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Gamble v. Minnesota State-Operated Services

United States District Court, D. Minnesota

September 28, 2017

DAVID LE ROY GAMBLE, JR., CYRUS P. GLADDEN, II, DAVID J. JANNETTA, JERRAD W. WAILAND, and CLARENCE A. WASHINGTON, Plaintiffs,
v.
MINNESOTA STATE-OPERATED SERVICES, MINNESOTA STATE INDUSTRIES, MINNESOTA SEX OFFENDER PROGRAM, DEPARTMENT OF HUMAN SERVICES, STATE OF MINNESOTA, EMILY JOHNSON PIPER, SHELBY RICHARDSON, JOHN AND JANE DOES 1-20, LUCINDA JESSON, DENNIS BENSON, NANCY A. JOHNSTON, SHIRLEY JACOBSON, and CHARLIE HOFFMAN, Defendants.

          David Le Roy Gamble, Jr., Jerrad W. Wailand, and Clarence A. Washington, St. Peter Regional Treatment Center, Cyrus P. Gladden, II and David J. Jannetta, pro se plaintiffs.

          Kathryn I. Landrum, MINNESOTA ATTORNEY GENERAL'S OFFICE, for defendants.

          MEMORANDUM OPINION AND ORDER ON REPORT AND RECOMMENDATION

          JOHN R. TUNHEIM Chief Judge

         Five individuals currently in the custody of the Minnesota Sex Offender Program (“MSOP”) and participating in MSOP's “Patient Pay Program” (“the Program”) brought this action against numerous state-entity and individual Defendants, asserting claims for both statutory and constitutional violations related to the Program. Defendants moved to dismiss all claims. Now before the Court are Plaintiffs' and Defendants' objections to the Report and Recommendation (“R&R”) of United States Magistrate Judge Katherine M. Menendez on Defendants' motion to dismiss. Because the Court will find that Plaintiffs state a plausible claim under the Fair Labor Standards Act (“FLSA”) but not a procedural due-process claim under the Fourteenth Amendment, the Court will sustain in part and overrule in part the objections. Accordingly, the Court will adopt in part and reject in part the R&R, and grant in part and deny in part Defendants' motion to dismiss.

         BACKGROUND

         Plaintiffs are five individuals civilly confined by the state of Minnesota pursuant to the MSOP. (Am. Compl. ¶¶ 1, 12-16, June 14, 2017, Docket No. 79.) Plaintiffs voluntarily participate in the Patient Pay Program - an MSOP-administered vocational work program for detainees. (Id. ¶¶ 12-16, 94.) To be admitted into the Program, volunteers must complete a W-9 form and indicate on it that they are independent contractors. (Id. ¶¶ 119-121.) Until recently, MSOP required volunteers to perform two hours of unpaid work “as a pre-condition of being hired.” (Id. ¶ 116.) Plaintiffs allege that, in administering the Program, “MSOP exercises sole control over all aspects of the work relationship.” (Id. ¶ 57(o).) For example, Plaintiffs allege that MSOP dictates workers' hours, furnishes all required tools and materials, and “specifies the exact duties to be performed.” (Id. ¶ 57.) MSOP allegedly does not provide many of Plaintiffs' “basic needs.” (Id. ¶ 72.) For example, Plaintiffs allege that they must purchase clothes (including work clothes), shoes, medical care, and medical supplies and devices. (Id. ¶ 72.) Plaintiffs also allege that all MSOP detainees - irrespective of their participation in the Program - must repay the state for the cost of their care according to their ability to pay. (Id. ¶ 75; see Minn. Stat. § 246B.07.) Accordingly, MSOP detainees receive monthly bills for the cost of their commitment. (Am. Compl. ¶ 76.)

         MSOP originally set the gross wages of the Program's workers at the state-mandated minimum, according to the Amended Complaint. (Id. ¶ 95.) In September 2009, however, MSOP allegedly began to withhold up to fifty percent of workers' wages (See Am. Compl. ¶¶ 95-105) pursuant to a state law that gives the Commissioner of the Minnesota Department of Human Services “the authority to retain up to 50 percent of any payments made to an individual participating in the vocational work program for the purpose of reducing state costs associated with operating the Minnesota sex offender program.” Minn. Stat. § 246B.06 subd. 6. Plaintiffs allege that MSOP uses the withheld wages to help defray losses from the operation of MSOP's “industry shops.” (Id. ¶¶ 96, 98.) Plaintiffs further allege that MSOP has continued to withhold fifty percent of Plaintiffs' wages, that the withholding is a “permanent confiscation, ” and that their withheld wages are not credited toward their obligation to reimburse the state for the cost of their care. (Id. ¶¶ 76, 95, 102.)

         Plaintiffs filed this action in August 2016 against several state-entity and individual defendants. (See Compl., Aug. 12, 2016, Docket No. 1; Am. Compl. ¶¶ 17-32; R&R at 2 & n.2, July 5, 2017, Docket No. 80.) Plaintiffs assert claims for violations of the FLSA and the Rehabilitation Act, along with claims for violations of their Thirteenth and Fourteenth Amendment rights. (Am. Compl. ¶¶ 125-154; see R&R at 4-5.) Defendants moved under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) to dismiss all claims for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted. (Mot. to Dismiss, Dec. 22, 2016, Docket No. 38.) The magistrate judge submitted an R&R on Defendants' motion, recommending that the Court (1) deny Defendants' motion with respect to both Plaintiffs' FLSA claim against the state-entity defendants and Plaintiffs' procedural due-process claim seeking prospective injunctive relief against the individual defendants in their official capacities; and (2) grant Defendants' motion to dismiss all other claims, for reasons including sovereign immunity, qualified immunity, mootness, and failure to state a claim. (R&R at 4-5.) Plaintiffs and Defendants both filed objections to the R&R. (Defs.' Obj. to R&R, July 19, 2017, Docket No. 81; Pls.' Obj. to R&R, Aug. 4, 2017, Docket No. 94.) The Court will deny Defendants' motion with respect to Plaintiffs' FLSA claim, but grant Defendants' motion to dismiss with respect to all other claims.

         DISCUSSION

         I. STANDARD OF REVIEW

         After a magistrate judge files an R&R, a party may file “specific written objections to the proposed findings and recommendations.” Fed.R.Civ.P. 72(b)(2); accord D. Minn. LR 72.2(b)(1). “The objections should specify the portions of the magistrate judge's report and recommendation to which objections are made and provide a basis for those objections.” Mayer v. Walvatne, No. 07-1958, 2008 WL 4527774, at *2 (D. Minn. Sept. 28, 2008). For dispositive motions, the Court reviews de novo a “properly objected to” portion of an R&R. Fed.R.Civ.P. 72(b)(3); accord D. Minn. LR 72.2(b)(3). “Objections which are not specific but merely repeat arguments presented to and considered by a magistrate judge are not entitled to de novo review, but rather are reviewed for clear error.” Montgomery v. Compass Airlines, LLC, 98 F.Supp.3d 1012, 1017 (D. Minn. 2015).

         In reviewing a motion to dismiss brought under Rule 12(b)(6), the Court considers all facts alleged in the complaint as true to determine if the complaint states a claim for “relief that is plausible on its face.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, a complaint must provide more than “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Although the Court accepts the complaint's factual allegations as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         II. DEFENDANTS' OBJECTIONS TO THE R&R

         Defendants object to the R&R to the extent that the magistrate judge found that Plaintiffs plausibly stated under Rule 12(b)(6) both an FLSA claim and a procedural due-process claim. The Court will overrule Defendants' objections with respect to Plaintiffs' FLSA claim. The Court will sustain Defendants' objections with respect to Plaintiffs' procedural due-process claim.

         A. Plaintiffs' FLSA Claim

         The FLSA affords employees a minimum wage. 28 U.S.C. §§ 206, 207, 214, 215. In determining whether a plaintiff is an “employee” under the FLSA, courts evaluate the “economic reality” of the parties' relationship based on the totality of the circumstances. Barnett v. Young Men's Christian Ass'n, Inc., No. 98-3625, 1999 WL 110547, at *1 (8thCir. Mar. 4, 1999); see Karlson v. Action Process Serv. & Private Investigations, LLC, 860 F.3d 1089, 1092 (8th Cir. 2017). The fact that an employer does not provide an employee her “basic needs” weighs in favor of finding an employer-employee relationship; the employee needs a minimum wage to purchase those basic needs. See 29 U.S.C. § 202(a); Villarreal v. Woodham, 113 F.3d 202, 205-206 (11th Cir. 1997); cf. Cody v. Hillard, 599 F.Supp. 1025, 1048 (D.S.D. 1984), aff'd, 799 F.2d 447 (8th Cir. 1986), on reh'g, 830 F.2d 912 (8th Cir. 1987).

         The magistrate judge found that Plaintiffs plausibly allege that they are employees. Defendants object, arguing that Plaintiffs are not employees under the “economic reality” test because the Magistrate's analysis of whether Plaintiffs are afforded their basic needs is both factually and legally incorrect.[1]

         After a de novo review, the Court will overrule Defendants objections and adopt the R&R with respect to Plaintiffs' FLSA claim. The Court, like the magistrate judge, finds that Martin v. Benson properly analyzed the MSOP's scheme and operation for evaluating a portion of the economic reality of Program participants. 827 F.Supp.2d 1022 (D. Minn. 2011). But unlike the plaintiffs in Martin, Plaintiffs here plausibly allege that MSOP does not provide Plaintiffs their basic needs. One of the FLSA's statutory purposes is to provide employees “the minimum standard of living necessary for health, efficiency, and general well-being.” 29 U.S.C. § 202(a); Miller v. Dukakis, 961 F.2d 7, 9 (1st Cir. 1992) (finding Massachusetts civil-detainees not employees under the FLSA because they “are cared for . . . by the state” in the same way that prisoners are). Plaintiffs allege that they must pay for various items, such as work clothing, shoes, medical care, and medical supplies and devices. Moreover, MSOP detainees must repay the state for the cost of their care according to their ability to pay, suggesting that Defendants do not provide Plaintiffs' basic needs. Minn. Stat. § 246B.07. Furthermore, MSOP allegedly withholds some portion of Plaintiffs' wages to help defray losses from the operation of MSOP's “industry shops, ” not to help ...


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