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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Kristina Rueling, 

Plaintiff, 

v. 

MOBIT LLC, et al., 

Defendants. 

No. CV-18-00568-PHX-BSB 

ORDER 

 Plaintiff Kristina Rueling has filed a “Motion for Attorneys’ Fees and Costs.” 

(Doc. 25.) Defendants MOBIT LLC and James Koch (“Defendants”) have filed an 

“Opposition to Plaintiff’s Motion for Attorneys’ Fees and Costs and Cross-Motion for 

Attorneys’ Fees.” (Doc. 26.) The motions are fully briefed. (Docs. 27, 28.) As set forth 

below, the Court denies Plaintiff’s and Defendants’ motions. 

I. Background 

 In her complaint, Plaintiff asserted claims for failure to pay minimum wages under 

the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, and failure to make 

timely payment of wages under the Arizona Wage Act, Ariz. Rev. Stat. §§ 23-351, 23-

353, and 23-355. (Doc. 1.) Plaintiff sought to recover unpaid minimum wage 

compensation, liquidated damages, and statutory penalties for Defendants’ alleged 

violations of the FLSA (id. at ¶ 2), as well as unpaid wages, treble damages, and statutory 

penalties for Defendants’ alleged violations of the Arizona Wage Act. (Id. at ¶ 3.) 
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 In response, Defendants filed a motion to dismiss for lack of subject matter 

jurisdiction. (Doc. 10.) Defendants argued that Plaintiff’s FLSA minimum wage claim 

was moot because a non-party, MOBIT Technologies Ltd., the New Zealand company 

that had contracted with Plaintiff, had wired $5,000 to Plaintiff’s bank account. (Id. at 2.) 

Defendants asserted that this amount covered the wages allegedly owed to Plaintiff under 

her contract, plus an additional sum. (Id., Ex. 1 at ¶ 8.) 

 The Court found that Plaintiff’s minimum wage claim under the FLSA was moot 

because Plaintiff “ha[d] been fully compensated for all possible damages under the 

FLSA.” (Doc. 23 at 10.) Therefore, the Court granted Defendants’ motion to dismiss 

Plaintiff’s FLSA claim. The Court declined to exercise supplemental jurisdiction over 

Plaintiff’s claim under the Arizona Wage Act and dismissed this matter in its entirety. 

(Id. at 9-10.) 

II. Plaintiff’s Motion for Attorney’s Fees 

In her motion for attorney’s fees, Plaintiff argues that she is the prevailing party on 

her FLSA minimum wage claim, even though she did not obtain a favorable judgment, 

and therefore she is entitled to an award of attorney’s fees. (Doc. 25 at 2-3.) In their 

response to Plaintiff’s motion, Defendants argue that they are not Plaintiff’s employers 

and therefore she has named the wrong parties as defendants. (Doc. 26 at 3.) In her 

reply, Plaintiff argues that Defendants have waived this argument because they did not 

move to dismiss her claims on this basis. (Doc. 27 at 2.) Finally, Plaintiff argues that the 

Defendants are liable for her FLSA minimum wage claims because they were “joint 

employers” with non-parties MOBIT Technologies, Ltd. and Sean McDonald. (Id.) The 

Court considers these arguments below. 

A. Plaintiff’s Status as Prevailing Party Without a Favorable Judgment 

 In her motion for attorney’s fees, Plaintiff asserts that she is the prevailing party 

on her FLSA minimum wage claim and therefore she is entitled to an award of attorney’s 

fees and costs under 29 U.S.C. § 216(b). (Doc. 25 at 2-3.) Relying on Orozco v. 

Borenstein, Plaintiff asserts that although she did not obtain a judgment in her favor, she 
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prevailed on her FLSA claims because the lawsuit she filed caused Defendants to pay the 

alleged unpaid wages. (Id. at 3 (citing Orozco v. Borenstein, 2013 WL 4543836, at *2 

(D. Ariz. Aug. 18, 2013)).) In Orozco, the court dismissed the plaintiff’s FLSA 

minimum wage claim as moot after the defendant paid the unpaid wages and liquidated 

damages. Orozco, 2013 WL 4543836, at *2. The court held that even though plaintiff 

did not obtain a favorable judgment on his FLSA minimum wage claim, he was the 

prevailing party and entitled to attorney’s fees because the filing of the lawsuit caused 

defendants to pay the unpaid wages. Id. In Orozco, the court addressed circumstances 

that are similar to this case. In both cases, after filing suit, but before a favorable 

judgment or settlement, the plaintiffs received full compensation for their claims and 

their claims were dismissed as moot. Thus, the court’s decision in Orozco supports 

Plaintiff’s argument that, in some circumstances, a favorable judgment is not required for 

an award of attorney’s fees under the FLSA. 

The Orozco decision, however, does not address the issue presented in this case—

whether Defendants were Plaintiff’s employer and thus can be liable for her FLSA wage 

claims or attorney’s fees. In Orozco, the defendants filed an answer and admitted that 

they employed the plaintiff, that they were an enterprise engaged in commerce with an 

annual gross volume of sales or business of not less than $500,000, and that they were an 

employer. Orozco v. Borenstein, et al, CV 11-2305-PHX-FJM, Doc. 11 at ¶¶ 1, 15, and 

16. In contrast, in this case Defendants have consistently asserted that they are not 

Plaintiff’s employer. Therefore, the Court concludes that Plaintiff’s reliance on Orozco

to support her claim for attorney’s fees is misplaced. 

In their response to Plaintiff’s motion for attorney’s fees, Defendants argue that 

Plaintiff did not prevail on her FLSA claim because the Court granted Defendants’ 

motion to dismiss and entered judgment in their favor.1

 (Doc. 26 at 4.) The Court, 

however, does not address the parties’ arguments on whether Plaintiff should be 

 1

 Although Defendants do not cite authority to support this argument, the Eleventh Circuit has held, in circumstances similar to this case, that “[t]he FLSA plainly requires that the plaintiff receive a judgment in his favor to be entitled to attorney’s fees and costs.” Dionne v. Floormasters Enters., Inc., 667 F.3d 1199, 1205-06 (11th Cir. 2012) 
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considered the prevailing party in the absence of a favorable judgment. Instead, as set 

forth below, the Court concludes that Plaintiff did not establish an essential element of 

her FLSA claim—that Defendants were her employers—and therefore she did not 

establish their liability under the FLSA for damages or attorney’s fees. 

B. Defendants Did Not Waive Defenses to Merits of Plaintiff’s Claims 

 Plaintiff argues that Defendants waived any argument that they were not her 

employers because they did not move to dismiss the complaint on this basis. 

(Doc. 27 at 2.) Plaintiff argues that Defendants should have asserted that they were not 

her employer “in the pre-judgment phase of this lawsuit.” (Id.) Plaintiff does not provide 

any support for her suggestion that a defendant who files a motion to dismiss for lack of 

subject matter jurisdiction, before answering, is required to move to dismiss on every 

available basis. 

 Defendants’ assertion that they are not Plaintiff’s employer is a defense to the 

merits of Plaintiff’s FLSA minimum wage claim. See 29 U.S.C. § 216(b) (addressing an 

employer’s liability for unpaid wages and attorney’s fees); Richardson v. Alaska Airlines, 

Inc., 750 F.2d 763, 766 (9th Cir. 1984) (holding that the Age Discrimination in 

Employment Act, which incorporates the remedial provisions of the FLSA including the 

attorney’s fee provisions of § 216(b), does not allow an award of attorney’s fees against a 

non-employer). A defense to the merits of a plaintiff’s claims is not waived because a 

defendant files a motion to dismiss for lack of subject matter jurisdiction, before filing an 

answer, and does not argue its defense to the merits of the claim in that motion. See Fed. 

R. Civ. P. 12(b); Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998) 

(rejecting doctrine of “‘hypothetical jurisdiction’ that would allow a court to resolve 

questions of law when its jurisdiction is in doubt” and explaining that “Article III 

jurisdiction is always an antecedent question.”). 

Therefore, the Court concludes that Defendants were not required to move to 

dismiss the complaint on the basis that they were not Plaintiff’s employers, either before 
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filing their motion for lack of subject matter jurisdiction or as part of that motion, and 

therefore they did not waive this argument. 

C. The FLSA Imposes Liability for Wage Claims on Employers 

 The FLSA requires employers to pay their employees a minimum hourly wage and 

overtime compensation. See 29 U.S.C. § 206 (“[e]very employer shall pay to each of his 

employees . . . wages at the following rates: . . .”), § 207(a)(1) (“no employer shall 

employ any of his employees . . . 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.”). The FLSA creates a private right of action against any employer who 

violates § 206 (the minimum wage requirement) or § 207 (the overtime compensation 

requirement). See Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1298 

(11th Cir. 2011) (stating that “[i]f a covered employee is not paid the statutory wage, the 

FLSA creates for that employee a private cause of action against his employer for the 

recovery of unpaid overtime wages and back pay”) (citing 29 U.S.C. § 216(b)). 

 In its remedial provisions, the FLSA states that an employer who violates § 206 or 

§ 207 shall be liable to its employee for unpaid wages, liquidated damages, and attorney’s 

fees: 

Any employer who violates the provisions of section 206 or section 207 of 

this title shall be liable to the employee or employees affected in the amount 

of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated 

damages. . . . An action to recover the liability prescribed in the preceding sentences may be maintained against any employer . . . . The court in such 

action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action. 

29 U.S.C. § 216(b) (emphasis added). The Ninth Circuit has held that this section allows 

recovery from an employer who violates the FLSA, and has explained that “the word 

‘defendant’ is used to describe the party who may be liable for the plaintiff’s attorney’s 

fees . . . . [and] refers to the employer against whom the charge of violation has been 

brought.” Richardson, 750 F.2d at 766 (quoting 29 U.S.C. § 216(b).) Therefore, Plaintiff 
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may not recover attorney’s fees from Defendants unless they were her employers at the 

time she alleges she was not paid the required minimum wage. 

D. Plaintiff Did Not Establish that Defendants Were Her Employers 

 In their motion to dismiss, Defendants asserted that Defendant MOBIT LLC is a 

Delaware-based company that has no employees or contractors. (Doc. 10, Ex. 2.) 

Defendants further asserted that Defendant MOBIT LLC never had a contract with 

Plaintiff. (Id. at 2, n.2; Ex. 1 at ¶¶ 3-5.) Defendants also asserted that Plaintiff was a 

contractor with non-party MOBIT Technologies Ltd., and not an employee. (Id., Ex. 1 at 

¶¶ 2-3.) In her response to the motion to dismiss, Plaintiff did not respond to these 

assertions and instead referred to the actions of “MOBIT” and did not specify whether 

she was referring to Defendant MOBIT LLC or non-party MOBIT Technologies Ltd. 

(See Doc. 11; Doc 23 at 2.) In its order on the motion to dismiss, the Court 

acknowledged Defendants’ argument that they were not Plaintiff’s employer, but noted 

that because Defendants “d[id] not seek dismissal of Plaintiff’s claims on that basis . . . 

the Court d[id] not need to address this issue to resolve the motion to dismiss.” 

(Doc. 23 at 2, n.1.) 

 Although Defendants asserted that they were not Plaintiff’s employers in their 

motion to dismiss, and the Court noted Plaintiff’s failure to address this issue in its order 

on that motion, Plaintiff does not address this issue in her motion for attorney’s fees. 

(See Doc. 25.) Instead, Plaintiff argues that “Defendants” wired money to her bank 

account (id. at 2), and that she is a prevailing party because “Defendants wire[d] Plaintiff 

all of her minimum wages” after she filed suit. (Id. at 3.) Plaintiff does not refer to any 

specific entity (MOBIT LLC or MOBIT Technologies Ltd.) in these arguments, she does 

not argue that Defendant MOBIT LLC wired money to her bank account, and she does 

not argue that Defendants MOBIT LLC or Koch were her employers. 

 In their response to Plaintiff’s motion for attorney’s fees, Defendants again assert 

that Plaintiff filed this matter against the incorrect parties and that the appropriately 

named party, if any, is not named as a defendant. (Doc. 26 at 3–4.) Defendants argue 
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that the Court should deny Plaintiff’s motion because they were not Plaintiff’s employers 

and therefore Plaintiff cannot recover fees against them under the FLSA. (Id. at 3.) In 

her reply, Plaintiff does not dispute that she must establish that Defendants were her 

employers as an element of her FLSA minimum wage claim. (See Doc. 27.) Instead, 

Plaintiff argues that “the named Defendants were her joint employers along with two 

other unnamed parties that reside out of the country, MOBIT Technologies and Sean 

McDonald.” (Doc. 27 at 2.) Plaintiff’s argument assumes that she is an “employee” of 

MOBIT LLC, Koch, MOBIT Technologies Ltd., or McDonald. As set forth below, 

Plaintiff has not presented any information or argument to establish that she is an 

“employee” under the FLSA. 

 1. The FLSA Definition of “Employee” and “Employer” 

 The FLSA defines an “employee” as an “any individual employed by an 

employer.” 29 U.S.C. § 203(e)(1). An “‘[e]mployer’ includes any person acting directly 

or indirectly in the interest of an employer in relation to an employee[.]” 29 U.S.C. 

§ 203(d). The determination of whether a party is an “employer” within the meaning of 

the FLSA is a question of law. Bonnette v. Cal. Health and Welfare Agency, 704 F.2d 

1465, 1469 (9th Cir. 1983), overruled on other grounds Garcia v. San Antonio Metro. 

Transit Auth., 471 U.S. 1049 (1985). “Courts have adopted an expansive interpretation 

of the definition of ‘employer’ and ‘employee’ under the FLSA, to effectuate the broad 

remedial purpose of the [FLSA].” Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 

748, 754 (9th Cir. 1979). Under that expansive interpretation, “employees are those who 

as a matter of economic reality are dependent upon the business to which they render 

service.” Id. 

 Courts often invoke the following six factors articulated in Real when analyzing 

the “economic reality” of a situation: (1) “the degree of the alleged employer’s right to 

control over the manner in which the work is performed”; (2) “the alleged employee’s 

opportunity for profit or loss depending upon his managerial skill”; (3) “the alleged 

employee’s investment in equipment or materials required for his task, or his 
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employment of helpers”; (4) “whether the service rendered requires a special skill”; 

(5) “the degree of permanence of the working relationship”; and (6) “whether the service 

rendered is an integral part of the alleged employer’s business.” Id. These factors, 

however, are not exhaustive and “[t]he presence of any individual factor is not dispositive 

of whether an employee/employer relationship exists.” Id. Instead, the “economic 

reality” controls regardless of whether contractual language purports to describe a 

working relationship. Id. Even “the subjective intent of the parties . . . cannot override 

the economic realities reflected in the factors.” Id. 

Plaintiff’s motion and reply do not address the “economic reality” of her 

relationships with the Defendants or with non-parties MOBIT Technologies Ltd. and 

McDonald. Plaintiff has not addressed the Real factors or provided any other information 

or argument to support her claim that she was an employee of Defendants or non-parties 

MOBIT Technologies Ltd. or McDonald. Therefore, she has not established that she was 

an “employee,” as that term is defined by the statute and explained in Ninth Circuit case 

law. Because Plaintiff has not established this essential element of her FLSA minimum 

wage claim, she has not established that she is entitled to unpaid wages, damages, or 

attorney’s fees. See 29 U.S.C. § 216(b). 

 2. Joint Employer Liability under the FLSA 

 Furthermore, even if Plaintiff had established that she was an employee of nonparty MOBIT Technologies Ltd., or non-party McDonald, or Defendants, she has not 

established that Defendants and these non-parties were “joint employers.” Two or more 

employers may be joint employers of an employee, with each employer having individual 

liability for compliance with the FLSA. Bonnette, 704 F.2d at 1469 (citations omitted). 

The Department of Labor regulations provide the following examples of joint 

employment situations: “[w]here one employer is acting directly or indirectly in the 

interest of the other employer (or employers) in relation to the employee”; or [w]here the 

employers are not completely disassociated with respect to the employment of a 

particular employee and may be deemed to share control of the employee, directly or 
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indirectly, by reason of the fact that one employer controls, is controlled by, or is under 

common control with the other employer.” Id. at 1470 (quoting 29 C.F.R. § 791.2(b).) 

 The determination of “joint employers” is based on a consideration of the total 

employment situation and the economic realities of the work relationship. Bonnette, 704 

F.2d at 1470. The court considers the following four factors in making this 

determination: “whether the alleged employer (1) had the power to hire and fire the 

employees, (2) supervised and controlled employee work schedules or conditions of 

employment, (3) determined the rate and method of payment, and (4) maintained 

employment records.” Id. (citations omitted). 

 Plaintiff does not address these factors. Instead, Plaintiff attempts to support her 

assertion that Defendants and non-parties MOBIT Technologies Ltd. and McDonald were 

her joint employers by noting that Defendants “obtained intimate knowledge and 

documentation related to Plaintiff’s pre-litigation communications with MOBIT 

Technologies, payment detail from the $5,000.00 bank transaction between MOBIT 

Technologies and Plaintiff, and a sworn statement from CEO of MOBIT Technologies.” 

(Doc. 27 at 3.) Plaintiff argues that these facts establish that “[t]he entities are 

unquestionably related.” (Id.) 

 Even if the Court accepted Plaintiff’s arguments and concluded that Defendants 

and non-parties MOBIT Technologies Ltd. and McDonald were “related” entities, or that 

they shared information, these conclusions would not establish that they were joint 

employers. Plaintiff has provided no information or argument from which the Court 

could evaluate the economic realities of any relationship between Defendants, the nonparties, and Plaintiff. Therefore, her conclusory assertion that Defendants and nonparties MOBIT Technologies Ltd. and McDonald were “joint employers” does not 

establish that any of these parties or non-parties was her employer. Therefore, she has 

not established an essential element of her FLSA wage claim and she is not entitled to 

unpaid wages, damages, or attorney’s fees. See 29 U.S.C. § 216(b). 
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III. Defendants’ Motion for Attorney’s Fees 

 In their motion for attorney’s fees, Defendants argue that Plaintiff’s counsel 

unreasonably and vexatiously multiplied the proceedings and, therefore, the Court should 

impose sanctions under 28 U.S.C. § 1927 and award Defendants $9,267.00 in attorney 

fees. (Doc. 26 at 7-8.) Defendants argue that the Court should award their attorney’s 

fees as a sanction against Plaintiff’s counsel for “(1) knowingly and intentionally 

pursuing claims against the incorrect party; and (2) continuing to seek relief under the 

FLSA after receiving a payment that exceeded the maximum recovery available, 

including unnecessarily opposing Defendants’ motion to dismiss.” (Id. at 7.) 

In response to Defendants’ argument that Plaintiff’s counsel knowingly pursued 

claims against the wrong parties, Plaintiff argues that her counsel acted appropriately 

because “he suspected that the named entities were joint employers.” (Doc. 27 at 4.) 

Defendants do not respond to these arguments in their reply and instead reassert their 

arguments that Plaintiff’s counsel knowingly pursued moot claims. (Doc. 28 at 1-2.) 

Similarly, Plaintiff does not respond to Defendants’ argument that her counsel 

unreasonably pursued moot claims. Instead, Plaintiff argues that Defendants’ motion is 

untimely under Local Rule 54.2. This argument fails under the plain language of Rule 

54.2, which states that the rule does not apply to claims for attorney’s fees under 

28 U.S.C. § 1927. See LRCiv 54.2. Nonetheless, as set forth below, the Court does not 

find that Plaintiff’s counsel acted in bad faith and, therefore, denies Defendants’ motion 

for attorney’s fees. 

A. Sanctions Under § 1927

 Section 1927 provides that “[a]ny attorney . . . who so multiplies the proceedings 

in any case unreasonably and vexatiously may be required by the court to satisfy 

personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of 

such conduct.” 28 U.S.C. § 1927. The Ninth Circuit has held that “unreasonably and 

vexatiously . . . implies a bad faith or intentional misconduct requirement not explicit in 

the statute.” Barnd v. City of Tacoma, 664 F.2d 1339, 1343 (9th Cir. 1982). 
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Consequently, “[s]anctions pursuant to section 1927 must be supported by a finding of 

subjective bad faith.” Blixseth v. Yellowstone Mountain Club, LLC, 796 F.3d 1004, 1007 

(9th Cir. 2015) (citation omitted). The Ninth Circuit has found that “bad faith is present 

when an attorney knowingly or recklessly raises a frivolous argument or argues a 

meritorious claim for the purpose of harassing an opponent.” Id. (citation and internal 

quotation marks omitted). An argument is frivolous when its resolution is “obvious” or it 

is “wholly without merit.” Nat’l Mass Media Telecomm. Sys., Inc. v. Stanley (In re Nat’l 

Mass Media Telecomm. Sys., Inc.), 152 F.3d 1178, 1181 (9th Cir. 1998). 

B. Plaintiff’s Counsel Pursued Moot Claims 

 In this case, Plaintiff pursued her FLSA minimum wage claim against Defendants 

after non-party MOBIT Technologies Ltd. wired Plaintiff $5,000, which she did not 

return. On March 15, 2018, Defendants’ counsel sent an email to Plaintiff’s counsel 

informing them of the wire transfer and how it compensated Plaintiff fully for her alleged 

statutory damages. (Doc. 26, Ex. 3, Attach. A.) Defendants’ counsel reiterated the effect 

of the $5,000 payment in a March 16, 2018 email, stating that Plaintiff “knowingly sued 

the wrong parties and that [Plaintiff] has received payment in full [for her FLSA claim].” 

(Id.) On March 27, 2018, Defendants’ counsel sent additional emails to Plaintiff’s 

counsel advising them that their client has been paid an amount that exceeded what she 

could recover for her FLSA wage claim and therefore her claim was moot. (Id., Ex. 3, 

Attach. B.) 

 On April 2, 2018, Defendants filed a motion to dismiss for lack of subject matter 

jurisdiction and argued that Plaintiff’s wage claim was moot because she had been fully 

compensated for any damages. (Doc. 10.) Defendants also asserted that Plaintiff had 

named the wrong parties, but they did not move to dismiss Plaintiff’s FLSA claims on 

this basis. The Court granted the motion to dismiss. (Doc. 23.) Although the Court 

rejected Plaintiff’s arguments in response to Defendants’ motion to dismiss, it does not 

find that counsel engaged in intentional misconduct or acted in bad faith. Therefore, the 

Court denies Defendants’ motion for attorney’s fees as a sanction under § 1927. 
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IV. Conclusion 

 As set forth above, Plaintiff did not establish an essential element of her FLSA 

claim—that Defendants were her employers—and therefore she did not establish their 

liability under the FLSA for damages or attorney’s fees. Therefore, the Court denies 

Plaintiff’s motion for attorney’s fees. Additionally, although the Court finds that 

Plaintiff’s counsel pursued moot claims, it does not find that counsel acted in bad faith 

and therefore denies Defendants’ motion for attorney’s fees. 

 Accordingly, 

IT IS ORDERED that Plaintiff’s Motion for Attorneys’ Fees and Costs (Doc. 25) 

is DENIED. 

IT IS FURTHER ORDERED that Defendant’s Cross-Motion for Attorneys’ 

Fees (Doc. 26) is DENIED. 

 Dated this 19th day of November, 2018.