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Zanders v. Wells Fargo Bank N.A.

United States District Court, S.D. Iowa, Central Division

October 28, 2014

RACHELLE ZANDERS, ROBERTHA LARMOUTH, MICHELLE STRAWMAN, MERCY ISSA, and Employees Similarly Situated to Them, Plaintiffs,
v.
WELLS FARGO BANK N.A. d/b/a WELLS FARGO HOME MORTGAGE, KETH MALONE, and BRIAN FREESE, in Their Individual and Corporate Capacities, Defendants

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For Rachelle Zanders, Robertha Larmouth, Michelle Strawman, Mercy Issa and Employees Similarly Situated to Them, Plaintiffs: Mark D Sherinian, Melissa C Hasso, LEAD ATTORNEYS, SHERINIAN & WALKER PC, WEST DES MOINES, IA.

For Wells Fargo Bank, N.A., doing business as Wells Fargo Home Mortgage, Keth Malone, Brian Freese, in their Individual and Corporate Capacities, Defendants: Karin A Johnson, Michael A Giudicessi, LEAD ATTORNEYS, FAEGRE BAKER DANIELS, LLP (IA), Des Moines, IA.

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ORDER

JAMES E. GRITZNER, CHIEF UNITED STATES DISTRICT JUDGE.

This matter comes before the Court on Motion to Dismiss by Defendants Wells Fargo Bank N.A. d/b/a/ Wells Fargo Home Mortgage (Wells Fargo), Keth Malone, and Brian Freese (collectively, Defendants), as well as Motion for Leave to Amend First Amended Petition and Jury Demand and Motion for Leave to Amend Second Amended Petition and Jury Demand by Plaintiffs Rachelle Zanders, Robertha Larmouth, Michelle Strawman, Mercy Issa, and employees similarly situated to them (collectively, Plaintiffs). Plaintiffs resist Defendants' motion, and Defendants resist Plaintiffs' motions.

The Court conducted a hearing on Defendants' Motion to Dismiss and Plaintiffs' first Motion to Amend on October 1, 2014. Attorney Mark Sherinian was present on behalf of Plaintiffs, and attorneys Karin A. Johnson and Michael Guidicessi were present on behalf of Defendants. Plaintiffs filed their second Motion to Amend after the hearing, and Defendants responded. Neither party requested a hearing on the second Motion to Amend, and the Court finds that a hearing on that issue is unnecessary. Accordingly, each motion is fully submitted and ready for disposition.

I. BACKGROUND[1]

All of the named plaintiffs are citizens of Iowa. Defendant Wells Fargo is a legal entity organized in California, and its principal place of business is in Des Moines, Iowa. The individual defendants Keth Malone and Brian Freese are citizens of Iowa and were managers and/or supervisors with Wells Fargo at all relevant times. Plaintiffs were formerly employed by Wells Fargo as Home Preservation Specialists. Plaintiffs were paid hourly and contend they were subject to the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq.

Plaintiffs allege that Wells Fargo, through its agents Malone and Freese,

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required Plaintiffs to " assume workloads that could not reasonably be performed within a forty hour work week," and Defendants told Plaintiffs not to report overtime and criticized them if they did. This caused Plaintiffs to work " off-the-clock" without payment for overtime. Plaintiffs contend that they worked between 50 and 60 or more hours per week. The Second Amended Petition explains that Plaintiffs were required to simultaneously assume responsibility for " more than 60 cases" involving defaulting borrowers. The Third Amended Petition alters this allegation to provide " Plaintiffs were told that they were required to handle 60 files at a time, but were normally assigned 90 to 100 files at a time." Third Am. Pet. ¶ 18, ECF No. 15-1.

In Count 1, Plaintiffs assert that Defendants intentionally failed to pay Plaintiffs the wages due to them, and accordingly Iowa Code § 91A.8, referred to as the Iowa Wage Payment Collection Law (IWPCL), entitles Plaintiffs to back wages, court costs, attorneys' fees, and liquidated damages. Count 2 alleges that Plaintiffs were " employees" and Defendants are " employers" as defined by the FLSA. See 29 U.S.C. § 203(d)-(e)(1) (2012). The Petition further alleges that -- in violation of 29 U.S.C. § 207(a)(1) (2012) -- Wells Fargo is " engaged in commerce," it employed Plaintiffs for more than forty hours per week, and did not properly pay them overtime. Count 2 requests damages for unpaid wages and interest, liquidated damages, attorneys' fees, and court costs.

Defendants' 12(b)(6) motion to dismiss makes three primary arguments. Defendants argue that Plaintiffs' IWPCL claim duplicates their FLSA claim, and accordingly the FLSA preempts the IWPCL. In the alternative, Defendants argue that Malone and Freese are not " employers" within the meaning of the IWPCL. Finally, Defendants argue that Plaintiffs have not alleged sufficient facts -- in any of their Petitions -- to plausibly suggest that similarly situated employees are entitled to relief.

II. DISCUSSION

A. Jurisdiction

The Court has jurisdiction over the FLSA claims under 28 U.S.C. § 1331 and 29 U.S.C. § 216(b). In addition, the Court may exercise supplemental jurisdiction over the IWPCL claims under 28 U.S.C. § 1367. See Lindsay v. Gov't Emps. Ins. Co., 448 F.3d 416, 424, 371 U.S.App.D.C. 120 (D.C. Cir. 2006) (finding supplemental jurisdiction over state-law wage claims when the plaintiffs brought claims under both the FLSA and the state wage claim statute); Salazar v. Agriprocessors, Inc., 527 F.Supp.2d 873, 884-87 (N.D. Iowa 2007) (finding supplemental jurisdiction over IWPCL claims when the plaintiffs also made FLSA claims). But see De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 312 (3d Cir. 2003) (holding that exercising supplemental jurisdiction over statelaw wage claims was inappropriate under 28 U.S.C. § 1367(c)(1)-(2)).

B. Applicable Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires only a " short and plain statement of the claim showing that the pleader is entitled to relief." However, the " plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (abrogating Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) (alteration in original) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).

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To survive a Rule 12(b)(6) " 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570). Under the current pleading standard, " [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. (citing Twombly, 550 U.S. at 556). " Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

The Court uses the same Rule 12(b)(6) standard when considering whether amending a complaint would be futile. Cornelia I. Crowell GST Trust v. Possis Med., Inc., 519 F.3d 778, 781-82 (8th Cir. 2008). " Ordinarily, the decision of whether to allow a plaintiff leave to amend a complaint is within the district court's discretion, however, when the court denies leave on the basis of futility, it means the district court has reached the legal conclusion that the amended complaint could not withstand a motion to dismiss under Rule 12(b)(6)." Id.

Accordingly, as Defendants have argued that each of Plaintiffs' proposed amended petitions would be futile, it is appropriate in the circumstances of this case to simultaneously consider Defendants' Motion to Dismiss and Plaintiffs' Motions to Amend. The Court must determine if any of Plaintiffs' Petitions state a plausible claim for relief.

C. Preemption

Defendants argue that the FLSA preempts the IWPCL and thus the Court should dismiss the state-law claim. Defendants observe that the IWPCL does not define the amount of wages employers must pay their employees, but rather the statute concerns when and how wages are paid. Defendants argue that because Plaintiffs do not allege any entitlement to the wages they seek other than the FLSA, their IWPCL claim is entirely dependent on the FLSA claim. Defendants cite several cases, including Anderson v. Sara Lee Corp., 508 F.3d 181, 192-93 (4th Cir. 2007), which have held that the FLSA preempts state-law claims that duplicate FLSA claims. See also Roble v. Celestica Corp., Civil No. 06-2934 (JRT/FLN), 2006 WL 3858396, at *3 (D. Minn. Dec. 29, 2006) (refusing to dismiss non-duplicative state-law claims, but noting " common law claims based on the same facts and circumstances as an FLSA claim may be preempted under the FLSA." ).

Defendants acknowledge that in Bouaphakeo v. Tyson Foods, Inc., 564 F.Supp.2d 870, 883 (N.D. Iowa 2008), the district court rejected the argument they make here -- that, at a minimum, the FLSA preempts IWPCL claims that entirely duplicate FLSA claims. However, Defendants note that the court in Bouaphakeo recognized that its decision departed from several other courts' resolution of similar issues. See id. at 885 (" Of course, the court is aware of the plethora of cases holding that the FLSA preempts duplicative state law claims." ). Defendants argue this departure was inappropriate because Bouaphakeo mistakenly relied on the FLSA's " savings clause," which provides,

No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a

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maximum work week lower than the maximum workweek established under this chapter . . . .

29 U.S.C. § 218(a). Defendants assert that this clause allows states to set a higher minimum wage but does not allow plaintiffs to use state wage-collection laws to pursue more generous remedies for violations of the FLSA.

Plaintiffs resist Defendants' motion by arguing that even if their IWPCL claims are duplicative of their FLSA claims, Bouaphakeo correctly rejected the exact argument that Defendants make in this case. Moreover, Plaintiffs continue, other Eighth Circuit courts have refused to find that the FLSA preempts state-law claims when, at the motion to dismiss stage, the plaintiffs alleged facts suggesting that their state-law claims may not be dependent on the FLSA. See Osby v. Citigroup, Inc., No. 07-CV-06085-NKL, 2008 WL 2074102, at *2 (W.D. Mo. May 14, 2008) (noting that " [a]lthough state law claims sharing core facts with FLSA claims may be preempted," plaintiffs' unjust enrichment claims might not be duplicative). Although Plaintiffs do not make explicit breach of contract or quantum meruit claims, they argue that their state-law claims are " parallel to" (rather than duplicative of) their FLSA claims because " Defendants agreed to pay the Plaintiffs wages for the time they worked but failed to do so." Pls.' Resist. Defs.' Mot. Dismiss 3, ECF No. 8-1.

In Arizona v. United States, 132 S.Ct. 2492, 183 L.Ed.2d 351 (2012), the Supreme Court summarized the preemption doctrine. " The Supremacy Clause provides a clear rule that federal law 'shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.'" Id. at 2500 (citing U.S. Const. art. VI, cl. 2). Accordingly, when properly acting pursuant to its enumerated powers, " Congress has the power to preempt state law." Id.

Congress may preempt state laws in at least three ways. Id. Congress may preempt state laws with an express statutory provision. Id. at 2500-01 (citing Chamber of Commerce of United States of Am. v. Whiting, 131 S.Ct. 1968, 1974-1975, 179 L.Ed.2d 1031 (2011)). Second, Congress preempts state law when it chooses to regulate a field exclusively. Id. at 2501. This " field preemption" can " be inferred from a framework of regulation 'so pervasive . . . that Congress left no room for the States to supplement it' or where there is a 'federal interest . . . so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.'" Id. (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)). Third, " state laws are preempted when they conflict with federal law." Id. (citing Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000)). Such an impressible conflict arises if it is impossible to comply with both federal and state law or " where the challenged state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Id. (quoting Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941)).

More specifically, a federal statute preempts a state statute " if it interferes with the methods by which the federal statute was designed to reach [a] goal. Forest Park II v. Hadley, 336 F.3d 724, 733 (8th Cir. 2003) (quoting CSX Transp. Inc. Easterwood, 507 U.S. 658, 663, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993)). However, " [i]n determining whether state ...


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