Kucken v. Orsuga Consulting LLC

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Shawnah Kucken, Plaintiff, v. Orsuga Consulting LLC, et al., Defendants.

No. CV-22-00573-PHX-DJH

United States District Court, D. Arizona

January 29, 2024

ORDER

HONORABLE DIANE J. HUMETEWA, UNITED STATES DISTRICT JUDGE

Plaintiff Shawnah Kucken (“Plaintiff”) has filed a Motion for Partial Summary Judgment (Doc. 106) against Defendant Orsuga Consulting LLC d/b/a Pinnacle Growth Advisors (“Defendant Pinnacle”), Defendant Brent Orsuga (“Defendant Orsuga”), and Defendant Susanna Orsuga^[1] (“Mrs. Orsuga”) (collectively “Defendants”). Plaintiff seeks judgment on the following issues: (1) her employment status, (2) her commission payments owed, and (3) Defendants' affirmative defense under the voluntary payment doctrine. (Id at 1-2). The matter is fully briefed. (Docs. 107 110).^[2] For the reasons that follow, the Court will grant Plaintiff's Motion in part and deny it in part.

I. Background^[3]

This is a failure to pay overtime case. Defendant Orsuga owns Pinnacle, which is a recruiting company that places job candidates with companies. (Doc. 111 at 2 (the prior Order)). Mrs. Orsuga is Defendant Orsuga's wife. Plaintiff owns Legacy Solutions LLC (“Legacy Solutions”), a business that helps find, screen, and place candidates for companies in the logistics industry. (Id.) In August of 2019, during prospective employment discussions, Defendant Orsuga suggested that Plaintiff create her own LLC. (Id.) Plaintiff created Legacy Solutions soon thereafter and began providing services to Pinnacle. (Id.)

A. The Parties' Independent Contractor Agreements

On April 9, 2020, Legacy Solutions and Pinnacle entered into an “Independent Contractor Agreement” (Doc. 107-1 at 41-49) (the “First Agreement”). On March 26, 2021, Legacy Solutions entered into a second Independent Contractor Agreement (Id. at 51-60) (the “Second Agreement”). The First and Second Agreements both state that “[t]he Contractor expressly acknowledges that Contractor will be an independent contractor and not an employee of the Company.” (Id. at 44, 54).

Plaintiff was paid in accordance with a fee schedule set forth in Schedule A of the Agreement and the Second Agreement. (Id. at 42, 52). Schedule A of the Second Agreement, the operative agreement, provides various percentages that Plaintiff shall receive when recruiting candidates on behalf of Pinnacle:

- Plaintiff would receive a 20% commission for transactions where Plaintiff recruited the candidate but never “screened, spoke with, met, or had any involvement with the candidate” during the “Recruiting Function.” (Id. at 59)

- Plaintiff would receive a 30% commission if she “screened, spoke with, or met with the candidate during the Recruiting Function, and the Company's Founder/President was also involved during the Recruiting Function.” (Id.)

- Plaintiff would receive a 40% commission if she “managed the entire Recruiting function without involvement from [Pinnacle's] Founder/President.”. (Doc. 107-1 at 59).

- Plaintiff would receive a 50% commission if Plaintiff “did the business development and located the client and the candidate during the Recruiting Functions (i.e. Contractor was not provided any leads from the Company), and the Contractor managed all Recruiting Functions without any involvement from the Company's Founder/President.” (Id.)

The Second Agreement further states that Pinnacle will not “dictate the time of performance, except as necessitated by the service to be performed” and that Plaintiff “will be paid by or through the Company based on the work the Contractor is contracted to perform and that the Company is not providing the Contractor with a regular salary or any minimum, regular payment.” (Id. at 55).

B. Plaintiff's Role at Pinnacle

Plaintiff acted as Pinnacle's Director of Recruiting, and she used this title in all of her recruiting activities. (Doc. 111 at 2). In this role, Plaintiff's primary task was to screen potential candidates. (Id.) This matter involves various placements of candidates and alleged overpayments and underpayments for these placements, including candidates “Brandon Bay,” “Nick K,” “Alex Giani,” and “Justin Day.” (Docs. 106 at 15; 107 at 16).

Plaintiff recruited candidate Brandon Bay and was paid a commission of $4,370 for the placement. (Doc. 109-1 at 9). Pinnacle received a total of $13,350 for placing Brandon Bay at “Traffix” (Id.) Plaintiff was only owed $2,670 based on a 20% rate for the placement of Brandon Bay. (Id.) Defendants' records show that Plaintiff was paid $6,810 on 1/6/2020 for the placements of Brandon Bay and Alex Giani, but that she was only owed $4,670, so a total of $2,140 was overpaid to Plaintiff. (Id.)

Plaintiff recruited candidate Justin Day and Pinnacle received $28,500 for the placement. (Id. at 12). Plaintiff earned a 40% rate on this placement, but the invoice shows that she was paid $0. This is because “Legacy Solutions would have been owed $11,400.00, but Pinnacle had to credit the client for this placement.” (Doc. 109-1 at 12).

Pinnacle still paid Legacy Solutions $10,200 for Mr. Day's placement, however. (Id.) Defendant Orsuga stated in his deposition that the commission for Brandon Bay was actually $21,850 but was listed as $13,350 because there was a $8,500 credit that needed to be applied for a different candiDated: “Nick K.” (Doc. 106-2 at 19).

Plaintiff terminated the Second Agreement with Defendants via email on September 9, 2021. (Doc. 111 at 2 (citing Doc. 60-1 at 175)).

C. Procedural History

In April 2022, Plaintiff filed suit against Defendants alleging the following three claims:

(1) Failure and/or refusal to pay overtime under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq., against all Defendants (Doc. 1 at ¶¶ 30-34);

(2) Failure to pay wages under the Arizona Wage Act (“AWA”), A.R.S. § 23-350, against Defendant Pinnacle (id. at ¶ 35-40); and

(3) Unjust enrichment against all Defendants (id. at ¶ 41-45).

In their Answer (Doc. 11), Defendants assert that Pinnacle overpaid Legacy Solutions for commissions that were advanced by Pinnacle but not earned by Legacy Solutions. (Id. at ¶ 27). Defendants seek to offset any damages allegedly owed to Plaintiff with the overpayments they already made to her. (Doc. 107 at 17).

Defendants previously filed a Motion for Partial Summary Judgment regarding Plaintiff's AWA claim. (Doc. 60). In the prior Order (Doc. 111), the Court found there was a genuine dispute of material fact as to “whether an employer-employee relationship existed and a reasonable expectation that [Defendants] owed Plaintiff payment” and denied Defendants' Motion. (Doc. 111 at 1-2). Plaintiff has since filed her own Motion for Partial Summary Judgment regarding her AWA claim and other issues. (Doc. 106).

II. Legal Standard

A court will grant summary judgment if the movant shows there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A fact is “material” if it might affect the outcome of a suit, as determined by the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “genuine” when a reasonable jury could return a verdict for the nonmoving party. Id. Here, a court does not weigh evidence to discern the truth of the matter; it only determines whether there is a genuine issue for trial. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1131 (9th Cir. 1994).

The moving party bears the initial burden of identifying portions of the record, including pleadings, depositions, answers to interrogatories, admissions, and affidavits, that show there is no genuine factual dispute. Celotex, 477 U.S. at 323. Once shown, the burden shifts to the non-moving party, which must sufficiently establish the existence of a genuine dispute as to any material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986). Where the moving party will have the burden of proof on an issue at trial, the movant must “affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue as to which the nonmoving party will have the burden of proof, however, the movant can prevail “merely by pointing out that there is an absence of evidence to support the nonmoving party's case.” Id. (citing Celotex Corp., 477 U.S. at 323). If the moving party meets its initial burden, the nonmoving party must set forth, by affidavit or otherwise as provided in Rule 56, “specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 250; Fed.R.Civ.P. 56(e). In judging evidence at the summary judgment stage, the court does not make credibility determinations or weigh conflicting evidence. Rather, it draws all inferences in the light most favorable to the nonmoving party. See T.W. Electric Service, Inc. v. Pacific Electric Contractors Ass 'n, 809 F.2d 626, 630-31 (9th Cir. 1987).

III. Discussion

Plaintiff argues that she is entitled to summary judgment on four separate issues: (1) that she was Defendant Pinnacle's employee under both the FLSA and the AWA; (2) that she was an employee of Defendant Orsuga for purposes of the FLSA; (3) she is owed certain commission payments; and (4) that the voluntary payment doctrine prevents Defendants from reducing Plaintiff's commissions due to alleged overpayments made to her. (Doc. 106 at 1-2). Defendants argue that these issues are “riddled with material factual disputes and not ripe for summary judgment.” (Doc. 107 at 2). The Court will address each issue in turn.

A. The AWA

As to Count Two, Plaintiff argues that she was Defendant Pinnacle's...