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Minnesota Living Assistance, Inc. v. Peterson

United States District Court, D. Minnesota

June 27, 2017

Minnesota Living Assistance, Inc., d/b/a Baywood Home Care, Plaintiff,
v.
Ken B. Peterson, Commissioner, Department of Labor and Industry, State of Minnesota, in his official capacity; and John Aiken, Interim Director of Labor Standards, Department of Labor and Industry, State of Minnesota, in his official capacity, Defendants.

          Bruce J. Douglas, Esq., Stephanie J. Willing, Esq. and Ogletree, Deakins, Nash, Smoak & Stewart, P.C., counsel for plaintiff.

          Jonathan D. Moler, counsel for defendants.

          ORDER

          David S. Doty, Judge

         This matter is before the court upon the motions to dismiss by defendants Ken B. Peterson and John Aiken[1] and for summary judgment by plaintiff Minnesota Living Assistance, Inc. d/b/a Baywood Home Care (Baywood). Based on a review of the file, record, and proceedings herein, and for the following reasons, the court grants defendants' motion to dismiss and denies plaintiff's motion for summary judgment.

         BACKGROUND

         Baywood is a Minnesota corporation that employs domestic service workers who provide companionship services as defined under the Federal Labor Standards Act (FLSA).[2] Compl. ¶¶ 1, 3. The FLSA establishes a minimum wage of $7.25 an hour and a maximum workweek of forty hours, after which employers must pay workers one and one-half times their regular hourly pay. See 29 U.S.C. §§ 206(a)(1)©, 207(a)(1). Workers who perform companionship services, however, are exempt from the minimum wage and weekly maximum hour requirements. See 29 U.S.C. § 213(a)(15). Unlike the FLSA, the MFLSA subjects companionship services to minimum wage, maximum weekly hours, and overtime requirements. See Minn. Stat. § 177.23, subdiv. 11.

         Based on a complaint by a Baywood employee, the Minnesota Department of Labor and Industry (DLI) investigated whether Baywood unlawfully withheld overtime compensation for companionship services employees from March 21, 2012, to March 21, 2014.[3] Compl. ¶¶ 17-18. After its investigation, on May 17, 2016, DLI assessed a penalty of $1, 000 for failure to keep records pursuant to Minn. Stat. § 177.30 and ordered Baywood to pay back wages of $557, 714.44 in addition to liquidated damages of $557, 714.44. Compl. ¶ 22; Moler Aff. Ex. A. Baywood objected to the penalties, and DLI brought a contested case proceeding at the Minnesota Office of Administrative Hearings before an Administrative Law Judge (ALJ).[4]Compl. ¶ 23; Moler Aff. Ex. B.

         On May 31, 2017, Baywood brought this suit seeking a declaration that the FLSA preempts the MFLSA and injunctive relief prohibiting DLI from further processing, investigating, or adjudicating its claims against Baywood. Defendants now move to dismiss the complaint arguing that the court should abstain from exercising jurisdiction under Younger v. Harris, 401 U.S. 37 (1971).

         DISCUSSION

         I. Younger Abstention Doctrine

         Under the Younger abstention doctrine, “federal courts should abstain from exercising jurisdiction when (1) there is an ongoing state proceeding, (2) which implicates important state interests, and (3) there is an adequate opportunity to raise any relevant federal questions in the state proceedings.” Plouffe v. Ligon, 606 F.3d 890, 892 (8th Cir. 2010) (citing Middlesex Cty. Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982)). The parties do not dispute that the first and third elements are met. Baywood argues, however, that Younger abstention does not apply because an important state interest is not implicated. Specifically, Baywood contends that an important state interest cannot exist when the state law the underlying proceeding seeks to enforce is preempted by federal law.

         Baywood's argument is based, in part, on dicta in New Orleans Pub. Serv., Inc. v. Council of the City of New Orleans, 491 U.S. 350 (1989) (NOPSI), where the “Supreme Court left open the possibility of an exception to Younger for preemption claims that are facially conclusive.” Cedar Rapids Cellular Tel., L.P. v. Miller, 280 F.3d 874, 880 (8th Cir. 2002) (internal quotation marks and citation omitted); see also NOPSI, 491 U.S. at 367 (emphasis in original) (“[N]OPSI argues [that] ... even if a substantial claim of federal pre-emption is not sufficient to render abstention inappropriate, at least a facially conclusive claim is. Perhaps so. But we do not have to decide the matter here ....”).

         The Eighth Circuit has not addressed what makes a preemption claim facially conclusive. Other circuits, however, have identified the following scenarios where preemption claims are not facially conclusive: (1) when a further factual inquiry is required; (2) when the claim involves a question of first impression; and (3) when the court must conduct a “detailed analysis” of the state statute in question, “including resolving interjurisdictional differences.” Colonial Life & Accident Ins. Co. v. Medley, 572 F.3d 22, 27-28 (1st Cir. 2009) (citing Woodfeathers, Inc. v. Washington County, Oregon, 180 F.3d 1017, 1022 (9th Cir. 1999); GTR Mobilnet of Ohio v. Johnson, 111 F.3d 469, 478 (6th Cir. 1997)). When courts have found that preemption was facially conclusive, they merely applied established precedent that easily resolved the preemption issue. See Chaulk Servs., Inc. v. Mass. Comm'n Against Discrimination, 70 F.3d 1361, 1370 (1st Cir. 1995) (holding that under Supreme Court precedent it was “readily apparent” the conduct at issue was subject to the National Labor Relations Act); Gartrell Constr. Inc. v. Aubry, 940 F.2d 437, 441-42 (9th Cir. 1991) (holding that under Ninth Circuit precedent it was “readily apparent” that the state law at issue was preempted by ERISA).[5]

         Here, Baywood fails to cite to any binding precedent that the FLSA preempts the MFLSA, or, more specifically, that the FLSA preempts state regulation of workers who are exempt under the FLSA. In fact, it appears that federal courts may be divided on the issue. Compare Pac. Merch. Shipping Ass'n v. Aubry, 918 F.2d 1409, 1418 (9th Cir. 1990) (holding that preemption from the FLSA did not preempt the state's ability to enforce overtime provision as to seamen), with Coil v. Jack Tanner Co., 242 F.Supp.2d 555, 559 (S.D. Ill. 2002) (holding that the state's overtime laws as applied to seamen directly ...


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