Solie v. Health Care@Home LLC

1 WO — 2 — — 3 — — 4 — — 5 — 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA — 8 — 9 Amanda V. Solie, et al., No. CV-19-05399-PHX-JJT 10 Plaintiffs, ORDER 11 v. 12 Health Care@Home LLC, et al., 13 Defendants. — 14 — 15 At issue is Defendants Steve Cohn and Lillian Focken’s Motion to Dismiss Second 16 Amended Complaint (Doc. 39 Ex. A, “Mot.”),1 to which Plaintiffs filed a Response 17 (Doc. 38, “Resp.”) and Defendants filed a Reply (Doc. 41, “Reply”). Defendants Health 18 Care@Home, LLC, Mark Forrest Cohn, and Susan Cohn (originally named as Jane Doe 19 Cohn) joined the Motion (Doc. 28.) This Order refers to Steve Cohn, Focken, Mark Cohn, 20 and Health Care@Home as “Moving Defendants.”2 However, the Court will not evaluate 21 1 Moving Defendants filed their Motion initially at Doc. 26. After Plaintiffs responded, Defendants realized they had inadvertently omitted from the Motion their 22 argument pertaining to Plaintiffs’ unjust enrichment claim, Count 9, which Moving Defendants had included in their original motion to dismiss Plaintiffs’ First Amended 23 Complaint (Doc. 20). Moving Defendants’ counsel obtained consent from Plaintiffs’ counsel to file a Notice of Errata with a corrected Motion, which includes the argument 24 regarding unjust enrichment. This is filed at Doc. 39. 25 2 Susan Cohn is omitted from “Moving Defendants” as the term is used throughout the Order because none of the SAC’s factual allegations are made against her. The Court 26 presumes she is named as a party solely to encumber her and Mark Cohn’s marital assets. 27 The Second Amended Complaint also names as Defendants Michelle Hosler, Dana Pierson, Rhianna Zastrow, Sanus Fieri Irrevocable Trust, Hosler Irrevocable Trust, and 28 Waya, Inc. (the “Nonmoving Defendants”). Waya has been terminated as a party. (Doc. 46.) The other Nonmoving Defendants have not answered or otherwise responded to 1 on behalf of Mark Cohn or the Company the arguments made by Steve Cohn and Focken 2 that require an analysis of individualized facts or allegations. For the reasons that follow, 3 the Court grants in part and denies in part Moving Defendants’ Motion. 4 I. BACKGROUND 5 Plaintiffs are four individuals who worked for Health Care@Home, LLC (the 6 “Company”) at different times and in different positions. Although each Plaintiff’s factual 7 allegations differ slightly, the essence of the Second Amended Complaint (Doc. 21 8 (“SAC”)) is that the Company made untimely or incomplete payment of wages throughout 9 their employment and breached promises related to the same. 10 According to the Complaint, Steve Cohn was the manager and only member of the 11 Company between June 2013 and April 14, 2017. (SAC ¶¶ 23–24; see SAC Exs. A & B.) 12 From April 14, 2017 through the remaining time period relevant to the SAC, Mark Cohn 13 was listed as a member and manager of the Company, and Focken was listed as a member. 14 (SAC ¶¶ 24–26; see SAC Exs. B, C & D.) Nonmoving Defendants were also all added as 15 members or managers on or after April 14, 2017. 16 Facts Specific to Amanda Solie 17 Plaintiff Amanda Solie was employed as Director of Personal Care and Support 18 Services for the Company from November 7, 2017 through January 1, 2018. (SAC ¶ 27.) 19 Her salary was $80,000 and the Company also agreed to make particular reimbursements 20 associated with her employment. (SAC ¶¶ 28–29.) “On or around December 4, 2017, the 21 Company began making untimely or incomplete payment of wages and expense 22 reimbursements to Solie” and “eventually” stopped paying her altogether. (SAC ¶¶ 31– 23 32.) She was terminated on January 3, 2018. (SAC ¶ 33.) Solie filed a Complaint with the 24 Labor Department of the Industrial Commission of Arizona, who eventually awarded her 25 unpaid wages in the amount of $3,845.06, and trebled the amount to $11,535.18 plus 4.25% 26 interest if Company failed to pay within 10 days of entry of final judgment. (SAC ¶¶ 34– — 27 — Second Amended Complaint, and several motions for default judgment are pending. This 28 Order addresses only the facts as they pertain to Moving Defendants and, to the extent argued in the briefing, the claims against the same. 1 36). The Company paid nothing on the judgment. (SAC ¶ 38). Solie alleges she “was not 2 paid either minimum wages (FLSA; Minimum Wage Act) or overtime wages (FLSA only) 3 for a total of 96 hours during the works weeks spanning November 7, 2017 through 4 January 3, 2018, and was not reimbursed costs of $152.90.” (SAC ¶ 45.) 5 Facts Specific to Roseanne Barrera 6 Plaintiff Roseanne Barrera was employed as Clinical Manager/Supervisor of the 7 Company from March 15, 2017 through August 11, 2017, at a salary of $96,000. (SAC ¶¶ 8 46–47.) In June 2017, the Company started making incomplete or late wage payments to 9 Barrera. (SAC ¶ 48.) When she demanded payment for her unpaid wages, the Company— 10 on two occasions—provided her with checks that were later dishonored due to insufficient 11 funds. (SAC ¶ 49.) Barrera eventually resigned in August 2017 after the Company stopped 12 paying her wages altogether. (SAC ¶ 50.) At that time, the Company agreed to pay Barrera 13 both her unpaid wages and for 53.32 hours of accumulated unpaid paid time off; the 14 Company never paid either. (SAC ¶¶ 51–52.) On November 2, 2017, Barrera and the 15 Company entered into a “Settlement Agreement” in which the Company agreed to pay 16 Barrera $15,000 in a series of monthly payments. (SAC ¶ 53; see Ex. H.) The Company 17 made only a partial payment of $1000 for the first payment, and never paid anything else. 18 (SAC ¶¶ 54–55.) Barrera alleges she “was not paid either minimum wages (FLSA; 19 Minimum Wage Act) or overtime wages (FLSA only) during the work weeks beginning 20 on June 20, 2017 and continuing through the entire duration of her employment with the 21 Company.” (SAC ¶ 63.) 22 Facts Specific to Joseph Kovach 23 Plaintiff Joseph Kovach was an Account Executive for the Company from May 27, 24 2017 through August 11, 2017 at a salary of $108,000. (SAC ¶ 66–67.) The Company 25 began making untimely or incomplete wage payments around June 2017 and eventually 26 stopped paying Kovach his wages altogether. (SAC ¶¶ 69–70.) After Kovach was 27 terminated from his position as Account Executive on August 11, the Company asked if he 28 would provide services as an Occupational Therapist Assistant at a rate of $50 per visit. 1 (SAC ¶¶ 66–67.) Kovach completed five visits in this role but was never paid for any of 2 them. (SAC ¶ 68.) Kovach alleges he “was not paid either minimum wages (FLSA; 3 Minimum Wage Act) or overtime wages (FLSA only) during the work weeks beginning in 4 June of 2017 through August 2, 2017” and that he is “entitled to reimbursement for work 5 luncheons totaling $978.98 and $515.05 in reimbursement for printed collateral related to 6 his position with the Company.” (SAC ¶ 75.) 7 Facts Specific to Alex Hatchett 8 Plaintiff Alex Hatchett worked as an Occupational Therapist for the Company from 9 January 2017 to October 2017. (SAC ¶ 76.) His rate of pay was $120 per visit for visits 10 outside the East Valley and $90 per visit within the East Valley. (SAC ¶ 77.) The Company 11 began making untimely or incomplete wage payments in March 2017 and eventually 12 stopped paying Hatchett his wages altogether. (SAC ¶¶ 78–79.) Hatchett alleges “he was 13 not paid either minimum wages (FLSA; Minimum Wage Act) or overtime wages (FLSA 14 only) during the work weeks spanning January of 2017 through October of 2017.” (SAC ¶ 15 85.) 16 Facts Relevant to All Plaintiffs 17 In addition to the above factual allegations, the SAC alleges Plaintiffs’ paychecks 18 came from different sources, including company checks, direct deposit, and sometimes 19 third-party vendors. (SAC ¶ 87.) After the Company failed to pay their wages, Plaintiffs 20 made demands on the Company but were still never paid. (SAC ¶ 93.) “Mark Cohn told 21 each Plaintiff numerous times both verbally and in writing that both he and the Company 22 would pay all their wages.” (SAC ¶ 94.) He made these promises until February 2018, at 23 which time he ceased all communication with Plaintiffs. (SAC ¶ 96.) 24 II. LEGAL STANDARD 25 Federal Rule of Civil Procedure 12(b)(6) is designed to “test[] the legal sufficiency 26 of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A dismissal under Rule 27 12(b)(6) for failure to state a claim can be based on either (1) the lack of a cognizable legal 28 theory or (2) insufficient facts to support a cognizable legal claim. Balistreri v. Pacifica 1 Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). When analyzing a complaint under Rule 2 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most 3 favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). 4 Legal conclusions couched as factual allegations are not entitled to the assumption of truth, 5 Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a 6 motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103 , 1108 7 (9th Cir. 2010). On a Rule 12(b)(6) motion, Rule 8(a) governs and requires that, to avoid 8 dismissal of a claim, Plaintiffs must allege “enough facts to state a claim to relief that is 9 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 10 III. ANALYSIS 11 Plaintiffs filed this action in state court on August 13, 2019, and filed their First 12 Amended Complaint (“FAC”) on September 6, 2019. Moving Defendants removed the 13 action to this Court (Doc. 1) and filed a motion to dismiss (Doc. 20). Rather than respond 14 to that motion, Plaintiffs filed the SAC later that same day. (Doc. 21.) 15 The SAC alleges 10 counts total, with each Plaintiff alleging each count against 16 different Defendants, depending on who was a member of the Company during the alleged 17 violations.3 The following counts are alleged: (1) failure to pay overtime wages under the 18 Fair Labor Standards Act (“FLSA”); (2) failure to pay minimum wages under the FLSA; 19 (3) failure to pay wages under the Arizona Wage Act (“AWA”); (4) failure to pay minimum 20 wages under the Arizona Minimum Wage Act (“AMWA”); (5) breach of contract related 21 to Mark Cohn’s promises to pay Plaintiffs’ wages; (6) breach of contract related to 22 Barrera’s Settlement Agreement; (7) breach of implied duty of good faith and fair dealing; 23 (8) negligent misrepresentation; (9) unjust enrichment; and (10) alter ego. Moving 24 Defendants move to dismiss all counts. — 25 — — 26 — — 27 — 3 For example, Solie and Kovach do not assert claims against Steve Cohn because 28 he was no longer a member of the Company during the times either Plaintiff worked for the Company. (SAC ¶ 21.) 1 A. Counts 3 & 7: Failure to Pay Wages under the AWA & Breach of Implied Duty of Good Faith and Fair Dealing — 2 — 3 In their Response to Moving Defendants’ present Motion, Plaintiffs ask the Court 4 to dismiss Counts 3 and 7 without prejudice. (Resp. at 2 n.4.) Moving Defendants respond 5 that these counts should be dismissed with prejudice. The Court agrees with Moving 6 Defendants. 7 Plaintiffs have had ample opportunity to substantively respond to Moving 8 Defendants’ arguments regarding Counts 3 and 7 and have not done so. Counsel for 9 Moving Defendants certify that on October 19, 2019, they notified Plaintiffs via letter of 10 the defects in the FAC as required by LRCiv 12(c). (Doc. 20 at 1 n.1.) Moving Defendants 11 later filed their first motion to dismiss and, as noted above, Plaintiffs then unilaterally filed 12 the SAC instead of responding to that motion. (See Docs. 20, 21.) Moving Defendants 13 certify that before they filed the present Motion, they again notified Plaintiffs that the SAC 14 failed to address the issues or cure the defects raised in their October 19 letter and the first 15 motion to dismiss. (Mot. at 2 n.1.) 16 The effect of all this is that Moving Defendants have been forced to expend 17 resources on moving to dismiss the same counts several times, and Plaintiffs have still not 18 addressed the merits of their arguments. To allow Plaintiffs to now dismiss these claims 19 with an opportunity to raise them again down the line—after having had multiple chances 20 to defend the viability of said claims—would manipulate the system and work an 21 unfairness on Moving Defendants. Accordingly, Counts 3 and 7 are dismissed with 22 prejudice as to Moving Defendants and without prejudice as to Nonmoving Defendants. 23 B. Alter Ego Liability 24 Before the Court turns to the substance of the remaining counts, it must first address 25 Count 10, the outcome of which will inform the Court’s analysis of other counts. In 26 Count 10, Plaintiffs seek to impose liability for the Company onto the “Individual 27 Defendants” (Moving Defendants Steve Cohn, Mark Cohn, and Focken, and Nonmoving 28 Defendants Hosler, Zastrow, and Pierson) under a theory of alter ego liability. 1 “[A]lter-ego status . . . exists when there is such a unity of interest and ownership 2 that the separate personalities of the corporation and owners cease to exist.” Dietel v. Day, — 3 — 492 P.2d 455, 457 (Ariz. Ct. App. 1972). Arizona courts will disregard the corporate entity 4 only if the plaintiff pleads facts sufficient to show that the corporation is the person’s alter 5 ego and that shedding the separate status is vital to preventing injustice or fraud. Loiselle 6 v. Cosas Mgmt. Grp., LLC, 228 P.3d 943, 950 (Ariz. Ct. App. 2010). Relevant factors to 7 consider in determining the existence of an alter ego relationship include “payment of 8 salaries and expenses” by the owner, an “owners’ making of interest-free loans to the 9 corporation,” “commingling of personal and corporate funds,” “diversion of corporate 10 property” for personal use, and the “observance of formalities at corporate meetings,” 11 among others. Deutsche Credit Corp. v. Case Power & Equip. Co., 876 P.2d 1190 , 1195– 12 96 (Ariz. Ct. App. 1994). 13 The SAC alleges “there is such a unity of interest and ownership” between the 14 Individual Defendants and the Company that no separation between the two exists, and to 15 treat them separately would work an injustice on Plaintiffs. (SAC ¶ 198–199.) More 16 specifically, upon information and belief, the Individual Defendants (1) paid personal 17 expenses from Company funds; (2) took or received improper distributions and/or 18 payments from the Company; (3) co-mingled their personal funds with the Company funds 19 (and the Company made no distinction between its own funds and the funds of the 20 Individual Defendants); and (4) failed to keep proper corporate and payroll records for the 21 Company. (SAC ¶¶ 193–197.) The SAC asserts the Company’s inability to meet its payroll 22 obligations so soon after it hired Plaintiffs supports these allegations. 23 Although the above allegations contain the hallmarks of boilerplate pleading, courts 24 in this district and circuit permit alter ego theories to survive with similar factual 25 allegations. See, e.g., Barba v. Seung Heun Lee, No. CV 09-1115-PHX-SRB, 2009 WL 26 8747368, at *5 (D. Ariz. Nov. 4, 2009); Whitney v. Wurtz, 2006 WL 83119 , at *2 (N.D. 27 Cal. Jan. 11, 2006). And while the Court agrees with Defendants that it may not be likely 28 that all six Individual Defendants engaged in the above pattern of behavior, discovery and 1 later motion practice will bear this out. For now, the allegations make alter ego liability 2 plausible—the standard under Rule 8 and Supreme Court precedent. Plaintiffs’ counsel are 3 reminded, however, that each paper they submit to the Court, including the SAC, includes 4 a certification that they sought credible information in determining the veracity of the 5 contents and factual bases therein. See Fed. R. Civ. P. 11(b); Cal. Architectural Bldg. 6 Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466 , 1472 (9th Cir. 1987). 7 Accordingly, Moving Defendants are not entitled to dismissal of the claims against 8 the Company for which the law permits piercing of the corporate veil. 9 C. FLSA and AMWA Claims 10 The FLSA has two major wage provisions. It requires employers pay (1) an hourly 11 minimum wage that is set by statute and calculated according to the number of hours 12 worked in a week, and (2) overtime wages at a rate of 1.5 times an employee’s hourly wage 13 for every hour worked over 40 hours in a week. See 29 U.S.C. § 206 (a)(1) (minimum 14 wage); 29 U.S.C. § 207 (a)(1) (overtime); see also Probert v. Family Centered Servs. of 15 Alaska, Inc., 651 F.3d 1007 , 1009–10 (9th Cir. 2011). 16 1. Count 1: FLSA Overtime 17 Moving Defendants argue the SAC fails to state a claim under the FLSA overtime 18 provisions because it does not clearly allege “any time, much less a specific workweek, in 19 which Plaintiffs worked more than forty hours without being compensated for overtime 20 hours.” (Mot. at 5) (emphasis in original). The Court agrees. 21 The Ninth Circuit holds that, “to survive a motion to dismiss, a plaintiff asserting a 22 claim to overtime payments must allege that she worked more than forty hours in a given 23 workweek without being compensated for the overtime hours worked during that 24 workweek.” Landers v. Quality Commc’ns, Inc., 771 F.3d 638, 645 (9th Cir. 2014). 25 Plaintiffs are not expected to allege “with mathematical precision” the amount of overtime 26 compensation owed, but the more facts alleged regarding the number of hours worked, the 27 length of an average workweek, and an estimated amount of overtime owed, “the closer 28 the complaint moves toward plausibility.” Id. at 645–46. At the very least, plaintiffs “must 1 be able to specify at least one workweek in which they worked in excess of forty hours and 2 were not paid overtime wages.” Id. (emphasis added). 3 Here, the SAC makes no such allegation. It merely states the Company stopped 4 paying Plaintiffs their wages or made incomplete payments at various times. In an attempt 5 to specify a week, the SAC alleges “Defendants first failed to pay them earned wages 6 during the following weeks: (1) Solie – week of November 6, 2017, (2) Barrera – week of 7 March 15, 2017, (3) Kovach – May 28, 2017, and (4) Hatchett – week of January 1, 2017.” 8 (SAC ¶ 108.) But this does not demonstrate Plaintiffs worked more than 40 hours during 9 that week—or any other given workweek—and failed to receive overtime wages for that 10 work. Accordingly, Plaintiffs fail to state a claim for FLSA overtime violations. 11 2. Counts 2 & 4: Minimum Wages 12 Plaintiffs’ minimum wages claims are similarly deficient. The SAC alleges that “on 13 or around” a certain date or month specific to each Plaintiff, the Company “began making 14 untimely or incomplete” wage payments. (SAC ¶¶ 31, 50, 69, 78.) This is insufficient 15 because it fails to identify a week in which their average hourly pay fell below the federal 16 minimum wage of $7.25 for the FLSA, 29 U.S.C. § 206 (A)(1)(C), or Arizona’s minimum 17 wage of $10 to $10.50, depending on the year, A.R.S. § 23-363(A)(1). Because minimum 18 wages are calculated by averaging the hourly wage over the number of hours worked in a 19 week, wage payments can be untimely or incomplete yet still satisfy minimum wage 20 requirements. See Maravilla v. Rosas Bros. Constr., Inc., 401 F. Supp. 3d 886 , 896 (N.D. 21 Cal. 2019 ). 22 In a similar vein, the SAC again alleges “Defendants first failed to pay them earned 23 wages during the following weeks: (1) Solie – week of November 6, 2017, (2) Barrera – 24 week of March 15, 2017, (3) Kovach – May 28, 2017, and (4) Hatchett – week of January 1, 25 2017.” (SAC ¶ 139) (emphasis added). First, these dates conflict with the dates or months 26 alleged throughout the rest of the SAC, making it difficult to discern the weeks during 27 which the alleged violations occurred.4 Second, even with the more particular workweeks 28 4 For example, other sections of the SAC allege the Company began making untimely or incomplete wage payments to Solie on December 4, 2017; to Barrera on 1 identified in Paragraph 139, the SAC still fails to demonstrate Plaintiffs were paid below 2 the minimum wage. Plaintiffs had salaries ranging from $80,000–$108,000 and rates of 3 $50 to $120 per occupational visit. Thus, a failure to pay Plaintiffs’ “earned wages” does 4 not, in light of their higher salaries, translate into a failure to pay minimum wages. See 5 Adair v. City of Kirkland, 185 F.3d 1055, 1059 (9th Cir. 1999) (“Because the salary, when 6 averaged across the total actual number of hours worked, still paid more per hour than the 7 minimum wage, [the defendants] complied with the FLSA’s minimum wage 8 requirements.”). 9 Finally, the SAC contains general allegations that (1) the Company eventually 10 stopped paying each Plaintiff his or her wages altogether, and (2) each Plaintiff “was not 11 paid either minimum wages [] or overtime wages” for a specified period of time that ranged 12 from three months (Barrera) to ten months (Hatchett). These allegations are too vague to 13 state a claim for either minimum wages or overtime wages for the reasons the Court has 14 already stated. See Landers, 771 F.3d at 646 . 15 In sum, the SAC’s lack of specificity and consistency fails to state a claim for 16 violations under either the FLSA or the AMWA. The Court acknowledges this may be a 17 function of the potential complications in keeping organized ten claims by four different 18 plaintiffs against ten defendants. This, however, does not excuse Plaintiffs from satisfying 19 the pleading requirements spelled out in Landers and its progeny. Nonetheless, because the 20 Plaintiffs might save their overtime and minimum wage claims by providing more precise 21 factual allegations, leave to amend shall be granted. See Lopez v. Smith, 203 F.3d 1122 , 22 1127 (9th Cir. 2000). 23 3. Employers under the FLSA and AMWA 24 Moving Defendants also argue the SAC does not adequately allege they were 25 employers of Plaintiffs. An employer who violates FLSA minimum wage or overtime 26 provisions is liable to affected employees, 29 U.S.C. § 216 , as is an employer who violates 27 the AMWA, A.R.S. § 23-364(G). Because the parties do not cite any cases interpreting the — 28 — June 20, 2017; to Kovach in June 2017; and to Hatchett in October 2017. 1 meaning of “employer” under the AMWA, the Court will look to case law interpreting the 2 FLSA definition because the two statutes define the term similarly. See 29 U.S.C. § 203 (d); 3 A.R.S. § 23-362; Cramton v. Grabbagreen Franchising LLC, No. CV-17-04663-PHX4 DWL, 2019 WL 7048773 , at *24 (D. Ariz. Dec. 23, 2019). 5 An FLSA employer is an individual who exercises “control over the nature and 6 structure of the employment relationship, or economic control over the relationship.” 7 Lambert v. Ackerley, 180 F.3d 997, 1012 (9th Cir. 1999). The Ninth Circuit applies a four8 factor “economic reality” test that considers whether the alleged employer (1) had the 9 power to hire and fire the employees, (2) supervised and controlled employee work 10 schedules or conditions of employment, (3) determined the rate and method of payment, 11 and (4) maintained employment records. See Bonnette v. Cal. Health & Welfare Agency, — 12 — 704 F.2d 1465 , 1470 (9th Cir. 1983). 13 Here, the SAC alleges that as members of the Company, Steve Cohn, Mark Cohn, 14 Focken, Pierson, Hosler, Zastrow, Hosler Trust, Sanus Fieri Trust, and Waya “had control 15 over the Company.” They also “had the authority to hire and fire employees, supervise and 16 control the work schedules or the conditions of the employment, determine the rate of pay 17 and method of payment, and maintain employment records in connection with” Plaintiffs’ 18 employment. (SAC ¶¶ 41–42; 59–60; 71–72; 81–82.) 19 The analysis here is similar to that of alter ego liability under Count 10. That is, the 20 SAC just barely puts forth enough allegations to make it plausible that Steve Cohn and 21 Focken were Plaintiffs’ “employers.”5 While discovery and summary judgment may 22 ultimately reveal the unlikelihood that all nine member-Defendants had and exercised these 23 authorities, this matter is currently in the pleading stage, and Plaintiffs’ counsel has averred 24 by signing the SAC that they have a good faith basis for alleging the above. See Fed. R. 25 Civ. P. 11. Additional allegations regarding Mark Cohn strengthen the claim against him. 26 For example, after each Plaintiff was terminated, Mark Cohn allegedly repeatedly promised 27 that he and the Company would pay all of Plaintiffs’ unpaid wages. He also signed the 28 5 However, because Steve Cohn was no longer a member as of April 2014, he could not have been Solie’s or Kovach’s employer. 1 Settlement Agreement with Barrera as Chief Executive Officer of the Company. These 2 demonstrate economic control over the employment relationships. 3 Accordingly, taking the allegations as true, the SAC asserts sufficient allegations to 4 make it plausible that Moving Defendants Mark Cohn, Steve Cohn, and Focken were 5 Plaintiffs’ employers under the FLSA and AWMA. 6 4. Timeliness 7 Moving Defendants assert that Plaintiffs’ FLSA and AMWA claims are mostly 8 untimely. The statute of limitations for a claim under either is two years, but can be 9 extended to three if a plaintiff demonstrates the defendant willfully violated the statutes. 29 10 U.S.C. § 255 (a); A.R.S. § 12-364(H). Generally, in order to even reach the willfulness 11 inquiry, the Court would have to first determine whether there was a statutory violation in 12 the first instance, and here the Court determined above that Plaintiffs failed to state a claim 13 under the FLSA or AMWA. However, because the Court granted Plaintiffs leave to amend 14 their claims, in the interest of efficiency it will evaluate Moving Defendants’ untimeliness 15 argument. 16 An employer acts willfully when it “either knew or showed reckless disregard for 17 the matter of whether its conduct was prohibited by the statute.” McLaughlin v. Richland 18 Shoe Co., 486 U.S. 128, 133 (1988). The SAC alleges generally that “[e]ach Defendant 19 knew that the Company had an obligation to pay earned wages to Plaintiffs” under the 20 FLSA and the AMWA and “intentionally did not pay those wages despite these 21 obligations.” (SAC ¶ 97.) This alone is enough at the pleading stage. See Rivera v. Peri & 22 Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013) (finding dismissal inappropriate on 23 statute of limitations grounds when the Complaint alleged the employer’s violations were 24 “deliberate, intentional, and willful”); see also Fed. R. Civ. P. 9(b) (“[C]onditions of a 25 person’s mind may be alleged generally.”). Beyond that, the SAC also alleged that during 26 her employment, Barrera demanded payment of her unpaid wages but continued to not be 27 paid. After being confronted by Barrera, the Company gave her dishonored checks—twice. 28 Mark Cohn also repeatedly promised to pay Plaintiffs their outstanding wages. Together, 1 these allegations sufficiently demonstrate Defendants’ knowledge that their conduct 2 violated the FLSA or AMWA or reckless disregard of the same. 3 D. Count 5: Breach of Contract – Mark Cohn’s Promise to Pay 4 All four Plaintiffs allege that Mark Cohn promised he would pay their wages after 5 they were terminated or left the company. These promises were repeatedly made orally and 6 in writing until February 2018. Moving Defendants argue Count 5 is untimely under A.R.S. 7 § 12-541(3), which provides a one-year statute of limitations for a “breach of an oral or 8 written employment contract.” A.R.S. § 12-541(3). Plaintiffs argue the limitations periods 9 of either A.R.S. § 12-548 (six years for breach of written contract) or A.R.S. § 12-543 10 (three years for breach of oral promise to pay a debt) applies.6 11 Arizona courts broadly construe the term “employment contract” under § 12-541(3) 12 and have “interpreted it as applying to almost all disputes between an employer and 13 employee.” Blood Sys., Inc. v. Roesler, 972 F. Supp. 2d 1150, 1155 (D. Ariz. 2013) (citing 14 Redhair v. Kinerk, Beal, Schmidt, Dyer & Sethi, P.C., 183 P.3d 544, 549 (Ariz. Ct. App. 15 2008)). The definition includes “all contracts defining specific responsibilities of the 16 employer to the employee” and any agreement related to “the nature, conditions, or 17 duration” of employment. Redhair, 183 P.3d 547–49. 18 Plaintiffs contend that despite this broad interpretation, Mark Cohn’s promises 19 cannot be “employment contracts” because they were made after Plaintiffs’ employment 20 terminated. (Resp. at 15.) However, Plaintiffs fail to cite any cases to support this temporal 21 distinction. Consistent with other decisions from this district, the Court finds that a promise 22 or assurance to pay wages owed after the employment relationship ends is still an 23 employment contract because it defines the responsibilities of the employer and extends a 24 term or condition of the employment. 25 In Gillard v. Good Earth Power AZ LLC, two plaintiffs sued their former employer 26 to recover wages the employer had “deferred” throughout the plaintiffs’ employment. 27 6 Plaintiffs also cite to A.R.S. § 12-550, arguing a three-year limitations period for written promises to pay applies. (Resp. at 16.) However, that section of the statute imposes 28 a four-year limitations period for “actions other than for recovery of real property for which no limitation is otherwise prescribed.” 1 No. CV-17-01368-PHX-DLR, 2019 WL 1280946 , at *6 (D. Ariz. Mar. 19, 2019). The 2 court found that, under the discovery rule, the limitations period could theoretically be 3 extended beyond the date of termination based on the employer’s “post-termination 4 assurances that [the plaintiffs] would be ‘made whole.’” Id. On the other hand, the court in 5 Lytikainen v. Schaffer's Bridal LLC held that the employer’s post-termination promises to 6 pay the plaintiff’s unpaid salary did not extend the limitations period under § 12-541(3) 7 because the plaintiff knew of the employer’s breach by the time she was terminated. 409 8 F. Supp. 3d 767, 777 (D. Ariz. 2019). While these cases arrived at different conclusions 9 regarding application of the discovery rule, they share an underlying legal premise: post10 termination promises to pay wages already owed are “employment contracts” under § 1211 541(3). Thus, even taking the more generous view that the limitations period began to run 12 in February 2018 after Mark Cohn’s last promise, Plaintiffs’ claims are still untimely 13 because they are based on employment contracts subject to a one-year limitations period. 14 E. Count 6: Breach of Contract – Barrera’s Settlement Agreement 15 Moving Defendants seek dismissal of Count 6 for similar reasons. Namely, they 16 argue the Settlement Agreement is not a settlement agreement at all because it lacks 17 consideration, and is therefore not a written contract subject to the six-year limitations 18 period under A.R.S. § 12-548. (Reply at 7.) They argue it is, at most, a promise to pay 19 wages and assert the one-year statute of limitations for employment contracts applies. See 20 A.R.S. §§ 12-541(3). Beyond pure argument, however, Moving Defendants offer no 21 support—statutory, case law, or otherwise—for their position. Without more, the Court 22 cannot conclude at this early stage that the signed document was not in fact a contract or 23 settlement agreement. Evaluation of the terms of the document, intent of the parties, and 24 validity of the agreement is more appropriate for a later stage of litigation. 25 Although Barrera also offers little substantive response and simply reasserts the six26 year statute of limitations applies, the Court finds Defendants have failed to demonstrate 27 expiration of the limitations period for Barrera’s breach of contract claim. Accordingly, the 28 Court will not dismiss Count 6 as untimely at this stage. See Cervantes v. Countrywide 1 Home Loans, 656 F.3d 1034, 1045 (9th Cir. 2011) (holding courts may dismiss a complaint 2 only “[i]f the running of the statute is apparent on the face of the complaint”). As this claim 3 is alleged against only the Company, it survives against the other Moving Defendants only 4 to the extent Plaintiffs prove alter ego liability. 5 F. Count 8: Negligent Misrepresentation 6 Moving Defendants did not address Plaintiffs’ claim for negligent misrepresentation 7 in their Motion; in their Reply, Steve Cohn and Focken state only that the claim was not 8 made specifically against them. (Reply at 11.) It was, however, brought specifically against 9 Mark Cohn, a joining Defendant, who made no individualized argument for dismissal of 10 this claim or any others. Count 8 therefore survives as to Mark Cohn. Further, Plaintiffs 11 alleged negligent misrepresentation against the Company. The claim thus survives against 12 Steve Cohn and Focken to the extent the law imputes liability for an LLC’s negligent 13 misrepresentation onto its alter ego members. 14 G. Count 9: Unjust Enrichment 15 As stated in footnote 1, Moving Defendants inadvertently omitted from their Motion 16 their argument regarding Plaintiffs’ unjust enrichment claim. (See Docs. 26, 39.) “Upon 17 realizing this error, counsel for the Moving Defendants sought consent from Plaintiffs’ 18 counsel to file a Notice of Errata with a corrected Motion adding the argument regarding 19 unjust enrichment.” (Reply at 7.) Moving Defendants filed their corrected Motion as 20 Exhibit A at Doc. 39. The parties agreed that Plaintiffs would have additional time to revise 21 their Response in order to respond to the unjust enrichment argument. (Doc. 39 at 1.) 22 However, Plaintiffs never filed a revised Response and consequently did not address the 23 arguments raised by Moving Defendants. Failure to respond to a motion may be deemed 24 consent to the Court’s granting of that Motion. LRCiv 7.2(i). Accordingly, the Court 25 dismisses Plaintiffs’ unjust enrichment claim. 26 IV. CONCLUSION 27 Plaintiffs failed to state a claim for Counts 1, 2, and 4, but are granted leave to 28 amend. Failure to cure the defects will result in dismissal with prejudice. Count 5 is 1 || dismissed with prejudice as to Moving Defendants on statute of limitations grounds. Counts 3, 7, and 9 are dismissed with prejudice as to Moving Defendants. Counts 6 and 8 || survive Moving Defendants’ Motion to Dismiss. The Court finds that Count 10 sufficiently 4|| alleges alter ego liability for the Company against Moving Defendants Steve Cohn, Mark || Cohn and Focken, as well as Nonmoving Defendants Zastrow, Pierson, and Hosler. Thus, || any claims that survive as to the Company also survive as to the Individual Defendants who worked for the Company during the requisite time periods, to the extent the law 8 || permits alter ego liability. 9 IT IS THEREFORE ORDERED granting in part and denying in part Defendants 10 || Steve Cohn and Lillian Focken’s Motion to Dismiss Second Amended Complaint filed at 11 || Doc. 26, which Defendants Mark Forrest Cohn, Susan Cohn, and Health Care@ Home LLC joined at Doc. 28. 13 IT IS FURTHER ORDERED that Plaintiffs have 14 days from this Order to file 14]| their Third Amended Complaint. 15 Dated this 10th day of April, 2020. CN 16 “wok: — 17 — Unifga State#District Judge — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 — -16-