Posada v. Cultural Care, Inc.

554 F.Supp.3d 309

Karen MORALES POSADA, Amanda Sarmento Ferreira Guimaraes, Williana Rocha, and Sara Barrientos, individually and on behalf of all others similarly situated, Plaintiffs,

v.CULTURAL CARE, INC., a Massachusetts Corporation, Defendant.

Civil No. 1:20-cv-11862-IT

United States District Court, D. Massachusetts.

Signed August 13, 2021

David Hollis Seligman, Alexander N. Hood, Pro Hac Vice, Towards Justice, Denver, CO, H. Clara Coleman, Pro Hac Vice, Nichols Kaster, PLLP, Minneapolis, MN, Matthew C. Helland, Pro Hac Vice, Nichols Kaster, LLP, San Francisco, CA, Peter Rukin, Pro Hac Vice, Rukin Hyland & Riggin LLP, Oakland, CA, for Plaintiff Karen Morales Posada.

David Hollis Seligman, Towards Justice, Denver, CO, Matthew C. Helland, Nichols Kaster, LLP, San Francisco, CA, for Plaintiffs Amanda Sarmento Ferreira Guimaraes, Williana Rocha.

Harvey J. Wolkoff, Gavin Frisch, Matthew Mazzotta, Quinn Emanuel Urquhart & Sullivan, LLP, Boston, MA, Kathleen M. Sullivan, Quinn Emanuel, Los Angeles, CA, for Defendant.

MEMORANDUM AND ORDER

TALWANI, D.J.

Plaintiffs Karen Morales Posada, Amanda Sarmento Ferreira Guimaraes, Williana Rocha, and Sara Barrientos are foreign nationals who participated as au pairs in the federal au pair program (under the J-1 Exchange Visitor Visa Program). Sec. Amend. Compl. ("SAC") ¶¶ 7-10 [#43]. Defendant Cultural Care, Inc. ("Cultural Care") sponsored Plaintiffs, coordinated their immigration process, and placed them with a host family. Id. at ¶¶ 3-4, 31, 50, 60, 71, 84. Plaintiffs allege that Cultural Care, through its failure to adequately pay them and to provide certain disclosures, has violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. , and New York, California, New Jersey, and Illinois minimum wage, overtime and wage statement laws. Plaintiffs also allege that Cultural Care has engaged in deceptive trade practices.

Their complaint includes fourteen separate counts. Counts 1-11 allege, as Rule 23 class actions, violations of California, New York, New Jersey, and Illinois minimum wage, overtime, and wage statement laws. SAC ¶¶ 123-47 (counts 1-4), 84 (class definition counts 1-3), 148-63 (counts 5-7), 91 (class definition counts 5-7), 164-71 (counts 8-9), 98 (class definition counts 8-9), 172-82 (counts 10-11), 105 (class definition counts 10-11). Counts 12-13 allege, as a collective action on behalf of the named plaintiffs and any similarly situated individuals in the three years prior to filing this suit, violations of the FLSA for failure to pay minimum wages and failure to pay overtime. Id. at ¶¶ 183-212 (counts), 120 (collective action class definition). Finally, Count 14 alleges, as a Rule 23 class action on behalf of the named plaintiffs and all individuals who were sponsored by Cultural Care and worked as au pairs in the states of New York, Illinois, New Jersey, Connecticut, and Washington during "any portion of the period commencing during the applicable statute of limitations prior to the filing of this action through the entry of final judgment in this action," that Cultural Care engaged in deceptive trade practices in violation of the consumer protection laws of aforementioned states. Id. at ¶¶ 213-17 (count), 112 (class definition).

Pending before the court is Cultural Care's Motion to Dismiss [#66] for lack of subject matter jurisdiction and for failure to state a claim.¹ Cultural Care argues that it is entitled to derivative sovereign immunity (asserted via Rule 12(b)(1) of the Federal Rules of Civil Procedure ), that the wage and employment laws allegedly violated are preempted by federal regulations (asserted via Rule 12(b)(6) ), and that Plaintiffs failed to allege facts establishing either that Cultural Care "employs" au pairs or that Cultural Care engaged in any deceptive practices (both also asserted via Rule 12(b)(6) ). Def's Mem. 2-3 [#67].

For the following reasons, the Motion to Dismiss [#66] DENIED as to Counts 1 through 13 and GRANTED IN PART and DENIED IN PART as to Count 14.

I. Background

A. Overview of Federal Statutes and Regulations

The au pair program is a part of the J-1 Exchange Visitor Program through which foreign nationals can come live and study in the United States. 22 C.F.R. § 62 et seq. (general program regulations); id. at § 62.31 (au pair program specific regulations). To be eligible to receive a J-1 visa, a person must be:

an alien having a residence in a foreign country which he has no intention of abandoning who is a bona fide student, scholar, trainee, teacher, professor, research assistant, specialist, or leader in a field of specialized knowledge or skill, or other person of similar description, who is coming temporarily to the United States as a participant in a program ... for the purpose of teaching, instructing or lecturing, studying, observing, conducting research, consulting, demonstrating special skills, or receiving training ....

8 U.S.C. § 1101(a)(15)(J). The au pair program is open to foreign nationals between the ages of 18 and 26 and allows such individuals to reside in the United States with an American host family for up to two years, where they provide childcare services and complete coursework at a local college or university. 22 C.F.R. § 62.31(a), (c)(1), (d), (o).

Exchange Visitor Program Sponsors are "legal entit[ies] designated by the Secretary of State to conduct an exchange visitor program." Id. at § 62.2. Organizations must apply to the Department of State (the "State Department") to become sponsors. Id. at § 62.5. If an applicant meets "all the statutory and regulatory requirements," the State Department may grant designation via a letter specifying what activities the applicant may undertake. Id. at § 62.6(a), (c). Designation can last up to two years, id. at § 62.6(b), 62.7(d), and sponsors can apply for redesignation in advance of the expiration. Id. at 62.7. Sponsors are responsible for choosing, in accordance with the regulatory eligibility rules, who participates in the au pair program. Id. at 62.4. Sponsors also have certain financial, insurance, and reporting obligations. Id. at § 62.8-15.

Sponsors designated by the Department of State to conduct an au pair exchange program have additional responsibilities, including limiting the au pair's initial participation to one year; requiring the au pair to register for and attend educational programs; and maintaining a record of monthly (or more frequent) contacts with each au pair and host family. 22 C.F.R. § 62.31(c).

The au pair specific regulations also require sponsors to provide the au pair and the host family documentation about: the au pair program rules, a participant's host family and the surrounding community, the participant's educational institution, travel arrangements, and the State Department's "written statement and brochure" about the program. Id. at 62.31(f), (i).² Sponsors must also select and screen host families in accordance with State Department criteria. Id. at § 62.31(e), (h). And there are specific au pair program monitoring and reporting obligations. Id. at 62.31(c)(5)-(9), (l), (m).

Of particular relevance here, the regulations address au pair wages and hours in a few places. First, au pair sponsors are specifically charged with limiting the number of hours per day and per week that the au pair participant is obligated to provide child care services. Id. at 62.31(c). The sponsor may not place an au pair with a host family unless the family signs a written agreement limiting the obligation to provide child care services for the au pair to ten hours per day and forty-five hours per week. Id. at 62.31(e)(5). Sponsors also must require that au pair participants "[a]re compensated at a weekly rate based upon forty-five hours of child care services per week and paid in conformance with the requirements of the Fair Labor Standards Act as interpreted and implemented by the United States Department of Labor." Id. at 62.31(j)(1). The regulations make the aforementioned hourly limitations binding on sponsors and require that au pairs receive at least one and a half days off each week, one full weekend off each month, and two weeks of paid vacation. Id. at § 62.31(j)(2)-(4). In 2009, when the federal minimum wage increased to its current rate, see 29 U.S.C. § 206(a)(1)(C), the State Department issued a notice indicating that in its view a weekly stipend of $195.75 complies with the federal minimum wage rate of $7.25/hour based on crediting room and board as 40% of an au pair ’s compensation.³

B. Factual Allegations

As alleged in the Second Amended Complaint [#43] and the incorporated documents, the facts are as follows.

According to the State Department, each year approximately 3,100 au pairs work in California, 2,500 au pairs work in New York, 1,700 au pairs work in New Jersey, and 1,100 au pairs work in Illinois, and Cultural Care, a sponsor under the federal program, sponsors the visas for at least 10% of these au pairs. Id. at ¶ 13. Au pairs sponsored by Cultural Care typically work at least forty hours per week and fifty weeks per year. Id. at ¶ 14. Cultural Care instructs host families to pay a weekly stipend of at least $195.75. Id. at ¶¶ 17, 21, 23. Cultural Care advertises the annual cost to a host family for an au pair as $19,553.25, comprised of $9,570 in fees to Cultural Care and $9,983.25 in payment to au pairs. Id. at ¶ 17. Cultural Care has distinct instructions for Massachusetts host families, who are told the following:

Paid weekly to your au pair:

Au pairs who live with a host family in Massachusetts are entitled to a weekly payment directly from their host family, that is at least the greater of either:

• The minimum federal stipend of $195.75¹

• The MA minimum wage ($12.75/hour in 2020) times the number of hours the au pair is on duty for the week up to 40. If the au pair works between 41-45 hours during a week, you must pay time-and-a-half for the hours worked over the 40 hour limit. You may be able to deduce from

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