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Acosta v. Valley Hotel

United States District Court, M.D. Pennsylvania

December 11, 2017

ALEXANDER ACOSTA, UNITED STATES SECRETARY OF LABOR, Plaintiff.
v.
VALLEY HOTEL, et al., Defendants.

          MEMORANDUM OPINION

          Matthew W. Brann, United States District Judge.

         Defendants Thomas E. Smith and the Valley Hotel moved to dismiss Plaintiff Alexander Acosta's Amended Complaint. For the reasons that follow, that motion is granted in part and denied in part.

         I. BACKGROUND[1]

         Thomas E. Smith owns the Valley Hotel, a restaurant and lodging facility located in Mill Hall, Pennsylvania.[2] On November 6, 2013, after an investigation by the Wage and Hour Division of the United States Department of Labor, Mr. Smith signed a Back Wage Compliance and Payment Agreement (“Agreement”), agreeing to pay $30, 816.86 in back wages to a number of identified Valley Hotel employees.[3] The back wages, owed under the Fair Labor Standards Act (“FLSA”), [4] accrued between August 28, 2011, and August 27, 2013.[5] The Agreement noted that the Defendants “waive[d] all rights and defenses which may be available by virtue of statute[s] of limitations, including but not limited to [§] 6 of the Portal-to-Portal Act (29 U.S.C. [§] 255[)], ” as well as “[a]ny right[] to challenge or contest the validity of this Agreement.”[6]

         The Defendants did not immediately tender the back wages. A few days after signing the Agreement, they noted their intention to condition payment upon receipt of certain information from the Government vis-à-vis its calculation methods.[7] The parties exchanged correspondence on this issue through April 6, 2015, [8] but did not reach a satisfactory agreement. Eventually, the Government filed a Complaint against Defendants on January 19, 2017, alleging various violations of the FLSA.[9]

         The Government filed an Amended Complaint on June 29, 2017, [10] outlining the sequence of events described above and alleging that Defendants violated the FLSA by (1) failing to pay certain employees the minimum wage mandated under 29 U.S.C. § 206;[11] (2) failing to pay certain employees an overtime premium-i.e., “time and a half”-under 29 U.S.C. § 207;[12] and (3) failing to maintain payroll records in the manner required by 29 U.S.C. § 211 and 29 C.F.R. 516.[13] The Amended Complaint sought relief from alleged violations occurring from November 11, 2010, through the present.

         Defendants moved to dismiss the Amended Complaint on July 11, 2017, arguing that many of the Government's claims were bared by the applicable statute of limitations and that, in any event, the Government failed to allege facts sufficient to state a claim upon which relief may be granted.[14]

         II. DISCUSSION

         A. Standard of Review

         When considering a motion to dismiss for failure to state a claim upon which relief may be granted, [15] a court assumes the truth of all factual allegations in a plaintiff's complaint and draws all inferences in favor of that party;[16] the court does not, however, assume the truth of any of the complaint's legal conclusions.[17] If a complaint's factual allegations, so treated, state a claim that is plausible - i.e., if they allow the court to infer the defendant's liability - the motion is denied; if they fail to do so, the motion is granted.[18]

         B. Whether any of the Government's Claims are Barred by the Applicable Statute of Limitations

         Claims for violations of the FLSA ordinarily face a two-year statute of limitations; claims for willful violations of that statute face a three-year limitations period.[19] The Government's original complaint in this case was filed on January 19, 2017. Therefore, all alleged violations occurring before January 19, 2014, must surmount a limitations obstacle.[20]

         The Government alleges that Defendants contractually waived their right to raise a statute of limitations defense against certain pre-January 19, 2014 claims when they signed the Agreement. As noted supra, the Agreement stated that Defendants agreed to “waive[] all rights and defenses which may be available by virtue of statute[s] of limitations, including but not limited to [§] 6 of the Portal-to-Portal Act (29 U.S.C. [§] 255[)].” Defendants maintain that the Agreement is unenforceable, arguing that it is invalid as (1) beyond the scope of authority granted to the DOL by the FLSA and (2) lacking consideration.

         The FLSA clearly states that the DOL “is authorized to supervise the payment of . . . unpaid minimum wages or . . . unpaid overtime compensation owing to any employee or employees under [29 U.S.C. §§] 206 or [ ]207.”[21] In light of the fact that the FLSA “has been liberally interpreted, ”[22] this Court cannot conclude that the Agreement-which sought to secure payment owed to underpaid employees-was an ultra vires act of the Department of Labor. As for the Defendants' consideration argument, this Court can-and, at this stage, must- infer that, in exchange for Defendants' agreement to pay back wages and waive the statute of limitations, the Government agreed to refrain from immediately filing a suit against them.[23] Therefore, the Government has sufficiently pled facts supporting its argument that Defendants contractually waived a limitations defense to certain pre-January 2014 claims.[24]

         It is important, however, to precisely identify which claims may be subject to this contractual limitations waiver. In its Amended Complaint, the Government seeks recovery on claims dating back to November 11, 2010. The Agreement, however, covers only eleven[25] specifically-mentioned claims dating back to August 28, 2011. Therefore, this Court can only infer that Defendants contractually waived a limitations defense on those eleven specific claims.

         In the alternative, the Government argues that the statute of limitations for pre-January 19, 2014 claims should be equitably tolled. In its complaint, the Government alleges that Defendants, in their correspondence with the Government through April 6, 2015, “actively misrepresented, and then continued to misrepresent, that [they] would pay the back wages . . . if [they] received certain information” from the Government.[26] However, this correspondence referred to the Agreement, which covers only the eleven specifically-identified back-wage claims this Court has just determined may be subject to a contractual statute-of-limitations waiver. This Court cannot, from this Amended Complaint, infer a basis to equitably toll the statute of limitations for other pre-January 2014 claims; therefore, these claims must be dismissed.

         C. Whether the Government Has Adequately Pled Claims Arising on ...


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