Levy v. Sonoran Rovers LLC

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Seth Levy, No. CV-25-00039-TUC-RCC 10 Plaintiff, ORDER 11 v. 12 Sonoran Rovers LLC, et al., 13 Defendants. [14] Defendants Sonoran Rovers LLC and Marcus and Colleen Whitaker filed a Motion [15] to Dismiss Counts III and IV. (Doc. 21.) These counts allege Sonoran Rovers and Marcus [16] Whitaker failed to pay all wages due, including overtime wages, in violation of Arizona [17] Revised Statutes §§ 23-351 and 23-353. (Doc. 13 at 14–16.) Defendants argue that Levy’s [18] state law claims are preempted by the Fair Labor Standards Act (“FLSA”) and that the [19] Whitakers are not “employers” under the Arizona Wage Act (“AWA”). (Doc. 21.) Levy [20] counters that the state claims are not for unpaid overtime, but for untimely payment of [21] wages, and so are not preempted by the FLSA. (Doc. 22 at 7.) In addition, Levy argues [22] Marcus Whitaker1 is an “employer” as defined under the AWA. (Id. at 9–14.) [23] For the reasons stated herein, the Court will grant the motion as to Count IV against [24] Mr. Whitaker individually and deny the motion as to Count III against Sonoran. [25] /// [27] 1 Levy states Colleen Whitaker is named as a Defendant only as the spouse of Marcus 28 Whitaker, “whose assets are . . . subject to Arizona community property laws.” (Doc. 22 at 2, n.1.) 1 I. Factual Summary 2 According to the First Amended Complaint, Levy was hired by Sonoran Rovers 3 owner Marcus Whitaker as a full-time Shop Technician. (Doc. 13 ¶ 16.) Levy’s duties 4 included “maintenance and repair services on vehicles,” as well as running errands for 5 Whitaker. (Id. ¶ 21.) Whitaker labeled Levy as an independent contractor, despite exerting 6 “extensive control over” Levy’s work. (Id. ¶¶ 18–19, 24–27.) Later, when Whitaker 7 returned from a trip to England, he reclassified Levy as an employee, but Levy’s duties and 8 Whitaker’s oversight remained the same. (Id. ¶¶ 22, 28.) The change was announced in the 9 middle of the pay period, and Whitaker applied the corresponding change in pay 10 retroactively. (Id. ¶ 31.) This resulted in Levy’s compensation being decreased by $10.00 11 an hour. (Id.) Whitaker also refused to pay Levy for overtime hours. (Id. ¶¶ 34, 37.) When 12 Levy was injured on the job, he asked Whitaker whether Levy could take paid time off and 13 inquired about the procedure for worker’s compensation. (Id. ¶¶ 38, 49.) Instead of 14 providing either, Whitaker terminated Levy’s employment soon thereafter. (Id. ¶¶ 48–53.) 15 II. Standard of Review 16 A complaint must contain a “short and plain statement of the claim showing that the 17 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A motion to dismiss may be granted 18 “based on the lack of a cognizable legal theory or the absence of sufficient facts alleged 19 under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696 (9th 20 Cir. 1990). “Where a state law claim is preempted by federal law, dismissal may be granted 21 under Fed. R. Civ. P. 12(b)(6).” Washington v. Geo Grp., Inc., 283 F. Supp. 3d 967 , 974 22 (2017) (citing Cleghorn v. Blue Shield of Cal., 408 F.3d 1222 , 1225 (9th Cir. 2005)). 23 There are three types of preemption, but in the FLSA context raised in this case, 24 conflict preemption applies. See Salazar v. Driver Provider Phoenix LLC, No. CV-1925 05760-PHX-SMB, 2023 WL 167021 , at *2 (D. Ariz. Jan. 12, 2023), reconsideration 26 denied, No. CV-19-05760-PHX-SMB, 2023 WL 2308372 (D. Ariz. Mar. 1, 2023). In an 27 FLSA claim, conflict preemption occurs “‘where it is impossible to comply with both state 28 and federal requirements’ or ‘where state law stands as an obstacle to the accomplishment 1 and execution of the full purposes and objectives of Congress.’” Wang v. Chinese Daily 2 News, Inc., 623 F.3d 743 , 759–60 (9th Cir. 2010), vacated on other grounds, 565 U.S. 801 3 (2011) (quoting Indus. Truck Ass’n v. Henry, 125 F.3d 1305, 1309 (9th Cir. 1997)). 4 III. Fair Labor Standards Act 5 The FLSA prevents an employer from making an employee work “longer than forty 6 hours [a week] unless such employee receives compensation for his employment in excess 7 of the hours above specified at a rate not less than one and one-half times the regular rate 8 at which he is employed.” 29 U.S.C. § 207 (a)(1). Barring certain exemptions, the FLSA 9 indicates that that any employer in violation of § 207, “shall be liable to the employee . . . 10 in the amount of their unpaid minimum wages, or their unpaid overtime compensation . . . 11 and in an additional equal amount as liquidated damages.” Id. § 216(b). 12 IV. Arizona Wage Act 13 The AWA requires that an employer “designate two or more days in each month, 14 not more than sixteen days apart, as fixed paydays for payment of wages” and is required 15 “on each of the regular paydays, [to] pay to the employees . . . all wages due the employees 16 up to that date . . . .” Ariz. Rev. Stat. §§ 23-351 (A), (C). An employer must pay overtime 17 wages no “later than sixteen days after the end of the most recent pay period.’” A.R.S. 18 § 23-351(C)(3). Upon termination of employment, the employer must pay any wages due 19 “within seven days or the end of the next regular pay period, whichever is sooner." A.R.S. 20 § 23-353(a). “[I]f an employer . . . fails to pay wages due any employee, the employee may 21 recover . . . an amount that is treble the amount of the unpaid wages.” A.R.S. § 23-355(A). 22 Thus, “A.R.S. §23-355 . . . is more generous than the remedy provided by the FLSA for 23 the failure to pay overtime.” Wood v. TriVita, Inc., No. CV-08-0765-PHX-SRB, 2008 WL 24 6566637, at *4 (D. Ariz. Sept. 18, 2008). 25 V. Discussion 26 Plaintiff seeks treble damages under state law that are more generous than the 27 liquidated damages provided under the FLSA. (Doc. 13 at 19.) Plaintiff’s contention that 28 the state recovery is not preempted by the FLSA relies primarily on the analysis regarding 1 untimely FLSA overtime claims found in Salgado v. Flowers Foods Inc., No. CV-222 00420-TUC-JGZ, 2023 WL 5348753 (D. Ariz. Aug. 20, 2023). 3 Defendants argue that (1) the AWA claims are preempted by FLSA; (2) the AWA 4 does not “pertain to overtime pay”; and (3) treble damages are not provided for under the 5 FLSA and to allow Levy to seek treble damages under state law would undermine 6 Congress’ objectives and allow for duplicative damages. (Doc. 23 at 6, 9.) 7 The Court finds the analysis in Salgado persuasive. The Court acknowledges both 8 a circuit and Arizona District Court split regarding whether recovery of untimely overtime 9 wages sought under the AWA is preempted by the FLSA. See Salgado, 2023 WL 5348573 10 at *2 n.2 (collecting cases); see also Weeks v. Matix Absence Mgmt. Inc., No. CV-2011 00884-PHX-SPL, 2022 WL 523323 at *3 (D. Ariz. Feb. 22, 2022) (same). However, the 12 Arizona District Court cases in favor of preemption rely on the Ninth Circuit’s contention 13 that “[c]laims that are directly covered by the FLSA (such as overtime and retaliation 14 disputes) must be brought under the FLSA.” Williamson v. Gen. Dynamics Corp., 208 F.3d 15 1144, 1154 (9th Cir. 2000). First, as explained in Salgado, this statement was dicta and has 16 since been rejected. Salgado, 2023 WL 5348573 at *3 (citing Wang, 623 F.3d at 760 ). 17 Second, the AWA claims for the untimely payment of wages are not preempted by 18 the FLSA because an employer can follow both state and federal law simply by paying an 19 employee’s overtime wages and also paying on time. Id. 20 Third, because “[t]he principal purpose of the FLSA” is to institute wage regulations 21 that protect employees, allowing employees to recover for untimely payment of wages does 22 not obstruct this purpose. Id. at *1, *3 (“The AWA’s requirement that an employer timely 23 pay its employees’ overtime wages that it owes furthers Congress’ purpose of protecting 24 covered employees from substandard wages and oppressive working hours.”); see also 25 Wang, 623 F.3d at 759 . 26 Fourth, while “the ‘AWA does not require payment of overtime . . . it does require 27 that, when due, overtime pay’” is timely paid. Butler v. Specialized Loan Servicing LLC, 28 No. 24-cv-01087-PAB-SBP, 2025 WL 404302 , at *7 (D. Colo. Feb. 4, 2025) (quoting 1 Salgado, 2023 WL 5348573 , at *2). Thus, Defendants are incorrect that AWA does not 2 pertain to overtime pay. 3 Fifth, while the AWA’s provision for treble damages encompasses a more 4 demanding pay provision than the FLSA’s double damages, this is permissible. Salazar, [5] 2023 WL 167021 , at *2 (quoting Pettis Moving Co. Inc. v. Roberts, 784 F.2d 439, 441 (2d 6 Cir. 1986) (“Section 218(a) of the FLSA explicitly permits states to set more stringent 7 overtime provisions than the FLSA.”); see also Lewis v. MHM Health Pros., LLC, 696 F. 8 Supp. 3d 707, 723 (E.D. Mo. 2023) (finding that the AWA is broader than the FLSA in 9 that “(1) it requires employers to pay all wages due, not just overtime, (2) it requires 10 employers to pay wages in a timely manner, and (3) it authorizes recovery of treble 11 damages” and this is allowed under the FLSA’s saving clause (citations omitted)). 12 Although “overtime claims that are directly covered by the FLSA must be brought under 13 the FLSA,” Salazar, 2023 WL 167021 , at *2, a claim of untimely payment of wages is not 14 directly covered under the FLSA, and allows for different forms of relief, Butler, 2025 WL 15 404302, at *9. 16 The Court finds FLSA does not preempt Plaintiff’s claims that Defendants failed to 17 timely pay wages under the AWA. 18 VI. “Employer” Under FLSA 19 Under A.R.S. § 23-350, an employer includes: [20] any individual, partnership, association, joint stock company, trust or 21 corporation, the administrator or executor of the estate of a deceased individual or the receiver, trustee or successor of any of such persons 22 employing any person. Employer also includes this state and any county, 23 municipality, school district or other political subdivision of this state. [24] (emphases added). The “statutory definition does not . . . authorize individual liability [25] against the owners, officers, and directors of a corporate employer in a case where the [26] claim is for the employer’s wholesale failure to pay wages.” Rosen v. Fasttrak Foods LLC, [27] No. CV-19-05292-PHX-DWL, 2021 WL 2981590 , at *5 (D. Ariz. July 15, 2021) (citing [28] Channel v. Home Mortg., Inc., 2005 WL 8160525 , *5 (D. Ariz. 2005) (emphases added)). 1 Defendants argue Mr. Whitaker was not Levy’s employer as defined under A.R.S. 2 § 23-350 et seq.; he was merely the owner of Sonoran. (Doc. 21 at 4.) They state 3 “individual, members of a corporate entity cannot be held personally liable under the 4 statute” and “only the entity ‘employing any person’ is an ‘employer.’” (Doc. 23 at 2, 4.) 5 This is because the AWA’s definition of “employer” is narrower than the FLSA’s, 6 Defendants contend. (Id. at 4.) 7 Plaintiff concedes that the AWA’s “definition of ‘employer’ differs from other 8 statutes that authorize liability for supervisors,” but argues that the cases precluding 9 individual liability under the AWA were based on distinguishable facts, not based on a 10 conclusion that independent liability is generally foreclosed. (Doc. 22 at 3.) Plaintiff posits 11 that in this case individual liability could be permissible because Whitaker is the owner 12 and exclusive operator of Sonoran. (Id.) Plaintiff asks the Court to allow discovery to 13 determine whether Whitaker is considered an “individual . . . employing any person” 14 subject to individual liability. (Id. at 3–4, 10.) Moreover, Plaintiff claims individual liability 15 is possible because he is not arguing “wholesale failure to pay wages,” but rather untimely 16 failure to pay wages. (Id. at 11.) 17 The Court finds the plain language of the statute allows for either individual liability 18 or corporate liability, regardless of the scope of the failure. Therefore, Plaintiff cannot raise 19 a claim against both Sonoran, the corporate entity, and Whitaker, the individual. 20 Levy alternatively asks for leave to amend. (Id. at 14.) “Leave to amend need not 21 be given if a complaint, as amended, is subject to dismissal.” Moore v. Kayport Package 22 Express, Inc., 885 F.2d 531 , 538 (9th Cir. 1989). The Court’s discretion to deny leave to 23 amend is particularly broad where Plaintiff has previously been permitted to amend his 24 complaint. Sisseton-Wahpeton Sioux Tribe v. United States, 90 F.3d 351 , 355 (9th Cir. 25 1996). Levy has amended his complaint once, and even additional facts showing Whitaker 26 “has complete authority and control over the entire business,” would not subject him to 27 individual liability along with Sonoran. (See Doc. 22 at 12; see also Salazar v. Driver 28 Provider Phoenix LLC, No. CV-19-05760-PHX-SMB, 2023 WL 7413663 , at *13 (D. Ariz. Nov. 9, 2023) (“No amount of managerial responsibility or substantial control can 2|| overcome the [AWA’s] statutory definition.”).) 3 Accordingly, IT IS ORDERED: 4 1) Defendants’ Motion to Dismiss Counts HI and IV of the First Amended Complaint 5 is GRANTED IN PART and DENIED IN PART. (Doc. 21.) 6 2) Count III against Defendant Sonoran Rovers LLC shall proceed. 7 3) Count IV against Defendant Marcus Whitaker is DISMISSED with PREJUDICE. 8 4) The Court will issue a separate order setting a case management conference. 9 Dated this 23rd day of June, 2025. [11] 12 _ p — ST (rl - 13 Honorable Raner C. Collins 14 senior United States District Judge [28] -7-