Compton v. Rent-A-Center, Inc. ( 2009 )

FILED
United States Court of Appeals
Tenth Circuit
October 20, 2009
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
FOR THE TENTH CIRCUIT
RON COMPTON,
Plaintiff-Appellant,
v. No. 08-6264
(D.C. No. 5:07-CV-00972-D)
RENT-A-CENTER, INC., (W.D. Okla.)
a foreign corporation,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before HENRY, Chief Judge, BRORBY, Senior Circuit Judge, and HARTZ,
Circuit Judge.
Plaintiff Ron Compton appeals the district court’s entry of summary
judgment in favor of his former employer, Rent-A-Center, Inc. (“RAC”), on his
claim that he was not paid overtime wages. Our jurisdiction arises from
28 U.S.C. § 1291, and we affirm. Although Mr. Compton now argues that his
original complaint included a state-law claim for breach of contract, we determine
*
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 This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and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.
that the complaint sought recovery only under federal law, the Fair Labor
Standards Act (“FLSA”). Because he presents arguments on appeal that were not
before the district court, we do not address them. In addition, we hold that the
district court did not abuse its discretion in denying Mr. Compton leave to amend
his complaint.
Background
Mr. Compton filed suit in Oklahoma state court on April 23, 2007, alleging
that during his employment with RAC from July 2002 to November 2003, he had
worked 600 hours in excess of 40 hours per week for which he had not been paid
overtime wages. He claimed that his “unpaid overtime hours [were] required by
federal law to be compensated at one-and-a-half times his regular rate of pay.”
Aplt. App. at 8. On August 31, 2007, RAC removed the case to federal court
asserting federal jurisdiction under 28 U.S.C. § 1331, because Mr. Compton’s
claims for overtime pay implicated the FLSA. On November 26, 2007,
Mr. Compton filed a motion to remand to state court on the ground that his
complaint alleged only state-law contract claims for “unpaid overtime work.”
Id. at 24. On February 7, 2008, after discovery was closed, RAC moved for
summary judgment. The district court denied Mr. Compton’s motion for remand
on June 12, 2008, holding that the original complaint did not allege a breach of
contract, but rather, asserted issues “requir[ing] the resolution of a substantial
federal question based on the [FLSA].” Id. at 316. Although the deadline for
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filing amended pleadings was November 19, 2007, Mr. Compton moved to amend
his complaint on June 16, 2008.
In an order entered November 11, 2008, the district court granted summary
judgment in favor of RAC and denied Mr. Compton’s motion to amend his
complaint. In granting summary judgment, the district court ruled that
Mr. Compton’s FLSA claims were time-barred under the three-year FLSA statute
of limitations, 29 U.S.C.§ 255(a), 1 because the complaint was filed April 23,
2007, almost three and one-half years after his employment ended in November
2003. The court further held that Mr. Compton was exempt from the FLSA’s
overtime requirement under the Motor Carrier Exemption, 29 U.S.C. §§ 207(a)
and 213(b)(1).
Addressing Mr. Compton’s state-law contract claims, the district court
reiterated its earlier holding that the complaint did not allege a state-law claim for
breach of contract. Even if there was a state-law claim alleged in the complaint,
the court recognized that parties may “execute a contract obligating [the
employer] to exceed the FLSA requirements regarding overtime compensation,”
but ruled that the undisputed material facts established that no such contract was
formed. Aplt. App. at 355. The court rejected Mr. Compton’s claim that RAC’s
1
The FLSA’s general limitations period is two years, but if the FLSA
violation was willful, the limitations period is three years. 29 U.S.C. § 255(a).
Therefore, even if Mr. Compton’s complaint alleged a willful violation, it was
filed outside the FLSA limitations period.
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employee handbooks created a contract, noting that all versions of the handbook
expressly stated that the handbook was not a contract and that employment was
at-will. The court further noted that even if the complaint alleged a contract
claim, the Oklahoma three-year limitations period applicable to an implied
contract, Okla. Stat. tit. 12, § 95(A)(2), barred this claim. Accordingly, the
district court granted summary judgment in favor of RAC. The court also denied
Mr. Compton’s motion for leave to amend his complaint because the motion was
untimely, and because allowing amendment would be prejudicial to RAC and
futile.
On appeal, Mr. Compton argues that the district court erred in (1) holding
that he failed to plead a breach-of-contract claim independent of the FLSA,
(2) failing to recognize that he and RAC had a written employment contract,
(3) finding that he failed to establish a contractual agreement to compensate him
for his overtime work, and (4) denying his motion to amend his complaint.
Summary Judgment
“This court reviews a summary judgment decision de novo, viewing the
evidence in the light most favorable to the non-moving party.” Archuleta v.
Wal-Mart Stores, Inc., 543 F.3d 1226, 1231 (10th Cir. 2008). Summary judgment
is appropriate “if the pleadings, the discovery and disclosure materials on file,
and any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
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Mr. Compton asserts on appeal that he had a written contract with RAC
simply to be paid for the hours he worked. He alleges that he was required to
work several hours each week for which he was not paid at all. Yet in the district
court he argued that RAC had failed to pay him overtime at the rate of
time-and-a-half for those hours, as required by federal law. Accordingly, the
district court construed his claims as invoking the FLSA and held that the FLSA
governed them.
Abandoning his federal claims on appeal, Mr. Compton now argues that
RAC’s employee handbooks and time cards formed a written employment
contract, subject to the five-year limitations period under state law. See
Okla. Stat. tit. 12 § 95(A)(1). 2 Challenging the district court’s ruling that he
failed to allege a claim for breach of contract, Mr. Compton points to the
following two paragraphs of his four-paragraph complaint:
2. The parties entered into an agreement for employment on or
about the first day of July, 2002, under the terms of which the
Plaintiff agreed to work for Defendant for the sum of $10.00
per hour.
3. The Plaintiff worked six hundred (600) hours in excess of forty
(40) hours per week for the Defendant over the course of his
employment with the Defendant, but was not paid by the
Defendant for the hours he worked beyond forty (40) hours per
week.
2
A contract not in writing is subject to a three-year statute of limitations, see
id. § 95(A)(2), and it is undisputed that Mr. Compton’s claims arose more than
three years before he filed suit.
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Aplt. Opening Br. at 10 (quoting Aplt. App. at 8).
In the district court, however, Mr. Compton argued that he was due
compensation under federal law for overtime at time-and-a-half. The complaint’s
fourth paragraph stated, “The Plaintiff’s unpaid overtime hours are required by
federal law to be compensated at one-and-a-half times his regular rate of pay,
such that the Defendant is currently indebted to the Plaintiff in the sum of nine
thousand dollars ($9,000.00).” Aplt. App. at 8 (emphasis added). The concluding
paragraph prayed for judgment in the amount of $9,000.00. Id. Accordingly, the
district court correctly construed Mr. Compton’s complaint as asserting a
violation of the FLSA, rather than a breach of contract under state law.
Seeking to avoid the FLSA statute of limitations, Mr. Compton now
attempts to recast his allegations as a state-law breach-of-contract claim. This
theory was not presented to the district court; therefore, we do not address it.
Bass v. Potter, 522 F.3d 1098, 1107 n.9 (10th Cir. 2008). Mr. Compton’s attempt
to save his case by changing his time-barred FLSA claim to a state-law claim for
an hourly wage is a litigation tactic we have rejected. “In order to preserve the
integrity of the appellate structure, we should not be considered a ‘second-shot’
forum, a forum where secondary, back-up theories may be mounted for the first
time.” Cummings v. Norton, 393 F.3d 1186, 1190 (10th Cir. 2005) (quotation
omitted).
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In a related argument, Mr. Compton asserts that there was evidence in the
record to establish the existence of an employment contract under state law. He
contends that the district court improperly disregarded this evidence. But he
relied on this evidence to argue to the district court that he was entitled to wages
at time-and-a-half. As explained above, we reject Mr. Compton’s attempt to
recast his claims on appeal.
Leave to Amend Complaint
We next consider Mr. Compton’s challenge to the district court’s order
denying him leave to amend his complaint to include a state-law claim for breach
of contract. A plaintiff’s motion to amend his complaint should be granted “[i]n
the absence of any apparent or declared reason–such as undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, futility of amendment, etc.” Foman v. Davis,
371 U.S. 178, 182 (1962). “We review the district court’s decision to deny leave
to amend a complaint for an abuse of discretion.” Hertz v. Luzenac Group,
576 F.3d 1103, 1117 (10th Cir. 2009). Where the district court has denied leave
to amend on the ground that amendment would be futile, “our review for abuse of
discretion includes de novo review of the legal basis for the finding of futility.”
Id. (quotation omitted).
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In denying leave to amend, the district court observed that “leave should be
freely granted ‘when justice so requires.’” Aplt. App. at 359 (quoting
Fed. R. Civ. P. 15(a)). The court ruled, however, that the motion to amend was
untimely, having been filed seven months after the deadline for filing amended
pleadings and one month after briefing on summary judgment had been
completed. Furthermore, the court noted that even though Mr. Compton was
aware that RAC construed his complaint as asserting only a federal claim under
the FLSA as of the date of removal, August 31, 2007, he delayed in seeking both
a remand and leave to amend. The court further determined that allowing
Mr. Compton to amend his complaint would be both prejudicial to RAC and
futile.
One of the justifications for denying a motion to amend is undue delay.
Minter v. Prime Equip. Co., 451 F.3d 1196, 1205 (10th Cir. 2006). “The longer
the delay, the more likely the motion to amend will be denied, as protracted
delay, with its attendant burdens on the opponent and the court, is itself a
sufficient reason for the court to withhold permission to amend.” Id. at 1205(quotation omitted). The court appropriately may deny leave to amend “when the
party filing the motion has no adequate explanation for the delay.” Id. at 1206(quotation omitted).
Mr. Compton contends that his motion to amend, filed on June 16, 2008,
was timely because it was filed just four days after the district court denied his
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motion to remand. He contends that he was entitled to wait for a ruling on his
motion to remand before moving to amend, despite the pendency of RAC’s
motion for summary judgment, the conclusion of discovery, and the
November 19, 2007, deadline to file amended pleadings. He explained that the
delay was due to his mistaken belief that his original complaint had sufficiently
stated a claim for breach of contract. 3
Mr. Compton was aware of the facts forming the basis of his contract claim
prior to filing his original complaint. He was also aware of RAC’s position that
the original complaint did not state such a claim, as indicated in its answer to the
complaint, Aplt. App. at 11-12 (denying all allegations; referring to plaintiff’s
“breach of contract claim, if any”); the joint status report, id. at 17 (“Plaintiff
seeks back overtime under the federal [FLSA].”); and its summary-judgment
motion, id. at 53-54 (arguing original complaint “does not state a claim for breach
of a written contract for overtime”). Yet Mr. Compton did not request leave to
amend until the litigation had progressed well into the summary-judgment stage,
and he did not proffer an adequate explanation for the delay. See McKnight v.
3
Mr. Compton again conflates his current claim for payment of hourly
wages, with the contract claim the district court addressed and denied–whether
the parties had a contract “obligating [RAC] to exceed the FLSA requirements
regarding overtime compensation,” Aplt. App. at 355. Therefore, even if
Mr. Compton reasonably believed his complaint stated a breach-of-contract claim
relative to the FLSA, it was not reasonable for him to believe that all potential
contract theories were included.
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Kimberly Clark Corp., 149 F.3d 1125, 1130 (10th Cir. 1998) (affirming order
denying leave to amend, noting that “plaintiff was aware of all the information on
which his proposed amended complaint was based prior to filing the original
complaint [and he] offered no explanation for the undue delay”). Indeed, it
appears that the motion to amend was an attempt to “salvage a lost case by
untimely suggestion of [a] new theor[y] of recovery,” a tactic we have disfavored,
see Hayes v. Whitman, 264 F.3d 1017, 1027 (10th Cir. 2001) (quotation omitted).
Finally, we consider the district court’s finding that amending the
complaint would be futile. “A court properly may deny a motion for leave to
amend as futile when the proposed amended complaint would be subject to
dismissal for any reason, including that the amendment would not survive a
motion for summary judgment.” E.Spire Commc’ns, Inc. v. N.M. Pub. Regulation
Comm’n, 392 F.3d 1204, 1211 (10th Cir. 2004) (quotation omitted).
Mr. Compton argues that the employee handbooks and time records created
a written contract of employment. The district court held that the evidence
Mr. Compton presented did not create a material factual dispute regarding a
breach-of-contract claim. In evaluating Mr. Compton’s claims under the FLSA,
the court discussed the employee handbooks, which contained bold, express
disclaimers that no contract was formed. Therefore, the court determined that
allowing amendment to assert a state-law claim for breach of contract would be
futile.
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We have reviewed the employee handbooks and the time records, noting the
disclaimers discussed by the district court. Under Oklahoma law, “an employer
may deny (or disclaim) any intent to make the provisions of [an employee
handbook] part of the employment relationship,” as long as the disclaimer is
clear. Russell v. Bd. of County Comm’rs, 952 P.2d 492, 502 (Okla. 1997).
Mr. Compton responds that an employer may not disclaim an employee’s claim to
accrued benefits, see id., and therefore, the disclaimers do not deprive him of his
past-due wages. This may be so, but Mr. Compton’s claims are time-barred
unless he can show that he and RAC formed a written contract, thus bringing the
claims within the Oklahoma five-year limitations period. Because the handbooks
clearly disclaim any intent to create an employment contract, Compton’s amended
complaint would not survive a motion for summary judgment.
Accordingly, based on our de novo review, we find no abuse of discretion
in the district court’s determination that amendment would be futile, and we
conclude that the district court acted within its discretion to deny leave to amend
the complaint.
Conclusion
The judgment of the district court is AFFIRMED.
Entered for the Court
Robert H. Henry
Chief Circuit Judge
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