Court Opinion

ID: 4251409
Source: CourtListenerOpinion
Date Created: 2018-03-02 17:00:32.879026+00
Date Added: 2024-06-11T14:43:33.165625
License: Public Domain

FILED
                                                                United States Court of Appeals
                                     PUBLISH                            Tenth Circuit

                      UNITED STATES COURT OF APPEALS                    March 2, 2018

                                                                    Elisabeth A. Shumaker
                             FOR THE TENTH CIRCUIT                      Clerk of Court
                         _________________________________

MARIA FERNANDEZ; LAURA
CHACON,

      Plaintiffs - Appellants,

and

RUBI JAZMIN ORTEGA AGUILAR,

      Plaintiff,
                                                          No. 17-1230
v.

CLEAN HOUSE, LLC; CESAR
BARRIDA, a/k/a Cesar Barriga,

      Defendants - Appellees.
                      _________________________________

                     Appeal from the United States District Court
                             for the District of Colorado
                           (D.C. No. 1:16-CV-02140-LTB)
                       _________________________________

Alexander Hood, Towards Justice, Denver, Colorado (Alexander L. Gastman and Penn
A. Dodgon, AndersonDodson, P.C., New York, New York, on the briefs), for Plaintiffs-
Appellants.

Teresa M. Wilkins, Law Firm of Teresa Wilkins, LLC, Englewood, Colorado, for
Defendants-Appellees.
                      _________________________________

Before BRISCOE, HARTZ, and PHILLIPS, Circuit Judges.
                  _________________________________

HARTZ, Circuit Judge.
                         _________________________________

       Plaintiffs Maria Fernandez and Laura Chacon appeal the dismissal by the United

States District Court for the District of Colorado of their Fair Labor Standards Act

(FLSA) claims against Defendants Clean House and Cesar Barrida. Plaintiffs allege that

Defendants failed to properly compensate them as employees. The general limitations

period under the FLSA is two years, but that period is expanded to three years for willful

violations. See 29 U.S.C. § 255(a). Plaintiffs’ employment had ended between two and

three years before they filed suit. Although the complaint alleged that Defendants’

violations had been willful, Defendants moved to dismiss the claims as untimely on the

ground that Plaintiffs had not supported their allegation of willfulness with sufficiently

specific facts. The district court agreed with Defendants and dismissed the claims with

prejudice. Plaintiffs argue that the statute of limitations is an affirmative defense which

they did not need to anticipate in their complaint by alleging willfulness, and, in any

event, their allegation of willfulness was adequate. We agree. Exercising jurisdiction

under 28 U.S.C. § 1291, we reverse.

       I.     BACKGROUND

    Plaintiffs filed their original complaint on August 24, 2016, alleging violations of the

FLSA and Colorado law. (They were joined by a third plaintiff who is not a party to this

appeal.) They later filed an amended complaint (the Complaint), which is the operative

pleading on appeal. The Complaint alleges that Plaintiffs began working as house

cleaners for Defendants in May 2013, with Fernandez continuing until February 2014 and

Chacon until April 2014. Both allegedly worked well over 40 hours per week, often

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working 11–12 hours a day and up to 77 hours per week. According to the Complaint,

Defendants misclassified them as independent contractors instead of employees and as a

result Defendants denied them, among other things, FLSA-required overtime pay, breaks,

and minimum wages. On the issue of scienter, the Complaint alleged the following:

       15. At all times material to this action, Defendant Clean House knew of the
       FLSA and CWA’s requirements that it pay at least the minimum wage to all
       employees covered by the aforementioned acts for each and every hour
       worked and overtime rates of one and one-half their regular rates of pay for
       all hours worked over forty in a given workweek to nonexempt workers.

       16. In choosing to pay Plaintiffs as it did, Defendant Clean House willfully
       violated the mandates of the laws at issue here.

Aplt. App. at 50 (emphasis added).

       Defendants moved to dismiss Plaintiffs’ claims under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a timely claim. Citing Bell Atlantic Corp. v.

Twombly, 550 U.S. 544 (2007), they argued that the Complaint “allege[d] no supporting

facts in support of” the allegation of willfulness and “[u]nsupported labels and legal

conclusions . . . are insufficient to establish a plausible claim.” Aplt. App. at 88. The

district court agreed, citing both Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009), in

ruling that the Complaint had not plausibly alleged willfulness. It later entered an order

dismissing Plaintiffs’ claims with prejudice. Although the claims of the third plaintiff

continued, the court certified its order as final under Federal Rule of Civil Procedure

54(b). Plaintiffs appeal the dismissal of their FLSA claims but do not appeal the

dismissal of their claims under Colorado law.

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       II.    DISCUSSION

       We review de novo a district-court dismissal of a complaint for failure to state a

claim. See Slater v. A.G. Edwards & Sons, Inc., 719 F.3d 1190, 1196 (10th Cir. 2013).

“To defeat a motion to dismiss, a complaint must plead facts sufficient to state a claim to

relief that is plausible on its face.” Id. (internal quotation marks omitted).

       Under the FLSA a claim “shall be forever barred unless commenced within two

years after the cause of action accrued, except that a cause of action arising out of a

willful violation may be commenced within three years after the cause of action accrued.”

29 U.S.C. § 255(a) (emphasis added). Because the Complaint alleges that neither

Plaintiff had worked for Defendants for more than two years before the Complaint was

filed, their claims were barred unless Defendants’ alleged FLSA violations were willful.

The Complaint alleges willfulness, but the district court nevertheless dismissed the FLSA

claims, ruling that the willfulness allegation was not supported by sufficient factual

allegations to make it plausible.

       The first flaw in Defendants’ argument is the failure to recognize that willfulness

is not relevant to the elements of Plaintiffs’ claims but only to the statute-of-limitations

defense. At the pleading stage of litigation it is not the plaintiff, but the defendant, who

must raise the issue. Federal Rule of Civil Procedure 8(c)(1) states: “In responding to a

pleading, a party must affirmatively state any avoidance or affirmative defense . . . .” A

plaintiff need not anticipate in the complaint an affirmative defense that may be raised by

the defendant; it is the defendant’s burden to plead an affirmative defense. See Gomez v.

Toledo, 446 U.S. 635, 640 (1980) (“[T]he burden of pleading [affirmative defenses] rests

                                              4
with the defendant.”); Ghailani v. Sessions, 859 F.3d 1295, 1306 (10th Cir. 2017) (the

complaint need not anticipate affirmative defenses); Levin v. Miller, 763 F.3d 667, 671

(7th Cir. 2014) (“The [Supreme] Court held in Gomez . . . that complaints need not

anticipate affirmative defenses; neither Iqbal nor Twombly suggests otherwise.”). And

there can be no question that a limitations issue is an affirmative defense; Rule 8(c)(1)

explicitly lists “statute of limitations” as such. Further, even after the defendant has

pleaded an affirmative defense, the federal rules impose on the plaintiff no obligation to

file a responsive pleading. Absent a counterclaim or cross-claim, pleading under the

Federal Rules stops with the answer. See Fed. R. Civ. P. 7(a)(7) (reply to answer is

permitted only if ordered by court); Creative Consumer Concepts, Inc. v. Kreisler, 563

F.3d 1070, 1076 (10th Cir. 2009) (“Rule 8(c)’s ultimate purpose is simply to guarantee

that the opposing party has notice of any additional issue that may be raised at trial so

that he or she is prepared to properly litigate it.” (internal quotations marks omitted)).

       To be sure, on occasion it is proper to dismiss a claim on the pleadings based on

an affirmative defense. But that is only when the complaint itself admits all the elements

of the affirmative defense by alleging the factual basis for those elements. See Xechem,

Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004) (“Only when the

plaintiff pleads itself out of court—that is, admits all the ingredients of an impenetrable

defense—may a complaint that otherwise states a claim be dismissed under Rule

12(b)(6).”); Miller v. Shell Oil Co., 345 F.2d 891, 893 (10th Cir. 1965) (“If the defense

appears plainly on the face of the complaint itself, the motion [to dismiss for failure to

state a claim] may be disposed of under [Rule 12(b)].”).

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       Under that standard, this is not an appropriate case to dismiss on statute-of-

limitations grounds. The Complaint hardly contains an admission that the alleged FLSA

violations were not willful. On the contrary, it asserts willfulness. Ultimately, Plaintiffs

will have the burden of persuasion on the willfulness issue. See McLaughlin v. Richland

Shoe Co., 486 U.S. 128, 135 (1988); Mumby v. Pure Energy Servs. (USA), Inc., 636 F.3d

1266, 1270 (10th Cir. 2011). But on the burden of pleading, Rule 8(c)(1) controls. This

is one of the unusual circumstances where the burdens of pleading and persuasion are not

on the same party.

       Moreover, we are not persuaded that the Complaint inadequately pleaded

willfulness. Federal Rule of Civil Procedure 9(b) states: “Malice, intent, knowledge, and

other conditions of a person’s mind may be alleged generally.” On this ground the Ninth

Circuit held in Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902–03 (9th Cir. 2013),

that willfulness was adequately alleged in an FLSA claim when the complaint merely

stated that the alleged violations were “deliberate, intentional, and willful,” id. at 902.

We recognize that in some circumstances there must be more specific factual allegations

to support willfulness. In Iqbal itself the Supreme Court said that the allegations of

misconduct by line officers in the Department of Justice could “if true, and if condoned

by petitioners [the Attorney General and the Director of the FBI], . . . be the basis for

some inference of wrongful intent on petitioners’ part,” 556 U.S. at 683, but the bare

allegation of willfulness (absent, for example, evidence of condonation), did not suffice,

see id. at 686–87. In the case before us, however, if we assume that the Complaint

adequately alleges an FLSA violation (which Defendants do not challenge on appeal), we

                                               6
follow the Ninth Circuit’s lead in concluding that the allegation of willfulness suffices.

See Rivera, 735 F.3d at 902–03. The Complaint indicates that the company employing

Plaintiffs was sufficiently small that Defendants would have knowledge of the conduct

that allegedly violated the FLSA. Whether the violations were willful would thus depend

largely upon Defendants’ knowledge of the pertinent requirements of the FLSA, and such

knowledge is plausible.

       Defendants argue that the effect of adopting Plaintiffs’ argument is that what the

FLSA envisioned as an exception (the three-year statute of limitations) will swallow the

rule (the two-year statute of limitation), increasing costs to parties and the courts by

allowing unmeritorious claims to proceed past pleading and into discovery. We do not

know how often FLSA claims are brought more than two, but less than three, years after

alleged violations. Regardless, we can sympathize with any defendant facing a meritless

claim. But our decision does not represent a departure from the usual practice when

defendants raise affirmative defenses, however meritorious they may be. The

defendant’s first line of defense in that circumstance is ordinarily summary judgment, not

dismissal on the pleadings. That would almost certainly have been the procedure here if

Defendants had raised an affirmative defense of payment or arbitration and award.

Plaintiffs rarely confess such defenses in their complaints.

       Because we reverse the dismissal of the Complaint, we need not address Plaintiffs’

alternative argument that they should be permitted to amend their complaint.

                                              7
       III.   CONCLUSION

       We REVERSE the dismissal of Plaintiffs’ FLSA claims and remand to the district

court for further proceedings.

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