Court Opinion

ID: 4426346
Source: CourtListenerOpinion
Date Created: 2019-08-16 17:00:34.212514+00
Date Added: 2024-06-11T14:27:51.353497
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JOSEPHINE TIJERINO; TAMICKA              No. 18-16013
TOLIVER; JANE ROE DANCER,
            Plaintiffs-Appellants,      D.C. Nos.
                                     CV 15-2563-SMM
                v.                    15-2564-SMM
                                      16-0408-SMM
STETSON DESERT PROJECT, LLC,
DBA Lé Girls Cabaret; CORY J.
ANDERSON; CARY ANDERSON,                  OPINION
          Defendants-Appellees.

      Appeal from the United States District Court
               for the District of Arizona
    Stephen M. McNamee, District Judge, Presiding

           Argued and Submitted July 9, 2019
                   Portland, Oregon

                 Filed August 16, 2019

 Before: Ferdinand F. Fernandez, A. Wallace Tashima,
          and John B. Owens, Circuit Judges.

               Opinion by Judge Tashima
2            TIJERINO V. STETSON DESERT PROJECT

                            SUMMARY*

                             Labor Law

    The panel reversed the district court’s dismissal for lack
of subject-matter jurisdiction of an action brought under the
Fair Labor Standards Act and Arizona state law by a group of
exotic dancers against the club at which they worked.

    The district court held that it lacked jurisdiction because
the dancers did not prove at the outset of the case that they
were employees rather than independent contractors.
Reversing, the panel held that the statutory requirement that
plaintiffs must be employees as defined in the FLSA is a
merits-based determination, not a jurisdictional limitation.
Further, the dancers’ complaints sufficiently alleged
substantial issues of federal law. The panel remanded the
case for further proceedings.

                             COUNSEL

Andrew Sterling (argued) and Michael J. Rusing, Rusing
Lopez & Lizardi PLLC, Tucson, Arizona, for Plaintiff-
Appellant Jane Roe Dancer.

Clifford P. Bendau II, The Bendau Law Firm PLLC, Phoenix,
Arizona, for Plaintiffs-Appellants Josephine Tijerino and
Tamika Toliver.

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
           TIJERINO V. STETSON DESERT PROJECT                3

Laurent R.G. Badoux (argued), Buchalter APC, Scottsdale,
Arizona, for Defendants-Appellees.

                         OPINION

TASHIMA, Circuit Judge:

    These are actions under the Fair Labor Standards Act
(“FLSA”) brought by a group of exotic dancers against the
club at which they worked, for asserted violations of the
FLSA and Arizona state law. The district court dismissed the
suit with prejudice for lack of subject-matter jurisdiction
because the Dancers did not prove at the outset of the case
that they were employees rather than independent contractors.
As we explain below, the district court erred in reaching that
decision. We reverse and remand for further proceedings.

                     BACKGROUND

    Plaintiffs-Appellants Josephine Tijerino, Tamicka
Toliver, and Jane Roe Dancer (collectively, the “Dancers”) all
worked as exotic dancers at Lé Girls Gentlemen’s Club, a
strip club in Phoenix, Arizona. The club is owned and
operated by Defendants-Appellees Stetson Desert Project,
LLC, dba Lé Girls Cabaret, Cory Anderson, and Cary
Anderson (collectively, the “Club”). Initially, each dancer
filed a separate complaint against the Club alleging violations
of employment law. The Dancers all allege that the Club
failed to pay them any wages in violation of the FLSA and
willfully failed to pay them at the rate of Arizona’s minimum
wage in violation of the Arizona Minimum Wage Act. See
29 U.S.C. § 206(a); Ariz. Rev. Stat. § 23-363. Separately,
Tijerino and Toliver allege that the Club failed to pay them
4          TIJERINO V. STETSON DESERT PROJECT

overtime wages in violation of the FLSA and willfully failed
to pay their wages for labor in violation of the Arizona Wage
Law. See 29 U.S.C § 207; Ariz. Rev. Stat. § 23-351. Jane
Roe Dancer separately alleges that the Club was unjustly
enriched in violation of Ariz. Rev. Stat. § 23-202.

     Jane Roe Dancer filed her complaint as a collective action
on behalf of herself and all other similarly situated
individuals who worked at the Club as dancers. See
29 U.S.C. § 216(b). She filed a motion to consolidate the
Dancers’ cases, which the district court granted. She also
filed a motion for conditional certification and to authorize
notice to putative class members, and she included a
declaration in which she provided information suggesting that
the exotic dancers who worked at the Club were similarly
situated for purposes of the FLSA. Shortly after the cases
were consolidated, the parties submitted a proposed joint case
management order in which they agreed that “[t]he basis for
the court’s subject-matter jurisdiction over plaintiff’s claims
is the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. . . .”

    The district court denied the Dancers’ motion to
conditionally certify an opt-in class and dismissed the case
with prejudice for lack of subject-matter jurisdiction. First,
in denying the motion to conditionally certify a FLSA opt-in
class, the district court called such a motion “premature.” It
held that Jane Roe “must satisfy her initial burden of alleging
specific facts that permit an inference that she is an
‘employee’ (and the Defendants her ‘employer’) within the
meaning of the FLSA.” It also noted that the Dancers’ status
as employees or independent contractors of the Club was
“unsettled,” and ordered the Dancers to file a brief “on
whether Plaintiff and her putative class are employees within
the meaning of FLSA under the economic realities test.”
             TIJERINO V. STETSON DESERT PROJECT                           5

    The district court next denied the Dancers’ renewed
motion for conditional class certification and held that the
Dancers were independent contractors, not employees. It
held that § 216(b)’s requirement that employees bring actions
under the statute constituted an “antecedent issue” of
jurisdiction and thus that, if the Dancers were not employees
under the FLSA, there could be no violation of the FLSA and
therefore no federal question jurisdiction. The district court
proceeded to evaluate the Dancers’ employment status under
the FLSA’s economic realities test and declared them to be
independent contractors. It then denied the Dancers’ motion
to conditionally certify a FLSA opt-in class based on a lack
of subject-matter jurisdiction.1

    Finally, the district court dismissed all three plaintiffs’
cases with prejudice for lack of subject-matter jurisdiction.2
The district court “reiterate[d] its position that employee
status under the FLSA is an antecedent jurisdictional issue,”
and that plaintiffs had not “come forward with any evidence
from which the Court could find a reasonable indicia of
employment.”

    The Dancers appeal from the final judgment, the order
dismissing the cases with prejudice for lack of subject-matter
jurisdiction, and the order denying their renewed motion for
conditional certification of an FLSA opt-in class.

    1
      The district court later denied the Dancers’ motion to reconsider this
order.
    2
      Although we need not examine the issue in detail because we
reverse the district court’s dismissal for other reasons, we note that, in
general, dismissal for lack of subject matter jurisdiction should be without
prejudice. See Mo. ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir.
2017).
6          TIJERINO V. STETSON DESERT PROJECT

APPELLATE JURISDICTION AND STANDARD OF
                REVIEW

    We have appellate jurisdiction under 28 U.S.C. § 1291.
We review de novo a dismissal for lack of subject-matter
jurisdiction. Leeson v. Transamerica Disability Income Plan,
671 F.3d 969, 974 (9th Cir. 2012). A district court’s
interpretation of federal law, such as the FLSA, is also
reviewed de novo. Id.

                        DISCUSSION

I. The district court erred in concluding that it lacked
   subject-matter jurisdiction.

    Congress granted federal district courts “original
jurisdiction of all civil actions arising under the Constitution,
laws, or treaties of the United States.” 28 U.S.C. § 1331.
The Supreme Court has held that “Congress has given the
lower federal courts jurisdiction to hear . . . only those cases
in which a well-pleaded complaint establishes either that
federal law creates the cause of action or that the plaintiff’s
right to relief necessarily depends on resolution of a
substantial question of federal law.” Franchise Tax Bd. v.
Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1,
27–28 (1983). “[A] federally created claim for relief is
generally a ‘sufficient condition for federal-question
jurisdiction.’” Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368,
377 (2012) (quoting Grable & Sons Metal Prods., Inc. v.
Darue Eng’g & Mfg., 545 U.S. 308, 317 (2005)). The FLSA
provides such a claim for aggrieved employees to sue to
recover unpaid minimum wages or unpaid overtime
compensation, either individually or collectively. 29 U.S.C.
§ 216(b).
           TIJERINO V. STETSON DESERT PROJECT                7

    In order to determine whether the district court had
subject-matter jurisdiction over the Dancers’ claims, we ask
two questions. First, we ask whether the employment status
provision—the statutory requirement that plaintiffs must be
employees as defined in the FLSA, 20 U.S.C. § 203(e), in
order to prevail in a § 216(b) action—is a jurisdictional
limitation on the statute’s coverage such that it prevents the
Dancers from moving forward with their claims. Second, we
ask whether the Dancers’ complaints survive the well-pleaded
complaint rule to invoke federal question subject-matter
jurisdiction.

   A. The Dancers’ employment status is a merits-based
      determination, not an antecedent jurisdictional
      issue.

     If the employment status provision of the statute is
jurisdictional, then district courts would be required to
analyze whether plaintiffs are employees under the FLSA at
the outset of the litigation under Federal Rule of Civil
Procedure 12(b)(1), as the district court did in this case. But
if the employment status provision is an essential ingredient
related to the merits of a claim, then whether plaintiffs are
employees should be decided at summary judgment or trial,
assuming the complaint sufficiently alleges that plaintiffs are
employees.

    In determining whether a statutory provision constitutes
a jurisdictional limitation or an “essential ingredient” of a
claim, the Supreme Court has set forth a bright-line test:

       If the Legislature clearly states that a
       threshold limitation on a statute’s scope shall
       count as jurisdictional, then courts and
8          TIJERINO V. STETSON DESERT PROJECT

       litigants will be duly instructed and will not
       left to wrestle with the issue. But when
       Congress does not rank a statutory limitation
       on coverage as jurisdictional, courts should
       treat the restriction as nonjurisdictional in
       character.

Arbaugh v. Y & H Corp., 546 U.S. 500, 515–16 (2006)
(internal citation omitted). A limitation on a statute’s scope
counts as a jurisdictional limitation only if Congress clearly
“intended” it to be jurisdictional such that courts should raise
the issue “on their own motion.” Id. at 514. Otherwise courts
should treat the statutory threshold as nonjurisdictional. Id.

    In Arbaugh, a restaurant challenged its former waitress’
Title VII sexual harassment claim after the close of trial,
arguing that the district court lacked subject-matter
jurisdiction over the case because Title VII’s statutory
definition of “employer” did not include restaurants of its
size. Id. at 504 (“Y & H asserted that it had fewer than
15 employees on its payroll and therefore was not amenable
to suit under Title VII.”). Noting the tendency of courts to
conflate subject-matter jurisdiction with the “plaintiff’s need
and ability to prove the defendant bound by the federal law
asserted as the predicate for relief—a merits-related
determination,” the Supreme Court set out to clarify this
“dichotomy.” Id. at 511 (emphasis added). The Court held
that, “if subject-matter jurisdiction turns on contested facts,
the trial judge may be authorized to review the evidence and
resolve the dispute on her own. If satisfaction of an essential
element of a claim for relief is at issue, however, the jury is
the proper trier of contested facts.” Id. at 514 (internal
citations omitted).
           TIJERINO V. STETSON DESERT PROJECT                9

    Subsequently, in Reed Elsevier, Inc. v. Muchnick,
559 U.S. 154 (2010), the Court reasoned that courts should
determine whether a statutory provision is jurisdictional by
looking at the provision’s “text and structure,” as well as
“context, and relevant historical treatment.” Id. at 162,
166–68 (applying the Arbaugh test to hold that the Copyright
Act’s registration requirement was not a jurisdictional
precondition to filing an infringement claim). The Ninth
Circuit has applied Arbaugh and Reed Elsevier to
employment-related statutory provisions. See Day v. AT & T
Disability Income Plan, 698 F.3d 1091, 1099–1100 (9th Cir.
2012); Leeson, 671 F.3d at 978. A straightforward
framework has emerged from this line of cases: when
determining whether a statutory threshold is a jurisdictional
barrier, we ask whether Congress clearly labeled the statutory
requirement as jurisdictional and whether the requirement is
located in a jurisdiction-granting provision; if so, Congress
likely intended the provision to be jurisdictional. See Reed
Elsevier, 559 U.S. at 160–69; Day, 698 F.3d at 1099–1100;
Leeson, 671 F.3d at 970–79. Also helpful to our analysis is
whether courts have historically treated the requirement as
jurisdictional absent an express designation from Congress.
Reed Elsevier, 559 U.S. aat 169. In this Circuit, we also
ensure that “no other reasons necessitate[] that the provision
be construed as jurisdictional.” Leeson, 671 F.3d at 977. All
of these factors help guide our analysis of the employment
status provision in the FLSA.

    Congress did not clearly label the FLSA employment
status provision as jurisdictional. “As in all cases involving
statutory construction, our starting point must be the language
employed by Congress.” Am. Tobacco Co. v. Patterson,
456 U.S. 63, 68 (1982) (internal quotation marks omitted).
Here, the relevant provision of FLSA § 216(b) states:
10          TIJERINO V. STETSON DESERT PROJECT

         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
         (including a public agency) in any Federal or
         State court of competent jurisdiction by any
         one or more employees for and in behalf of
         himself or themselves and other employees
         similarly situated.

29 U.S.C. § 216(b).3 Section 216(b)’s requirement that
employers be liable to employees for violations of the FLSA
is not clearly labeled as jurisdictional. In fact, there is not
even a mention of jurisdiction in this section (besides a
general reference to a “court of competent jurisdiction”), and
there is no indication whatsoever that employee status is a
jurisdictional limitation. Compare this to the statute in Reed
Elsevier, in which even “the presence of the word
“jurisdiction” in the last sentence of [the statutory provision]”
did not render that requirement jurisdictional. Reed Elsevier,
559 U.S. at 163. In the “Definitions” section of the FLSA,
Congress defined the term “employee” to mean “any
individual employed by an employer,” while also setting
aside exceptions to the term “employee” for certain

     3
      29 U.S.C. § 206 requires that non-exempt employees be paid the
minimum wage and § 207 requires that non-exempt employees be paid
overtime wages for hours worked in excess of forty hours in one week.
           TIJERINO V. STETSON DESERT PROJECT               11

individuals employed by governmental entities, individuals
who volunteer to perform services for governmental entities,
and immediate family members of employers employed in
agriculture. 29 U.S.C. § 203(e)(1)–(4)(A). Here too, there is
no indication that the criterion of a plaintiff being an
“employee” is in any way related to subject matter
jurisdiction, let alone clearly labeled as jurisdictional.

     Section 203(e) and § 216(b) are not located in
jurisdiction-granting provisions of the statute. In Arbaugh,
the Court concluded that Congress did not intend that Title
VII’s definition of the term “employer” be jurisdictional
because Congress placed the term’s definition in a section
titled “Definitions”—“a separate provision that ‘does not
speak in jurisdictional terms or refer in any way to the
jurisdiction of the district courts.’” Arbaugh, 546 U.S. at 515
(internal citation omitted); see also Leeson, 671 F.3d
at 978–79 (Plaintiff’s status as a plan “participant,” for
purposes of the Employee Retirement Income Security Act,
was a substantive element of his claim—not a prerequisite for
subject-matter jurisdiction—because the definition of
“participant” appears in a provision that “does not speak in
jurisdictional terms.”). Here, Congress also placed § 203(e),
which defines the term “employee,” in a section titled
“Definitions,” and § 216(b) in a section titled “Penalties,”
neither of which speaks to jurisdiction. See 29 U.S.C.
§§ 203(e), 216(b); see also Day, 698 F.3d at 1099–1100
(statute’s minimum age requirement for plaintiffs alleging
discrimination claims “appear[ed] in a separate provision that
d[id] not speak in jurisdictional terms” and therefore was a
substantive element of a claim rather than a jurisdictional
limitation). Congress did use jurisdictional language in other
sections of the FLSA, which suggests that Congress clearly
did not intend the requirements of § 216(b) and § 203(e) to be
12         TIJERINO V. STETSON DESERT PROJECT

jurisdictional. See 29 U.S.C. § 210(a) (stating that upon the
filing of a petition for judicial review of a § 208 order in a
specific court of appeals, “such court shall have exclusive
jurisdiction to affirm, modify, . . . or set aside such order”).

    Furthermore, courts have not historically treated § 203(e)
and § 216(b)’s employment status provisions as
jurisdictional. Although the Court in Reed Elsevier found
previous treatment of the Copyright Act’s registration
requirement as jurisdictional, it still concluded “that
§ 411(a)’s registration requirement [was] nonjurisdictional,
notwithstanding its prior jurisdictional treatment.” 559 U.S.
at 169. Here, courts have not historically treated the
employment status provision as jurisdictional; in similar
cases, both the Fourth and Fifth Circuits have treated this
question as nonjurisdictional. See McFeeley v. Jackson St.
Entm’t LLC, 825 F.3d 235 (4th Cir. 2016); Reich v. Circle C.
Invs., Inc., 998 F.2d 324 (5th Cir. 1993). Thus, all factors
weigh in favor of construing the statute’s employment status
provision as nonjurisdictional.

    There is no support for the district court’s theory that the
employment status provision constitutes an antecedent
jurisdictional issue, and we can find no reasons that
“necessitate[] that the provision be construed as
jurisdictional.” Leeson, 671 F.3d at 977. The district court
attempted to distinguish cases like Leeson and Day, writing
that “the controlling cases upon which Plaintiff relie[d] to
refute the Court’s decision that employee status is an
antecedent issue [were] specific to Employee Retirement
Income Security Act and Title VII of the Civil Rights Act
cases – not FLSA cases.” But, aside from this conclusory
statement, the district court did not provide any further
analysis. It provided no rationale as to why Arbaugh’s
             TIJERINO V. STETSON DESERT PROJECT                        13

framework is not controlling, other than to suggest that
Arbaugh does not control merely because that case involved
a different statute than the statute in this case. Instead, the
district court cited Rutherford Food Corp. v. McComb,
331 U.S. 722 (1947), in support of its position that the
exercise of jurisdiction over a FLSA complaint turned on
whether the plaintiff was an employee. Id. at 727 (“Whether
or not the acts charged in this complaint violate the [FLSA]
depends, so far as the meat boners are concerned, upon a
determination as to whether either of both respondents are
employers of the boners.”). The district court, however,
overlooked that Rutherford was a decision reached on the
merits, not on jurisdictional grounds. See id.4

    In summary, under the Arbaugh test, it is clear that the
FLSA’s employment status provision in § 203(e) and
§ 216(b) should be construed as nonjurisdictional. Our
conclusion is also supported by applications of this test to
other employment-related statutory provisions. See Day,
698 F.3d at 1099–1100; Leeson, 671 F.3d at 979. Most
importantly, Congress did not state that the statute’s
employment status provision was jurisdictional, and § 203(e)
and § 216(b) are not located in jurisdiction-granting
provisions of the statute. Finally, courts have not historically
treated the employment status provision as jurisdictional.
The term “employee” in the FLSA “serves to identify those
plaintiffs who may be entitled to relief, not to limit the

    4
      The district court also cited to Dellinger v. Sci. Applications Int’l
Corp., in support of this proposition.            Dellinger, however, is
distinguishable in that the plaintiff was never hired by nor performed any
work for the defendant: a prospective employer. See 649 F.3d 226, 228
(4th Cir. 2011).
14         TIJERINO V. STETSON DESERT PROJECT

authority of federal courts to adjudicate claims” under the
FLSA. Id. at 978.

     B. The allegations were not so patently without merit
        as to justify dismissal for lack of subject-matter
        jurisdiction.

    Having held that the FLSA’s employment status provision
in § 203(e) and § 216(b) is nonjurisdictional, we now turn to
the Dancers’ complaints to ensure that they allege a
substantial issue of federal law that is sufficient to invoke
subject-matter jurisdiction. A complaint for relief properly
invokes federal jurisdiction where its well-pleaded allegations
establish “either that federal law creates the cause of action or
that the plaintiff’s right to relief necessarily depends on
resolution of a substantial question of federal law.”
Franchise Tax Bd., 463 U.S. at 27–28. There is no federal
question jurisdiction where the federal claim asserted is “too
insubstantial,” Cook v. Peter Kiewit Sons Co., 775 F.2d 1030,
1035 (9th Cir. 1985), defined as so patently without merit that
the claim requires no meaningful consideration. See Yokeno
v. Mafnas, 973 F.2d 803, 808 (9th Cir. 1992); see also
Cement Masons Health & Welfare Trust Fund for N. Cal. v.
Stone, 197 F.3d 1003, 1008 (9th Cir. 1999) (“Any non-
frivolous assertion of a federal claim suffices to establish
federal question jurisdiction, even if that claim is later
dismissed on the merits.”).

    Here, the Dancers’ complaints facially allege substantial
issues of federal law: whether the Dancers could collectively
recover damages under § 216(b) for the Club’s failure to pay
them at the required minimum wage and at the required
overtime rate, for hours worked in excess of 40 per week, in
violation of § 206 and § 207 of the FLSA. Moreover, the
           TIJERINO V. STETSON DESERT PROJECT               15

Dancers allege numerous facts supporting their claims that
the Club owes them wages because they are employees under
the FLSA, and relatedly, under Arizona state law. The claims
in the Dancers’ complaints are not “wholly insubstantial and
frivolous,” and are not so patently without merit as to warrant
dismissal for lack of subject-matter jurisdiction. Arbaugh,
546 U.S. at 513 n.10. Therefore, there is federal question
subject-matter jurisdiction to hear the Dancers’ § 216(b)
claims pursuant to 28 U.S.C. § 1331, and there is
supplemental jurisdiction over the state law claims.

II. The Dancers’ other arguments on appeal

    The Dancers make two additional arguments on appeal.
First, they ask us to remand with instructions to grant the
Dancers’ motion for conditional class certification under the
FLSA. The district court did not reach a merits-based
analysis of conditional certification because it erroneously
determined that it lacked subject-matter jurisdiction over the
case. Our holding that employee status under the FLSA is
nonjurisdictional necessarily reverses the reasoning of the
district court’s denial of conditional certification. On
remand, the district court will have the opportunity to
determine whether to conditionally certify an FLSA
collective action in accordance with our precedent. See
Campbell v. City of Los Angeles, 903 F.3d 1090, 1100 (9th
Cir. 2018) (discussing the “near-universal practice” of the
two-step approach to conditional certification under
§ 216(b)). We deny the Dancers’ request to remand with
specific instructions to grant the Dancers’ motion for
conditional certification.

    Second, the Dancers ask us to remand with instructions
“to adjudicate the merits of the Dancers’ claims in accordance
16         TIJERINO V. STETSON DESERT PROJECT

with well-established case law applying the FLSA’s
economic realities test.” The district court applied the
economic realities test in reaching its conclusion that it lacked
subject-matter jurisdiction. Because we reverse the district
court’s conclusion that it lacked subject-matter jurisdiction,
on remand, it will have the opportunity to address the
economic realities test when it addresses the merits of the
Dancers’ FLSA claims. See Real v. Driscoll Strawberry
Assocs., Inc., 603 F.2d 748, 750 (9th Cir. 1979) (evaluating
the employment status of the plaintiffs on summary
judgment). We doubt that the experienced district court is in
need of any further instructions on remand.

                       CONCLUSION

    For the reasons set forth above, we reverse the district
court’s dismissal of these actions for lack of subject-matter
jurisdiction, and remand for further proceedings consistent
with this opinion.

     REVERSED and REMANDED.