (D. Ariz. Mar. 1, 2023) (dismissing AWA overtime claim due to conflict preemption), 28 Finton v. Cleveland Indians Baseball Co. LLC, No. CV-19-02319-PHX-MTL, 2021 WL 661975, at *10 (D. Ariz. Feb. 19, 2021) (determining that conflict preemption precludes 1 Both arguments were addressed and rejected in Wang v. Chinese Daily News, Inc., 2 623 F.3d 743, 760 (9th Cir. 2010), judgment vacated on other grounds, 565 U.S. 801 3 (2011).3 There, the Ninth Circuit concluded that the FLSA did not preempt a claim brought 4 under a California statute prohibiting fraudulent business practices that borrowed its 5 substantive standard from the FLSA. The court provided two reasons for its conclusion: it 6 was possible for the defendant to comply with both laws simultaneously, and allowing the 7 state claim to proceed furthered Congress’s purpose of protecting employees. Id. at 760. 8 Notably, the court rejected dicta from its earlier decision, Williamson v. General Dynamics 9 Corp., 208 F.3d 1144, 1154 (9th Cir. 2000), which suggested that overtime claims directly 10 covered by the FLSA must be brought under the FLSA. Id. at 759. The court also declined 11 to follow Anderson v. Sara Lee Corp., 508 F.3d 181 (4th Cir. 2007), where the Fourth 12 Circuit held that the FLSA provides exclusive remedies for its violation, and that state-law 13 claims grounded in FLSA violations are thus preempted. Id. at 760. In rejecting the Fourth 14 Circuit’s approach, the Ninth Circuit noted that Anderson relied on an earlier decision that 15 concerned whether Congress intended a general federal remedial statute, 42 U.S.C. 1983, 16 to apply to FLSA claims—an issue that is distinct from the issue whether independent state- 17 law claims parallel to FLSA claims are preempted. Id. 18 The Ninth Circuit’s reasoning in Wang is applicable to Salgado’s AWA overtime 19 claim and warrants denial of Defendants’ motion to dismiss the claim. The AWA’s 20 requirement that an employer timely pay its employees overtime wages that it owes furthers 21 Congress’ purpose of protecting covered employees from substandard wages and 22 oppressive working hours. See Barrentine, 450 U.S. at 739. Additionally, it is possible for 23 Defendants, like any other private employer in Arizona, to comply with the relevant 24 provisions of the FLSA and the AWA simultaneously. Employers can be responsible for 25 the plaintiff’s AWA overtime claim), order vacated in relevant part on reconsideration, 26 No. CV-19-02319-PHX-MTL, 2021 WL 1610199 (D. Ariz. Apr. 26, 2021), and Wood v. Trivita, Inc., CV-08-765-Phx-SRB, 2008 WL 6566637, at *3-4 (D. Ariz. 2008) (relying on 27 pre-Wang authority to find state-law claim preempted by the FLSA). 28 3 Wang has been vacated on other grounds and therefore may be considered for its persuasive authority. Rosenbloom v. Pyott, 765 F.3d 1137, 1154 n.14 (9th Cir. 2014). 1 paying overtime under the FLSA and for the timely payment of the overtime wages as 2 required by the AWA. 3 The fact that A.R.S. Section 23-355 provides for additional remedies in the form of 4 treble damages and the potential to certify a class does not change this result, “undermine[] 5 congressional intent,” or “render[] the enforcement provisions of the FLSA meaningless,” 6 as Defendants contend. (Doc. 16 at 6.) The Ninth Circuit has repeatedly rejected the 7 proposition that the FLSA requires the lesser of two damages remedies for employers who 8 violate federal and state wage laws. In fact, the court has reiterated that Congress has 9 specifically authorized states to enforce overtime laws more generous than the FLSA. 10 See Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1150 (9th Cir. 2000) (cleaned up) 11 (“In addition to protecting workers by establishing a minimum wage and maximum hours, 12 the FLSA contains a savings clause that enables states and municipalities to enact more 13 favorable wage, hour, and child labor legislation.”); Pac. Merch. Shipping Ass'n v. Aubry, 14 918 F.2d 1409, 1423–24 (9th Cir. 1990) (“[W]e find no indication in the language or 15 legislative history of the FLSA's savings clause that Congress intended that section 218 not 16 allow states to apply more generous overtime pay laws to maritime workers working on 17 the high seas.”). 18 The Court is unpersuaded by Defendants’ arguments to the contrary, and the cases 19 they cite are distinguishable. In Roberts v. Arizona, 512 P.3d 1007 (Ariz. 2022), the 20 Arizona Supreme Court did not “reject[] the notion that Arizona statues incorporate the 21 FLSA into Arizona law.” (Doc. 16 at 5.) Rather, the court determined which provisions of 22 the FLSA were incorporated into A.R.S. § 23-392, where the statute specifically referenced 23 incorporation, providing for additional compensation for certain law enforcement officers 24 “for each hour worked if by the person's job classification overtime compensation is 25 mandated by federal law.” Id. at 1013. Because the statute contained only a single reference 26 to federal law, for a specific, limited purpose, the Arizona supreme court concluded that 27 the federal law incorporated by the state statute pertained only to the rate and method of 28 calculating overtime, and not, as the state argued, the entirety of the FLSA, including the 1 Portal-to-Portal Act, federal implementing regulations, federal agency interpretative 2 bulletins, and federal court jurisprudence construing federal law and regulations. Id. at 3 1011-14. Unlike the statute at issue in Roberts, A.R.S. § 23-355 contains no such limiting 4 and specific language. It provides for the timely payment of overtime, with no limitation 5 as to the source of the overtime pay. 6 As to preemption, Defendants rely on Williamson. But as noted above, the Wang 7 court disclaimed Williamson’s reasoning. Moreover, Williamson’s reference to the FLSA’s 8 preemption of overtime claims was dicta. Defendants also cite Wood v. TriVita, Inc., No. 9 CV-08-0765-PHX-SRB, 2008 WL 6566637, at *3 (D. Ariz. Sept. 18, 2008). But Wood 10 was decided before Wang and relied on dicta from Williamson and the Fourth Circuit’s 11 ruling in Anderson, both of which were rejected by the subsequent decision in Wang. 12 Recent decisions from this district that have found the AWA’s state-law claims preempted 13 continue to rely on Wood and Williamson. See, e.g., Salazar v. Driver Provider Phoenix 14 LLC, No. CV-19-05760-PHX-SMB, 2023 WL 167021, at *2-3 (D. Ariz. Jan. 12, 2023), 15 reconsideration denied, No. CV-19-05760-PHX-SMB, 2023 WL 2308372 (D. Ariz. Mar. 16 1, 2023); Finton v. Cleveland Indians Baseball Co. LLC, No. CV-19-02319-PHX-MTL, 17 2021 WL 661975, at *10 (D. Ariz. Feb. 19, 2021), order vacated in part on 18 reconsideration, No. CV-19-02319-PHX-MTL, 2021 WL 1610199 (D. Ariz. Apr. 26, 19 2021); Nelson v. Network Infrastructure Corp., No. CIV 09-1172-PHX-DKD, 2010 WL 20 11515662, at *2 (D. Ariz. Mar. 30, 2010); Colson v. Avnet, Inc., 687 F. Supp. 2d 914, 923 21 (D. Ariz. 2010). However, in light of the Wang court’s rejection of Williamson and 22 Anderson and the reasoning behind its decision, this Court finds Wang more persuasive 23 and declines to employ the reasoning that the Ninth Circuit has already rejected. 24 Finally, Defendants cite Anderson, 508 F.3d at 193, for the proposition that the 25 distinct remedies and procedures under state and federal wage laws are so incompatible as 26 to require dismissal of the state-law claim so as to avoid preemption. (Doc. 16 at 6.) 27 Defendants assert that, “[b]ecause an AWA claim brought under Rule 23 does not require 28 Plaintiffs to affirmatively opt in, ‘[i]t would undermine this balance to allow Plaintiffs to 1 assert their FLSA claim on behalf of similarly situated employees while using a duplicative 2 state wage-collection law to bootstrap in the more generous procedure of Rule 23.’” (Id. at 3 7.) However, Anderson relied on Kendall v. City of Chesapeake, Virginia, 174 F.3d 437, 4 439-43 (4th Cir. 1999), and both Wang and Williamson rejected Kendall’s reasoning 5 because Kendall did not involve federal preemption of state-law claims. See Wang, 623 6 F.3d at 760 (“Kendall is irrelevant to a preemption analysis.”); Williamson, 208 F.3d at 7 1153 (“Kendall is not a case about federal preemption of state law; rather, it is about 8 whether another federal statute (Section 1983) can support a claim that clearly falls under 9 the FLSA.”). Notably, other district courts in this Circuit have rejected Defendants’ 10 argument in denying requests to dismiss state-law wage claims as incompatible and in 11 declining requests to forego the exercise of supplemental jurisdiction over such claims. 12 See, e.g., Ribot v. Farmers Ins. Grp., No. CV 11-2404 DDP, 2011 WL 13128072, at *6 13 (C.D. Cal. Nov. 23, 2011) (adopting the persuasive Wang reasoning in denying a motion 14 to dismiss plaintiffs’ state-law wage claims); Madrid v. Peak Constr., Inc., No. 2:09-CV- 15 00311 JWS, 2009 WL 10707072, at *6 (D. Ariz. July 23, 2009) (ruling that “economy, 16 convenience, fairness, and comity all militate in favor of exercising, not declining to 17 exercise, supplemental jurisdiction over plaintiffs' Rule 23 state-law claims concurrently 18 with § 216(b) FLSA collective actions.”). While Defendants correctly note that 19 supplemental jurisdiction is not pertinent to the claims at hand, the effect of allowing state 20 and federal wage laws to coincide in the same action, even though they employ different 21 procedural schemes, is the same. 22 23 24 25 26 27 28 1 CONCLUSION 2 Salgado has sufficiently stated a cognizable claim under the AWA for the timely || payment of overtime wages. His AWA overtime claim does not conflict with the FLSA’s 4|| purpose or remedies. Moreover, the class certification and collective action procedures are 5 || not so incompatible as to render the congressional intent behind the FLSA meaningless or 6 || to require the dismissal of equally purposeful state wage claims. Accordingly, 7 IT IS ORDERED that Defendants’ Partial Motion to Dismiss Salgado’s First 8 || Amended Complaint (Doc. 16) is DENIED. 9 10 Dated this 20th day of August, 2023. 11 12 □ 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9-