United States District Court, S.D. Texas, Houston Division
PAULA SILVA, Individually and On Behalf of All Others Similarly Situated, Plaintiffs,
TEGRITY PERSONNEL SERVICES, INC.; MAKE READY SERVICES, LLC; DYNAMIC LABOR SERVICES, LLC; PRESTIGE LABOR & SERVICES, LLC; and IGLOO PRODUCTS CORP., Defendants
For Paula Silva, Individually and on Behalf of All Others Similarly Situated, Plaintiff: Curt Christopher Hesse, Melissa Moore, Moore & Associates, Houston, TX.
For Jennifer Terriquez, Plaintiff: Melissa Moore, Moore & Associates, Houston, TX.
For Tegrity Personnel Services, Inc., Make Ready Services, LLC, Dynamic Labor Services, LLC, Prestige Labor & Services, LLC, Defendants: Daniel N. Ramirez, LEAD ATTORNEY, Stephen Jose Quezada, Monty & Ramirez LLP, Houston, TX.
For Igloo Products Corp., Defendant: Carolyn A Russell, LEAD ATTORNEY, Ogletree Deakins et al, Houston, TX.
MEMORANDUM & ORDER
KEITH P. ELLISON, UNITED STATES DISTRICT COURT JUDGE.
This case arises out of an employment relationship between Plaintiffs and at least one of Defendants Tegrity Personnel Services, Inc., Make Ready Services, LLC, Dynamic Labor Services, LLC, Prestige Labor & Services, LLC, and Igloo Products Corp. Before the Court are four motions that are ripe for decision: Plaintiffs' Motion for Class Certification (Doc. No 25); Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. No 32); Defendants' Motion to Strike a Notice of Consent (Doc. No 69); and Defendants' Motion to Strike Plaintiffs' First Amended Complaint (Doc. No. 70). Defendants have also filed a Motion to Compel Arbitration (Doc. No. 80), but that motion is not yet fully briefed. Most of this Memorandum & Order addresses Defendants' Motion to Dismiss, in which Defendants argue that offers of judgment they made to Plaintiffs moot all claims and therefore deprive this Court of jurisdiction. After considering that Motion, all responses and replies, and the applicable law, the Court concludes that the Motion should be DENIED. The Court further concludes that both Motions to Strike should likewise be DENIED. Finally, the Court determines that a hearing is necessary before it can rule on the Motion to Certify.
On March 27, 2013, Plaintiff Paula Silva filed suit against Defendants Tegrity Personnel Services, Inc. (" Tegrity); Make Ready Services, LLC; Dynamic Labor Services, LLC; Prestige Labor & Services LLC; and Igloo Products Corp.(Doc. No. 1 at 1.) In her complaint, Plaintiff alleged violations of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201 et seq., and sought to recover unpaid overtime wages " on behalf of herself and all other similarly situated employees." (Doc No. 1 at 1.) " The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract." Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1527, 185 L.Ed.2d 636 (2013). It " provides that an employee may bring an action to recover damages for specified violations of the Act on behalf of himself and other 'similarly situated' employees." Id. at 1526. " A suit brought on behalf of other employees is known as a 'collective action.'" Id. at 1527 (citing Hoffmann--La Roche Inc. v. Sperling, 493 U.S. 165, 169-70, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989)). Silva also claimed that she had been retaliated against in violation of 29 U.S.C. § 215(a)(3).
The same day she filed her complaint, Silva and another individual, Seferino Coronado, filed Notices of Consent, thereby opting in to the lawsuit and accepting representation from Silva's counsel. (Doc Nos. 2, 3.) In response, on June 19, 2013, Defendants presented Silva and Coronado with offers of judgment pursuant to Federal Rule of Civil Procedure 68. (Doc. Nos. 32-4, 32-5.) Without accepting that offer, Plaintiff filed a Motion to Certify the Class as a collective action pursuant to 29 U.S.C. § 216(b) on June 28. (Doc. No. 25.) That same day, four additional Plaintiffs -- Jesse Saldivar, Andres Terriquez,
Bobby Tolbert, and Roy Cavazos -- also filed Notices of Consent to join in the
suit. (Doc. Nos. 26-29.) On July 3, each was promptly made a Rule 68 offer of
(Doc. Nos. 32-7, 32-8, 32-9, 32-10.) On July 9, one more Plaintiff, Gary Gallardo, filed a Notice of Consent. (Doc. No. 30.) He received a Rule 68 offer of judgment that very same day. (Doc. No. 32-11.) Defendants contend that each of the seven offers they extended " fully satisfied [Plaintiffs'] wage claims." (Doc. No. 32 at 2.) Plaintiffs dispute whether that is so. (Doc. No. 34 at 11.)
Defendants filed this motion to dismiss on July 9. (Doc. No. 32.) By then, the Rule 68 offers to Silva and Coronado had lapsed. See Fed.R.Civ.P. 68 (" If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service." ). The offers to Saldivar, Terriquez, Tolbert, and Cavazos were set to lapse eight days later, and the offer to Gallardo still would be live for another fourteen days. Nevertheless, Defendants filed this motion, arguing that their Rule 68 offers rendered -- or would soon render  -- Plaintiffs' claims moot, thereby divesting this Court of subject matter jurisdiction. (Doc. No. 32 at 2.) None of Plaintiffs ultimately accepted Defendants' Rule 68 offers.
The Court heard argument on Defendants' Motion on October 15, 2013. Prior to that hearing, the Court reached out to the parties to encourage them to bring forward any evidence that would bear on whether the Rule 68 offers would have provided complete relief. In fact, Defendants sought this Court's intervention in order to ensure that any such evidence was produced in a timely fashion. (Doc. No. 63.) Defendants submitted time records for each of the seven Plaintiffs that helped to show the Court how Defendants formulated their offers. (Doc. No. 64.) Plaintiffs, in contrast, focused primarily on legal arguments -- and presented the Court after the hearing with a Notice of Additional Authority (Doc. No. 65) -- rather than introducing anything that would have addressed the pure factual question of whether Defendants' offers would have provided total relief.
After the Oct. 15 hearing, however, Plaintiffs changed course. They filed a new Notice of Consent  and an Amended Complaint. (Doc. Nos. 66, 68.) Defendants have moved to strike both. (Doc. Nos. 69, 70.) Among other things, the Amended Complaint designated Jennifer Terriquez, who had opted in the day before, as a named Plaintiff. (Doc. No. 68 at 1.) Plaintiffs attached Declarations to their Amended Complaint, seeking to convince the Court that the Rule 68 Offers would not have provided total relief. (Doc. Nos. 68-1, 68-2, 68-3, 68-4.) Those Declarations set forth specific instances of work for which Plaintiffs were allegedly not compensated and for which the Rule 68 offers allegedly did not account. The Court asked Defendants to respond and explain why their offers nevertheless provided complete relief. (Doc. No. 73.) The Court also gave Plaintiffs a chance to respond. ( Id. )
II. MOTION TO DISMISS
A. Legal Standard
Motions filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure allow a party to challenge the subject matter jurisdiction of the district court to hear a case.
Fed.R.Civ.P. 12(b)(1). " A case is properly dismissed under Rule 12(b)(1) when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Ass'n of Mississippi, Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998). A finding that the court lacks subject matter jurisdiction may be based upon: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996). Importantly, the burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
" Article III of the Constitution limits federal 'Judicial Power,' that is, federal-court jurisdiction, to 'Cases' and 'Controversies.'" U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 395, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980). " [W]hen the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome," a case is considered moot. Id. at 396 (internal quotation marks omitted). " Generally, any set of circumstances that eliminates actual controversy after the commencement of a lawsuit renders that action moot." Ctr. for Individual Freedom v. Carmouche, 449 F.3d 655, 661 (5th Cir. 2006). In turn, " the definitive mootness of a case or controversy . . . ousts the jurisdiction of the federal courts and requires dismissal of the case." Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 335, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980); see also Envtl. Conservation Org. v. City of Dallas, 529 F.3d 519, 525 (5th Cir. 2008) (" If a case has been rendered moot, a federal court has no constitutional authority to resolve the issues that it presents." ).
Defendants argue that this suit became moot on July 23, 2013. ( See, e.g., Doc. No. 70 at 1.) As of that date, all of the Plaintiffs that had opted into this suit had received Rule 68 offers, and all of those offers had expired. Because " an 'actual controversy' must exist not only 'at the time the complaint is filed,' but through 'all stages' of the litigation," Already, LLC v. Nike, Inc., 133 S.Ct. 721, 726, 184 L.Ed.2d 553 (2013) (quoting Alvarez v. Smith, 558 U.S. 87, 92, 130 S.Ct. 576, 175 L.Ed.2d 447 (2009)), if Defendants are correct that the unaccepted offers mooted the case, on July 23 Plaintiffs were " deprive[d] . . . of a 'personal stake in the outcome of the lawsuit,'" and the action " must be dismissed as moot." Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1528, 185 L.Ed.2d 636 (2013) (quoting Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477-78, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990)); see also Already, 133 S.Ct. at 727 (" No matter how vehemently the parties continue to dispute the lawfulness of the conduct that precipitated the lawsuit, the case is moot if the dispute 'is no longer embedded in any actual controversy about the plaintiffs' particular legal rights.'" (quoting Alvarez, 558 U.S. at 93)); Al-Farook v. Marina Dist. Dev. Co., LLC, No. CIV.A. 13-138 MAS, 2013 WL 6177933, at *3 (D.N.J. Nov. 25, 2013) (" [A] federal court's jurisdiction evaporates when, for whatever reason, a ripened controversy becomes academic." ).
Thus, for the purposes of resolving this Motion, the Court cannot consider any developments that took place after July 23. It can, of course, consider briefing and evidence submitted after that date, but the Court must rule on the motion on the basis
of the facts as they stood on July 23. As such, Terriquez's Notice of Consent and the Amended Complaint cannot be considered for present purposes. This is in keeping with the principle that " a case that is factually moot under Article III cannot be cured by amendment of the complaint." Mabary v. Hometown Bank, N.A., 276 F.R.D. 196, 205 (S.D. Tex. 2011) (Ellison, J.).
With respect to Defendants' contention that the unaccepted Rule 68 offers rendered this suit moot on July 23, the parties have ably identified the two most relevant cases: the Supreme Court's recent decision in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 185 L.Ed.2d 636 (2013), and the Fifth Circuit's decision in Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008). The challenge, however, is that this case lies in the interstices of Symczyk and Sandoz. The Court first considers the Fifth Circuit's 2008 Sandoz decision and then turns to how the Supreme Court's decision last spring in Symczyk alters the landscape. The Court next proceeds to situate this case among them. The condensed version is this: Plaintiffs have brought this suit at a time when the law of this circuit is very much against them.
a. The Fifth Circuit Weighs In: Mootness With An Out
In Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008), the Fifth Circuit " deal[t] with the difficult question of when an employer can moot a purported [FLSA] collective action." Id. at 914. Sandoz initially filed her FLSA claim in state court, Cingular removed to federal court, and soon thereafter -- before any other individuals had joined in the action -- defendant made Sandoz a Rule 68 offer of judgment. Id. When Sandoz failed to accept that offer, Cingular moved to dismiss for lack of subject matter jurisdiction, but the district court denied that motion. Id. The Fifth Circuit agreed to take up an interlocutory appeal.
To be precise, the Court of Appeals framed the issue thus: " whether a FLSA claim becomes moot when the purported representative of a collective action receives an offer that would satisfy his or her individual claim and no other plaintiffs have opted in to the collective action." Id. at 915. After a lengthy discussion of whether cases construing mootness in the context of Rule 23 class actions could bear on mootness in the context of FLSA collective actions, the Fifth Circuit determined that " the district court improperly applied the precise rules from the Rule 23 context." Id. at 919. Moreover, the court of appeals explained that it " f[ou]nd persuasive the Eleventh Circuit's ruling in [ Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240 (11th Cir. 2003)] that there is a difference between when a Rule 23 class action and a FLSA collective action can become moot, because, unlike in a Rule 23 class action, in a FLSA collective action the plaintiff represents only him- or herself until similarly-situated employees opt in." Id. As such, the Fifth Circuit held that
the language of § 216(b) and the cases construing that provision demonstrate that Sandoz cannot represent any other employees until they affirmatively opt in to the collective action. This means that when Cingular made ...