Reagor v. Okmulgee County Family Resource Center, Inc. , 501 F. App'x 805 ( 2012 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 14, 2012
Elisabeth A. Shumaker
Clerk of Court
PEARL REAGOR,
Plaintiff-Appellant,
No. 11-7070
v. (D.C. No. 6:11-CV-00085-JHP)
(E.D. Okla.)
OKMULGEE COUNTY FAMILY
RESOURCE CENTER, INC., a domestic
not-for-profit corporation,
Defendant-Appellee.
ORDER AND JUDGMENT*
Before HARTZ, ANDERSON, and EBEL, Circuit Judges.
Pearl Reagor, an employee of Okmulgee County Family Resource Center, Inc.
(OCFRC), appeals from the district court’s grant of OCFRC’s motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6) her first amended complaint. In that
complaint, she asserted claims for (1) failure to pay overtime in violation of the Fair
Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219; (2) breach of contract; and
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
(3) violation of Oklahoma labor laws. She argues that the district court erred in
dismissing the FLSA claim and in failing to allow limited discovery before
dismissing. She also seeks clarification of the court’s dismissal of the state-law
claims. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the dismissal of
the FLSA claim and remand for dismissal without prejudice of the state-law claims.
BACKGROUND
OCFRC is a non-profit agency that provides services to victims of domestic
violence and sexual assault. Ms. Reagor works a forty-eight-hour weekend shift at
OCFRC’s safe house shelter, but she is compensated for only forty hours of work.
By agreement of the parties, OCFRC treats eight hours as volunteer time--four hours
per night for sleeping on Saturdays and Sundays, subject to interruption should
responsibilities arise. This agreement was entered into after OCFRC’s executive
director stated at a board meeting that OCFRC must comply with the FLSA and pay
employees for all on-duty hours. Ms. Reagor, however, contends that she is entitled
to overtime pay under the FLSA for the extra eight hours each week. In support, she
asserts in her first amended complaint that:
Plaintiff is an “employee engaged in commerce” and Defendant is an
“employer” within the meaning of the FLSA. Upon information and
belief that will be confirmed through discovery, Plaintiff and
Defendant’s other employees handled good[s] and/or admitted clients
into Defendant’s facility who had moved across state lines from
California, Texas and Indian Territories. Plaintiff utilized the telephone
as part of her duties, and was responsible for security of Defendant’s
facility, including the monitored security system at the facility. Plaintiff
also was responsible for helping patrons of the facility secure cellular
telephone service and upgrades to existing cellular phone plans.
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Plaintiff also secured pharmaceutical prescriptions at the facility that
[had] been manufactured and distributed within interstate commerce on
behalf of Defendant’s clients. Furthermore, Defendant’s facility is
located within easy access of U.S. highway 75 and is therefore
conveniently located to attract clients from out of state by virtue of
Defendant’s facility’s easy access from the highway.
Aplt. App. at 34-35.1 Also, Ms. Reagor asserted that OCFRC breached its contract
with her and violated the Oklahoma Protection of Labor Act and the Oklahoma
Minimum Wage Act.
OCFRC moved to dismiss under Rule 12(b)(6), asserting that the first
amended complaint failed to set forth facts showing it was plausible that Ms. Reagor
was entitled to the FLSA’s protections. The district court granted the motion, finding
that Ms. Reagor’s factual allegations did not “raise a right to relief above the
speculative level” and her bare assertions lacked factual support. Id. at 90.
STANDARD OF REVIEW
We review de novo the district court’s Rule 12(b)(6) dismissal for failure to
state a claim for relief. See Khalik v. United Air Lines, 671 F.3d 1188, 1190
(10th Cir. 2012). Under Federal Rule of Civil Procedure 8(a)(2), a pleading stating a
claim for relief must contain “a short and plain statement of the claim showing that
the pleader is entitled to relief.” “To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
1
Ms. Reagor filed her first amended complaint after OCFRC filed a motion to
dismiss her complaint under Rule 12(b)(6).
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Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. But “dismissal
is appropriate where ‘the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct.’” Al-Owhali v. Holder, 687 F.3d 1236, 1240
(10th Cir. 2012) (quoting Iqbal, 556 U.S. at 679). “Thus, mere ‘labels and
conclusions’ and ‘a formulaic recitation of the elements of a cause of action’ will not
suffice. Accordingly, in examining a complaint under Rule 12(b)(6), we will
disregard conclusory statements and look only to whether the remaining, factual
allegations plausibly suggest the defendant is liable.” Khalik, 671 F.3d at 1191
(quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a
right to relief above the speculative level.” Twombly, 550 U.S. at 555.
DISCUSSION
I. FLSA
Ms. Reagor argues that she sufficiently pleaded the elements of an FLSA claim
and therefore the district court erred in dismissing under Rule 12(b)(6). In her
complaint, she alleged that she is an FLSA-covered employee and that OCFRC is an
FLSA-covered employer. She further alleged that she was not paid overtime for
hours she worked in excess of forty-hours per week. She contends that these
allegations satisfy Rule 8(a) and plausibly state her claim for relief under the FLSA.
We disagree.
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The FLSA requires overtime pay of time and a half of regular pay for an
employee who works more than forty hours per week and who is “engaged in
commerce . . . or . . . employed in an enterprise engaged in commerce.” 29 U.S.C.
§ 207(a)(1).2 See generally 29 U.S.C. § 203(b) (“‘Commerce’ means trade,
commerce, transportation, transmission, or communication among the several States
or between any State and any place outside thereof.”). To be eligible for overtime,
Ms. Reagor bears the burden to show that she is entitled to the protection of the
FLSA. See Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1298
(11th Cir. 2011). As is relevant to this case, she may do so by asserting sufficient
facts to plausibly state a claim either (1) that she, individually, was engaged in
commerce or (2) that OCFRC is an enterprise engaged in commerce. See id. at
1298-99; see also Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 295
n.8 (1985) (“Employment may be covered under the [FLSA] pursuant to either
‘individual’ or ‘enterprise’ coverage.”).
2
Section 207(a)(1) states:
[N]o employer shall employ any 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, for a workweek longer than forty hours unless
such employee receives compensation for his employment in excess of
the hours above specified at a rate not less than one and one-half times
the regular rate at which he is employed.
Ms. Reagor does not assert under § 207(a)(1) that either she or OCFRC produced
goods for commerce.
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In assessing individual and enterprise coverage, Congress intends to “regulate
only activities constituting interstate commerce, not activities merely affecting
commerce.” Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1266 (11th Cir.
2006) (citing McLeod v. Threlkeld, 319 U.S. 491, 497 (1943)). Practical
considerations guide when determining what constitutes commerce or engaging in
commerce. Overstreet v. N. Shore Corp., 318 U.S. 125, 128 (1943).
For individual coverage, an employee must “directly participat[e] in the actual
movement of persons or things in interstate commerce.” Thorne, 448 F.3d at 1266;
see N.M. Pub. Serv. Co. v. Engel, 145 F.2d 636, 638 (10th Cir. 1944) (“[T]o be
engaged in commerce within the meaning of that phrase, an employee must be
actually engaged in the movement of commerce, or the services he performs must be
so closely related thereto as to be for all practical purposes an essential part
thereof.”). To determine whether an employee is engaged in commerce we look at
her activities, not the business of her employer. See Mitchell v. Lublin, McGaughy &
Assocs., 358 U.S. 207, 211 (1959). She must either work for a transportation or
communication industry employer or regularly and recurrently use an instrument of
interstate commerce, such as a telephone. See Thorne, 448 F.3d at 1266; see also
29 C.F.R. § 776.10(b) (requiring regular and recurrent use of instruments of
communication as part of job duties). Isolated or sporadic activities do not satisfy
this requirement. Dent v. Giaimo, 606 F. Supp. 2d 1357, 1360 (S.D. Fla. 2009);
see also Bowrin v. Catholic Guardian Soc’y., 417 F. Supp. 2d 449, 466 (S.D.N.Y.
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2006) (stating that de minimis interstate activities are not covered by FLSA);
Kitchings v. Fla. United Methodist Children’s Home, Inc., 393 F. Supp. 2d 1282,
1293 n.26 (M.D. Fla. 2005) (“For an employee to be engaged in commerce, a
substantial part of the employee’s work must be related to interstate commerce.”
(internal quotation marks omitted)).
For enterprise coverage, there must be an “[e]nterprise engaged in
commerce or in the production of goods for commerce.” 29 U.S.C. § 203(s)(1)
(internal quotation marks omitted). Such an enterprise “has employees engaged in
commerce . . . or . . . handling, selling, or otherwise working on goods or materials
that have been moved in or produced for commerce by any person” and had “annual
gross volume of sales made or business done” of $500,000 or more. Id.
§ 203(s)(1)(A)(i), (ii). A non-profit may engage in business activities and therefore
be an enterprise. See Tony & Susan Alamo Found., 471 U.S. at 296-97. But the
question is whether the non-profit is primarily engaging in competition in the public
with commercial enterprises. See Kitchings, 393 F. Supp. 2d at 1294; Briggs v.
Chesapeake Volunteers in Youth Servs., Inc., 68 F. Supp. 2d 711, 714-15
(E.D. Va. 1999) (citing Tony & Susan Alamo Found., 471 U.S. at 295-99).
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A. Individual Coverage
Ms. Reagor contends that she pleaded sufficient facts to show that she,
individually, was an employee engaged in commerce. As indicated above, she
asserted in her complaint that she (1) handled goods that traveled in interstate
commerce; (2) admitted clients who had moved across state lines; (3) used a
telephone; (4) was responsible for obtaining cellular telephones or upgrading cellular
telephone plans for clients; and (5) secured prescription drugs manufactured and
distributed in interstate commerce for clients. We assess each of these in turn to
determine whether Ms. Reagor plausibly stated a claim for relief under the FLSA.
Ms. Reagor’s assertion that she handled goods that traveled in interstate
commerce is conclusory. Even if the goods had traveled in interstate commerce, she
did not engage in commerce, because the FLSA “does not include goods after their
delivery into the actual physical possession of the ultimate consumer.” 29 U.S.C.
§ 203(i); see Joles v. Johnson Cnty. Youth Servs. Bureau, Inc., 885 F. Supp. 1169,
1178-79 (S.D. Ind. 1995). Any effect Ms. Reagor may have had on commerce was
too remote to qualify as engaging in commerce. See Joles, 885 F. Supp. at 1179.
Ms. Reagor’s assertion that OCFRC provided housing for clients who
previously lived in other states does not implicate interstate commerce. She does not
assert that she was responsible in any way for these clients arriving at the shelter.
Her contact with them was strictly local. See Clyde v. Broderick, 144 F.2d 348, 351
(10th Cir. 1944) (stating that where services are performed for local project, FLSA
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does not apply); Dent, 606 F. Supp. 2d at 1361 (holding that although patients may
have been residents of other states, there was no engagement in interstate commerce
where all contacts were local). Also, there is no indication that out-of-state clients
regularly or recurrently lived at the shelter. See Dent, 606 F. Supp. 2d at 1361.
OCFRC’s location near a highway is insufficient by itself to suggest that she engaged
in interstate commerce.
Ms. Reagor’s assertion that she uses the telephone as part of her duties is
conclusory. She does not assert that her use of the telephone was a regular and
recurrent part of her duties or that she used the telephone for interstate
communications. See Thorne, 448 F.3d at 1266-67.
Ms. Reagor’s assertion of helping persons obtain cellular telephone service or
upgrade existing service also does not implicate interstate commerce. She provided
that help as part of the charitable activities of OCFRC, not as a competitor in the
cellular telephone business.
Ms. Reagor’s assertion of securing pharmacy prescriptions that had been
manufactured and distributed in interstate commerce consists of merely handling
goods which have already been delivered to the consumer. See 29 U.S.C. § 203(i).
Because Ms. Reagor has failed to plausibly suggest that she engaged in
interstate commerce, we cannot draw a reasonable inference that OCFRC is liable for
overtime pay under the FLSA. See Iqbal, 129 S. Ct. at 1949.
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B. Enterprise Coverage
Ms. Reagor contends that OCFRC is covered by the FLSA because its
executive director stated at a board meeting that the FLSA requires OCFRC to pay
for all hours worked. After that meeting, OCFRC prepared an employment
agreement for Ms. Reagor, which stated that she agreed to volunteer eight hours of
her time for each weekend shift.
Again, we conclude that Ms. Reagor has failed to plausibly state a claim for
relief under the FLSA. The statement by OCFRC’s executive director at the board
meeting was insufficient standing alone to plausibly indicate OCFRC was engaged in
interstate commerce. As indicated above, OCFRC is a non-profit organization, which
provides shelter to victims of domestic violence. Generally, activities of nonprofits
“are not considered to be conducted for a common business purpose unless they
engage in commercial activity.” Bowrin, 417 F. Supp. 2d at 459 (citing Tony &
Susan Alamo Found., 471 U.S. at 297 n.14). Nothing in the complaint suggests that
OCFRC was engaged in a business purpose or in any type of competition.
See 29 C.F.R. § 779.214 (requiring eleemosynary organization to perform activities
for business purpose for FLSA coverage); cf. Murray v. R.E.A.C.H. of Jackson Cnty.,
Inc., 908 F. Supp. 337, 339-40 (W.D.N.C. 1995) (deciding in summary judgment
case that charitable temporary shelter for victims of domestic violence and sexual
abuse was not engaged in business enterprise covered by FLSA); Joles, 885 F. Supp.
at 1175 (“Unless it engages in commercial activities in competition with private
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entrepreneurs or qualifies as one of the organization[s] listed in 29 U.S.C.
§ 203(r)(2), a non-profit charitable organization is not an ‘enterprise’ under § 203(r)
because it is not conducted for a ‘business purpose.’”); Wagner v. Salvation Army,
660 F. Supp. 466, 468-69 (E.D. Tenn. 1986) (deciding in summary judgment case
that transient lodge was not enterprise engaging in commercial activities within
meaning of FLSA, because it did not serve general public or compete with private
businesses).
Because Ms. Reagor failed to allege sufficient facts indicating that she
engaged in interstate commerce or that OCFRC was an enterprise engaged in
commerce, we cannot draw an inference that her claim that she is entitled to
protection under the FLSA is plausible. We therefore conclude the district court
appropriately granted OCFRC’s motion to dismiss under Rule 12(b)(6).
II. Discovery
Ms. Reagor argues that the district court should have allowed her to conduct
limited discovery concerning OCFRC’s coverage under the FLSA before dismissing
her claim. But she never requested discovery before the court ruled on OCFRC’s
motion to dismiss.3 We therefore conclude the court did not abuse its discretion in
failing to order discovery sua sponte. See Flaim v. Med. College of Ohio, 418 F.3d
629, 643 (6th Cir. 2005) (“Where the district court accepts the plaintiff’s allegations
3
Although Ms. Reagor indicates in her complaint that she will confirm her
allegations through discovery, we do not consider that to be a sufficient request for
discovery.
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as true, but concludes that those allegations are insufficient as a matter of law, it is
not an abuse of discretion to limit discovery sua sponte.”); Baylis v. Marriott Corp.,
906 F.2d 874, 878 (2d Cir. 1990) (deciding district court did not abuse its discretion
when it dismissed complaint without sua sponte ordering discovery); see also Iqbal,
129 S. Ct. at 1954 (deciding that because complaint was deficient under Rule 8,
plaintiff was not entitled to discovery).
III. State-Law Claims
Lastly, Ms. Reagor asks that this case be remanded for the district court to
clarify whether it retained jurisdiction over her state-law claims, and, if it did not,
whether the dismissal of the claims was without prejudice. Based on our review of
the court’s order and judgment, we conclude the court did not retain jurisdiction over
the state-law claims and the court dismissed all claims with prejudice. Because the
state-law claims should have been dismissed without prejudice, we remand to the
district court with instructions to dismiss the state-law claims without prejudice.
See Brooks v. Gaenzle, 614 F.3d 1213, 1229 (10th Cir. 2010) (stating that where
federal claims are dismissed before trial, district court should decline jurisdiction
over state-law claims and dismiss them without prejudice).
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CONCLUSION
The judgment of the district court is AFFIRMED as to the FLSA claim and the
appellate assertions regarding discovery. The case is REMANDED to the district
court with instructions to vacate its judgment and re-enter judgment dismissing the
state-law claims without prejudice.
Entered for the Court
David M. Ebel
Circuit Judge
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