Fuentes v. Compadres, Inc.

JAIME FUENTES, individually and on behalf of others similarly situated, Plaintiffs, v. COMPADRES, INC., d/b/a Tequila's (Golden),TEQUILAS THORNTON NUMBER 6, LLC, d/b/a Tequila's (Thornton),TEQUILAS OF THORNTON, LLC d/b/a Tequila's (Thornton),EL AGAVE AZUL, INC. d/b/a El Tequileno (Arvada),EL NOPAL, INC. d/b/a El Tequileno (Lakewood),EL TEQUILENO #1 d/b/a El Tequileno (Aurora),JOSE RAIGOZA DeJESUS GARCIA, and RODRIGO SANCHEZ, Defendants.

Civil Action No. 17-cv-01180-CMA-MEH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

December 12, 2017

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Michael E. Hegarty, United States Magistrate Judge.

Plaintiff Jaime Fuentes, on behalf of himself and others similarly situated ("Plaintiff"), initiated this action on May 12, 2017 and filed the operative Second Amended Complaint on September 15, 2017 alleging, inter alia, that the Tequila Defendants¹ and the Tequileno Defendants,² which are restaurants and alleged owners/managers of the restaurants, failed to pay the proper overtime rate for hours over 40 worked in the workweek, retained tips for management, failed to provide adequate notice related to the tip credit, and over-reported his tips on paystubs in violationof the Fair Labor Standards Act ("FLSA") and the Colorado Wage Claim Act ("CWCA"). Each set of Defendants filed a motion to dismiss all claims against them. The Court finds that the Plaintiff's state law claims against the individual Defendants must be dismissed, but none of the other arguments proffered by the Defendants support dismissal at this stage of the litigation and, thus, the Court recommends that the Honorable Christine M. Arguello grant in part and deny in part the Defendants' motions.

BACKGROUND

I. Statement of Facts

The following are factual allegations (as opposed to legal conclusions, bare assertions, or merely conclusory allegations) made by the Plaintiff in the Second Amended Complaint, which are taken as true only for analysis under Fed. R. Civ. P. 12(b)(6) pursuant to Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Plaintiff worked for Tequila's Family Mexican Restaurant as a waiter/bartender from October 24, 2016 to February 22, 2017. For the first couple of months, Plaintiff worked at the Thornton location, then for the next two months he worked at the Golden location. Regardless of the location, Plaintiff Fuentes' paycheck included the same notation at the top: "Tequila's Family Mexican Restaurants, 17535 S Golden Road Golden, CO 80401-2635."

Both the Thornton and Golden locations used the same kind of point-of-sale ("POS") system for clocking in and out and placing customers' orders. The menus at the two restaurants were the same. The logo and signs at the two restaurants looked the same. Further, regardless of the location, Plaintiff was required to wear the same uniform, a long sleeved grey shirt with the Tequila's logo on it.

Plaintiff's manager in Golden, "Alejandro," worked at Thornton as a server with Plaintiff. Plaintiff knows other people who worked at Thornton and who started working at Golden when it reopened. Additionally, he knows other servers who had worked at various Tequila's Family Mexican Restaurant locations.

In addition to waiting tables, Plaintiff was tasked with "side work" such as loading ice into the soda machine, making iced tea, slicing lemons, stocking the salt and pepper racks, cleaning the tables and floors, writing the daily lunch specials for customers, and rolling silverware. In his position, Plaintiff regularly interacted with customers who were from all across the United States. He handled food and other supplies that originated outside of Colorado, and he utilized Defendants' credit card machine to process payments.

When he worked in Thornton, Plaintiff estimates that, on average, he worked 45 hours per week. In Golden, Plaintiff estimates that he worked 55 hours per week for the first three weeks after the location opened, after which he worked about 45 hours per week. Plaintiff usually worked six days per week, or every day of the week except Tuesday, and he almost always worked both the lunch and dinner shifts. Generally, Plaintiff started work around 10:00 a.m. before the restaurants opened for customers at 10:45 a.m. in Golden or 11:00 a.m. in Thornton. Then, Plaintiff would clock out in the middle of the afternoon, for approximately two-to-three hours, between 2:00 p.m. and 5:00 p.m. The restaurants both closed at 11:00 p.m. on Fridays and Saturdays and at 10:00 p.m. during the remaining days of the week. Plaintiff would generally clock out at closing time, unless there were any guests remaining in his section. In such circumstances, he clocked out shortly after the last customer left, typically twenty-to-thirty minutes after closing time.

For the biweekly pay period ending December 31, 2016, Plaintiff's paystub indicates thathe worked more than eighty-six hours at the Golden location. Thus, in at least one of the two weeks constituting that pay period he worked more than forty hours per week. He also worked "off the clock," meaning the Defendants required Plaintiff to perform work before clocking in and/or after clocking out. Specifically, Defendants regularly required Plaintiff to clock out, then perform the "side work" and cleaning activities, which took approximately twenty-to-thirty minutes per day to perform. Defendants did not pay Plaintiff for this time in wages, nor did he receive any tips related to this time. For almost every shift he worked at Golden, Plaintiff's manager, Alejandro, required him to clock out, then perform cleaning activities. When he worked at Thornton under a different manager, such requirement happened less frequently, but still occurred approximately two-to-three times per week.

In this position, Plaintiff's pay scheme was sub-minimum wage plus tips. In 2016 (and the first pay period of 2017), his regular hourly rate was $5.28 per hour and his overtime rate was $7.92 per hour. Thereafter in 2017, his hourly wage rate was $6.28 per hour and the overtime rate was $9.14 per hour. Thus, Plaintiff was paid an incorrect rate for all hours over 40 worked in a workweek.

Plaintiff, like others similarly situated, was never informed about or provided notice of any tip credit claimed by the Defendants. Even though customers would regularly leave tips on credit cards, tips were only ever paid to servers, including Plaintiff, in cash at the end of the shift, not by paychecks. On the pay stubs, all the tips were reported as cash tips. Management retained tips intended for Plaintiff and others similarly situated. At some point when he was working at Golden, Plaintiff realized that the amount of tips reported on his paystubs was more than he actuallyreceived. In around mid-February 2017, he complained to Defendant Garcia about the over-reporting of his tips. Approximately one week later, the manager, Alejandro, accused Plaintiff of stealing tequila and fired him.

II. Procedural History

Based on these factual allegations, Plaintiff claims on behalf of himself and other similarly situated willful violations of the FLSA including minimum wage violations; failures to compute overtime properly for sub-minimum wage tipped workers; and incorrect payment of overtime and minimum wages due to incorrect accounting of hours worked. Am. Compl., ECF No. 63. Plaintiff also claims violations of the CWCA, including failures to pay minimum wages and weekly overtime premiums; improper payment of tips, failure to pay wages when due, failure to pay all earned wages, failure to properly keep records, and willful failure to respond to a wage demand. Id.

Both the Tequila Defendants and the Tequileno Defendants responded to the operative pleading by filing motions to dismiss arguing that, since Plaintiff was not employed by some of the Defendants, he had no standing to bring claims against them and the Court lacks subject matter jurisdiction to hear such claims. In addition, the Defendants contend that Plaintiff fails to state plausible claims under the FLSA and CWCA, and the individual Defendants are not liable under the CWCA.

Plaintiff counters that, even were he not employed by some Defendants, his allegations plausibly demonstrate that all Defendants are liable under the FLSA and CWCA as a "single employer" or "single enterprise," which is a theory different than the "joint employer" doctrine applied by the Defendants. Further, Plaintiff contends that for collective (or class) action complaints such as that here, courts have historically found that a plaintiff need not "determine conclusively"which of the defendant companies was his or her employer at the pleading stage. Plaintiff also contends that the individuals are properly named as Defendants under the FLSA and CWCA, FLSA coverage questions are not proper for Rule 12 analysis, and Plaintiff's allegations are sufficient to demonstrate plausible overtime claims, improper retention of tips, and record-keeping failures. Finally, Plaintiff asks that, should the Court determine his allegations are insufficient, he be granted leave to file a third amended complaint.

Defendants reply³ that they are separately owned and, thus, do not meet the definition of a "single enterprise"; Plaintiff fails to establish an employee-employer relationship with certain Defendants; Plaintiff fails to properly rebut Defendants' argument that his allegations do not demonstrate enterprise coverage; Plaintiff should not be granted leave to amend for the fourth time; Plaintiff's allegations are insufficient to state claims for overtime and improper retention of tips; and Plaintiff cannot sue an individual under the CWA.

LEGAL STANDARDS

Defendants contend this Court lacks subject matter jurisdiction over Plaintiff's claims pursuant to Fed. R. Civ. P. 12(b)(1) and, otherwise, they argue Plaintiff fails to state claims for relief pursuant to Fed. R. Civ. P. 12(b)(6).

I. Dismissal under Fed. R. Civ. P. 12(b)(1)

Rule 12(b)(1) emp...