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Argento v. Sylvania Lighting Services Corp.

United States District Court, D. Arizona

September 1, 2015

RONALD ARGENTO, et al, Plaintiffs,
v.
SYLVANIA LIGHTING SERVICES CORP., Defendant

Page 1061

          For Ronald Argento, on behalf of himself and all similarly situated individuals, Danny Carrillo, on behalf of himself and all similarly situated individuals, Jordan Guibault, on behalf of himself and all similarly situated individuals, Clifton Anthony, on behalf of himself and all similarly situated individuals Craig Zuchelkowski, on behalf of himself and all similarly situated individuals, Stephen Bewick, Carl Bradshaw, Roger Brown, Ken Bujan, Larry Davis, Hector Daza-Frias, Juan Forrellat, Bill Loveland, Tim Millsap, Billy Molina, Kyle Moore, Hossein Moradi, Leslie Phillips, Michael Tanner, Warren Upchurch, Steve Wallen, Plaintiffs: Isaac Pasaret Hernandez, LEAD ATTORNEY, Hernandez Law Firm PLC, Phoenix, AZ.

         For Sylvania Lighting Services Corporation, Defendants: Julia Y Trankiem, Michele J Beilke, LEAD ATTORNEYS, Reed Smith LLP - Los Angeles, CA, Los Angeles, CA; Laura Mary Pasqualone, Mary Ellen Simonson, LEAD ATTORNEYS, Lewis Roca Rothgerber LLP - Phoenix Office, Phoenix, AZ.

Page 1062

         ORDER

         H. Russel Holland, United States District Judge.

         Motion for Summary Judgment as to Claims Alleged by Plaintiffs Clifton Anthony, Hector Daza-Frias, Juan Forrellat. and Craig Zuchelkowski

         Defendant moves for summary judgment on the claims alleged by plaintiffs Clifton Anthony, Hector Daza-Frias, Juan Forrellat, and Craig Zuchelkowski.[1] This motion is opposed.[2] Oral argument was requested by defendants. However, the issues before the court are largely legal in nature and have been well researched and briefed. Oral argument would not be helpful.[3]

         Facts

         Plaintiffs Clifton Anthony, Hector Daza-Frias, Juan Forrellat, and Craig Zuchelkowski[4] worked for defendant Sylvania Lighting Services Corporation on a lighting service project for the Clark County School District (CCSD) in Nevada. The CCSD project began in July 2011 and ended in January of 2012. Plaintiffs allege that they worked more than 40 hours per week while working on the CCSD project but that they were only paid for 40 hours of work per week no matter how many hours they actually worked.

         On February 24, 2012, plaintiffs filed a complaint against defendant for unpaid overtime with the Nevada Labor Commission. The claims were referred to CCSD for investigation, which made a series of determinations, to which plaintiffs were allowed

Page 1063

to object.[5] A pre-hearing conference was held in March 2013, after which discovery was taken, and then a Final Hearing was held on January 22, 2014.[6] On May 5, 2014, a Final Order was filed. The ALJ determined that plaintiffs were due overtime that they had not been paid.[7] Zuchelkowski was awarded $12,041.87 in back overtime wages; Anthony was awarded $10,292.16; Diaz-Frias was awarded $5,978.90; and Forrellat was awarded $6,119.52.[8] The ALJ declined to assess any forfeitures against defendant, which are available under Nevada law " against a contractor where the worker is not paid the applicable prevailing wage rate for work performed on a prevailing wage project." [9] The ALJ declined to assess any forfeitures because they would have been retained by CCSD and the ALJ felt that such an assessment would be a windfall for CCSD " given [its] failure to meet [its] statutory responsibilities under NRS 338.070." [10] The ALJ also declined to assess any administrative fines or penalties against defendant, even though plaintiffs' counsel argued that " such fines should be assessed because Sylvania took this matter to hearing thereby costing each of the parties involved thousands of dollars in costs." [11] Because the determinations that CCSD made after its investigation favored defendant, the ALJ concluded that " [p]enalties will not be assessed against Sylvania simply because they elected to accept CCSD's findings." [12]

         Although plaintiffs could have sought judicial review of the Final Order, no appeal was taken. Rather, plaintiffs signed release forms " in order to receive payment of the award...." [13] The release provided that plaintiffs were discharging the " State of Nevada, the Department of Business & Industry, and the Office of the Labor Commissioner, ... and all other state and local agencies" from any claims " arising out of, or by reason of, the investigation of the allegations raised in this matter and other matters relating thereto." [14] Plaintiffs " waive[d] all rights to file any additional such claims, actions, etc, relating to such wage claim[s]." [15]

         While the Nevada administrative proceedings were ongoing, this action was commenced. On December 20, 2013, plaintiffs filed an amended complaint in which they assert a single FLSA overtime claim. Plaintiffs allege that " they worked more than forty hours in a workweek" and that defendant failed to pay them overtime.[16]

Page 1064

More specifically, plaintiffs allege that " [t]hey worked an average of ten (10) to twelve (12) hours per workday." [17] Although not specifically alleged, these overtime claims appear to be based on pre- and post-shift work. And, plaintiffs Anthony and Zuchelkowski allege that from late August or early September 2011, " they worked between eleven (11) to fourteen (14) hours per day" because they became " designated drivers on the CCSD Project...." [18] Plaintiffs also generally alleged that they were required to work during their unpaid meals breaks at times.[19] Plaintiffs seek the overtime they contend they are due and liquidated damages in an amount equal to their unpaid overtime.

         Defendant now moves for summary judgment on plaintiffs' FLSA claims on the grounds that these claims are barred by res judicata because of the Final Order in the Nevada administrative proceedings. Defendant contends that allowing plaintiffs to pursue their FLSA claims could result in plaintiffs obtaining a double recovery.

         Discussion

         Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The initial burden is on the moving party to show that there is an absence of genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets its initial burden, then the non-moving party must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding a motion for summary judgment, the court views the evidence of the non-movant in the light most favorable to that party, and all justifiable inferences are also to be drawn in its favor. Id. at 255. " [T]he court's ultimate inquiry is to determine whether the 'specific facts' set forth by the nonmoving party, coupled with undisputed background or contextual facts, are such that a rational or reasonable jury might return a verdict in its favor based on that evidence." T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987).

         " The concept of res judicata embraces two doctrines, claim preclusion and issue preclusion (or collateral estoppel), that bar, respectively, a subsequent action or the subsequent litigation of a particular issue because of the adjudication of a prior action. McClain v. Apodaca, 793 F.2d 1031, 1033 (9th Cir. 1986) (footnote omitted). Claim preclusion treats a judgment, once rendered, as the full measure of relief to be accorded between the same parties on the same claim or cause of action." Id. (footnote and citation omitted).

         The threshold issue here is whether an unreviewed order from a state administrative agency or commission can be given preclusive effect in a FLSA case. " Title 28 U.S.C. § 1738 requires that [courts] give the same preclusive effect to state court judgments as they would be given in the state in which they were rendered." Miller v. Cnty. of Santa Cruz, 39 F.3d 1030, 1032 (9th Cir. 1994). However, " Section 1738 does not govern cases involving unreviewed decisions of a state administrative hearing board or commission." Id. " Nonetheless, as a matter of federal common law, federal courts give

Page 1065

preclusive effect to the findings of state administrative tribunals in subsequent actions under § 1983." Id. However, federal courts do not give unreviewed administrative determinations preclusive effect for Title VII claims. Univ. of Tennessee v. Elliott, 478 U.S. 788, 796, 106 S.Ct. 3220, 92 L.Ed.2d 635 (1986). But, this is not a § 1983 action, nor is it a Title VII case. This case involves only FLSA claims, and the Ninth Circuit has never considered whether preclusive effect should be given to unreviewed decisions of a state administrative commission or agency in a subsequent FLSA case.

         There are cases from other jurisdictions that have considered the question of whether an unreviewed decision of a state administrative agency or commission should be given preclusive effect in a subsequent FLSA case. In Akwesi v. Uptown Lube & C/W, Inc., No. 07 Civ. 335(NRB), 2007 WL 4326732, at *1 (S.D.N.Y. Dec. 3, 2007), the plaintiffs filed a complaint on June 14, 2005 with the New York State Department of Labor " claiming that Uptown Lube failed to pay its employees proper overtime wages." The Department of Labor issued a Final Report of its investigation on March 10, 2006, in which it " determined that Uptown Lube had paid overtime', but had 'failed to pay spread of hours for the period 10/03-11/05.'" Id. " 'Spread of hours' is a species of overtime payment required by New York state labor regulations, but not by federal law." Id. Basically, it requires that " [i]n addition to overtime at one and one half times the regular rate, an employer must pay an employee one extra hour's worth of wages for every day the employee's workday extends beyond ten hours." Id. The Department of Labor awarded the plaintiffs back overtime pay and Uptown Lube paid each plaintiff the back " spread of hours" overtime pay he or she was due. Id. at *2. On January 16, 2007, the plaintiffs filed a complaint in federal court against Uptown Lube, alleging a FLSA overtime claim and other state law claims. Id. Uptown Lube moved to dismiss the plaintiffs' complaint. Id. The court rejected the " defendant's first argument ... that the complaint should be dismissed for lack of subject matter jurisdiction, under Fed.R.Civ.P. 12(b)(1), because any case or controversy has been rendered moot by the N.Y.S. DOL findings and subsequent payments." Id. at *3. The court found that it did not

need [to] even address the question of whether the N.Y.S. DOL findings-the judicially unreviewed findings of a state administrative agency-are entitled to preclusive effect in this Court, for it is clear that Uptown Lube remained in business for a period of time after the conclusion of the N.Y.S. DOL investigation, and therefore this Court would retain jurisdiction over at least a portion of plaintiffs' claims even if we were to give preclusive effect to the N.Y.S. DOL findings.

Id. However, the court did " note that it will be unlikely that defendant can assert preclusion on the basis of the N.Y.S. DOL investigation. While unreviewed factual determinations of state agencies may be given preclusive effect in federal court, this is not so in all circumstances, and appears to not be so in suits brought under the FLSA." Id. (internal citation omitted). The court also noted that " the broad remedial purpose underlying the FLSA seems antithetical to common law doctrines of preclusion." Id. at *3 n.12.

         The Akwesi court cited to Solimino v. Astoria Federal Savings and Loan Association, 901 F.2d 1148 (2nd Cir. 1990), as the authority supporting the proposition that preclusive effect should not be given to unreviewed state agency decisions in FLSA cases. Solimino involved the question of whether preclusive effect should be given to an unreviewed state agency decision

Page 1066

in a subsequent ADEA case. Id. at 1149. The plaintiffs argued that the court should look to Title VII cases for guidance and the defendant suggested that the court should look to FLSA cases instead. The court observed that

assuming arguendo that we should look to the FLSA instead of Title VII for guidance as to the preclusion issue in this ADEA suit, Astoria fails to cite any part of the FLSA or its interpretive caselaw that indicates Congress intended in the FLSA to give preclusive effect to the ...

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