Introduction

This commentary analyzes the Fifth Circuit’s per curiam decision in Peterson v. Lottery.com, Inc., No. 25-50261 (5th Cir. Nov. 5, 2025) (unpublished), arising from an employer’s extended failure to pay an executive-level employee for ongoing work and to reimburse business expenses. Ryan Peterson, formerly Vice President and later Executive Vice President of Technology at Lottery.com (also doing business as Sports.com and Autolotto, Inc.), sued under the Fair Labor Standards Act (FLSA) and Texas law after he allegedly continued to work without compensation for over two years following a company-wide furlough.

The key issues on appeal were:

• Whether Peterson stated a plausible FLSA minimum-wage claim and, if so, whether his alleged exempt status barred the claim when the employer stopped paying him;
• Whether an at-will employment relationship can furnish a “valid contract” sufficient to sustain a Texas breach-of-contract claim for unpaid wages;
• Whether Peterson adequately pleaded fraudulent inducement under Rule 9(b); and
• Whether his alternative quasi-contract claims—quantum meruit and unjust enrichment—were properly dismissed at the pleading stage.

The panel affirmed dismissal of the FLSA and fraudulent inducement claims but revived Peterson’s Texas breach-of-contract and quasi-contract claims, remanding those for further proceedings. Although unpublished, the decision offers useful guidance on FLSA exemptions, Texas contract and quasi-contract pleading standards, and the permissible scope of alternative pleading in wage disputes.

Summary of the Opinion

The court’s disposition was mixed:

• FLSA Claim: The court held that Peterson adequately pleaded a minimum-wage violation but affirmed dismissal because the face of the complaint established that he worked in an exempt administrative capacity. Echoing a related unpublished case involving the same employer (Wells v. Lottery.com, Inc.), the panel rejected Peterson’s contention that nonpayment alone strips an otherwise applicable FLSA exemption.
• Breach of Contract (Texas law): The court reversed dismissal. An at-will employment relationship can be a valid contract, and Peterson plausibly alleged essential terms—duties and compensation—supported by an offer letter attached to the complaint.
• Fraud/Fraudulent Inducement (Texas law): The court affirmed dismissal. Peterson alleged representations made long after he entered the employment contract to induce him to continue working without pay. Those allegations do not amount to inducement into the contract as required for fraudulent inducement, and they did not satisfy Rule 9(b).
• Quantum Meruit and Unjust Enrichment (Texas law): The court reversed dismissal. Peterson plausibly alleged he rendered valuable services, the employer accepted them, and he received no compensation. He may plead quasi-contract in the alternative to contract at this stage, and his allegations supported both active (undue advantage) and passive (unconscionable retention of benefit) unjust enrichment theories. The panel also clarified that passive unjust enrichment does not require third-party involvement.
• Declaratory Judgment (Domain Names): Forfeited on appeal for failing to list the issue in the statement of issues under Rule 28(a)(5).

Analysis

Precedents Cited and Their Influence

• Pleading Standards: Bell Atlantic v. Twombly and Ashcroft v. Iqbal set the plausibility threshold. The panel relied on these to conclude Peterson plausibly alleged an FLSA minimum-wage violation and sufficiently pleaded contract and quasi-contract claims. Rule 9(b) (Sullivan v. Leor Energy; Dorsey; Daughtry v. Silver Fern) controlled the specificity required for fraud, which Peterson failed to meet because his allegations did not describe inducement to enter a contract and lacked particularity.
• Affirmative Defenses at 12(b)(6): American Precision Ammunition and Jeanty v. Big Bubba’s Bail Bonds recognize that dismissal at the pleading stage is proper if an affirmative defense is apparent on the face of the complaint. The court employed this framework to affirm dismissal of the FLSA claim based on the administrative exemption alleged by Peterson’s own pleadings.
• FLSA Coverage and Jurisdiction: Biziko v. Van Horne clarifies that the FLSA lacks a separate jurisdictional hook; interstate commerce is an element, not a jurisdictional prerequisite. The court rejected Lottery.com’s jurisdictional challenge accordingly.
• FLSA Exemptions and Salary-Basis: Helix Energy Solutions Group v. Hewitt (salary-basis), Venable v. Smith Int’l (highly compensated exemption), Smith v. Ochsner Health, and Cunningham v. Circle 8 Crane confirm the tests for exemptions (duties, salary-level, salary-basis) and the employer’s burden. The panel acknowledged these standards but, following Wells v. Lottery.com, rejected the argument that nonpayment alone destroys an exemption where the pleaded duties otherwise satisfy an exemption. The court noted Peterson failed to cite authority for that proposition.
• Texas Contract Law: Mullins v. TestAmerica sets breach-of-contract elements; Conner v. Lavaca Hospital identifies essential terms of an employment contract; Heggemeier and Fadeyi recognize Texas’s strong at-will presumption and that at-will employment is nonetheless a contractual relationship; Kalmus v. Oliver confirms at-will status when duration is indefinite. The panel used these to hold that Peterson’s at-will arrangement was a valid contract sufficient to proceed.
• Fraudulent Inducement: Anderson v. Durant, Zorrilla v. Aypco (quoting Formosa Plastics), Bohnsack v. Varco, Kevin M. Ehringer Enterprises, and Haase v. Glazner require misrepresentation that induces entry into a contract. Because Peterson alleged post-contract representations to keep working, not inducement into the contract, dismissal was proper. Allen v. Walmart Stores supports dismissal where an element is missing from the pleadings.
• Quantum Meruit and Unjust Enrichment: Hill v. Shamoun & Norman; In re Kellogg Brown & Root; Vortt Exploration; Matter of KP Engineering; Coghlan v. Wellcraft; Digital Drilling Data Systems; Villarreal v. Grant Geophysical collectively recognize alternative quasi-contract pleading and set the elements and measures of relief. The panel relied on these to reinstate Peterson’s quantum meruit and both active and passive unjust enrichment claims and clarified that passive unjust enrichment does not require third-party involvement, distinguishing an overreading of Jyue Hwa Fu.
• Review of Documents at 12(b)(6): Lone Star Fund V permits considering documents attached to the complaint; the panel used Peterson’s offer letter to confirm the plausibility of a valid contract.
• Briefing Forfeiture: United States v. Quintanilla enforces Rule 28(a)(5)’s statement-of-issues requirement; the domain-name declaratory judgment issue was forfeited.

Legal Reasoning

1) FLSA Minimum Wage: Adequacy of Pleading versus Exemption

Peterson adequately alleged coverage and nonpayment, satisfying the minimum-wage pleading standard. However, the court affirmed dismissal on the basis of an exemption apparent from the complaint. Peterson’s pleaded duties—senior management of IT operations, product development leadership, and high-level discretion—fit the administrative exemption, and his alleged compensation placed him squarely in the realm of highly compensated employees. Although he argued the exemption evaporated when weekly pay ceased, the panel, citing Wells and the lack of supporting authority, did not accept that nonpayment alone negates an otherwise applicable exemption. The court did not conduct an in-depth salary-basis analysis under Helix; instead, it concluded that, on the pleadings, the exemption barred the claim.

Two procedural points underpin the outcome: (a) employers bear the burden to prove exemptions, but (b) a complaint can be dismissed under Rule 12(b)(6) where the exemption is evident on the face of the complaint and no plausible allegations avoid it. Here, Peterson’s own allegations established the exemption and his sole counter-argument (loss of exemption due to nonpayment) lacked authority.

2) Breach of Contract under Texas Law: At‑Will Still Means “Contract”

The district court dismissed because it believed no enforceable contract was alleged. The Fifth Circuit reversed, holding that an at‑will employment relationship, even if terminable at any time, is still contractual under Texas law. Peterson pleaded essential terms—position, duties, and biweekly salary—supported by an offer letter; duration was indefinite and therefore at‑will, but that does not negate the existence of a contract. Accepting the allegations as true and drawing inferences in Peterson’s favor, the claim was plausible and should proceed.

3) Fraudulent Inducement: Timing and Particularity Defects

Fraudulent inducement requires a misrepresentation that induces a party to enter a contract. Peterson’s allegations centered on representations made after Lottery.com allegedly stopped paying him—assurances that he would be compensated if he kept working. Those allegations do not plausibly show inducement into the March 2020 employment contract (or a separate contract alleged in the complaint). Nor did the complaint satisfy Rule 9(b)’s particularity standard. The court therefore affirmed dismissal. Because the claim failed on inducement and specificity, the panel did not reach the at‑will doctrine or the economic loss rule defenses.

4) Quantum Meruit: Alternative Pleading and Plausible Nonpayment

Texas allows plaintiffs to plead quasi-contract claims in the alternative when enforceability of an express contract is disputed. Peterson’s complaint explicitly pleaded quantum meruit in the alternative. He alleged that he continued to render valuable services used by the employer and received no compensation at all for the relevant period. That sufficed at the pleading stage; the reasonable value of services and the measure of damages can be developed in discovery and proven later. The district court erred by treating the allegation of an agreed salary as foreclosing alternative quasi-contract relief and by demanding damages specificity not required by Twombly/Iqbal at 12(b)(6).

5) Unjust Enrichment: Active and Passive Theories Plausibly Alleged

Peterson alleged Lottery.com took undue advantage of his uncompensated services (active unjust enrichment) and passively retained those benefits without paying (passive unjust enrichment), which he characterized as unconscionable. The panel held both theories were plausibly alleged in the alternative. It clarified that passive unjust enrichment does not hinge on third-party involvement, distinguishing a district court’s contrary reading of Jyue Hwa Fu. As with quantum meruit, the presence of a valid express contract may ultimately bar quasi-contract remedies at the merits stage, but it does not foreclose alternative pleading at 12(b)(6).

Impact

• FLSA Strategy in Executive Nonpayment Cases: Plaintiffs whose duties plainly satisfy an FLSA exemption face an uphill battle using minimum-wage claims to recover unpaid compensation. This panel’s reliance on Wells to reject the “nonpayment negates exemption” theory signals that, at least in unpublished Fifth Circuit dispositions, cessation of pay alone will not defeat an exemption at the pleading stage absent on-point authority.
• State-Law Remedies Remain Robust: Even where FLSA claims falter, Texas law offers robust avenues—breach of contract based on at‑will employment agreements and alternative quasi-contract theories—when employers accept services without paying.
• Pleading Guidance for Quasi‑Contract: Plaintiffs may (and should) plead quantum meruit and unjust enrichment in the alternative. Alleging that the employer accepted and used the services and paid nothing can be enough to survive Rule 12(b)(6); detailed valuation is for later stages.
• Clarification on Passive Unjust Enrichment: The court corrected a misperception that passive unjust enrichment requires a benefit conferred through a third party. That clarification will simplify pleading and analysis in similar Texas cases.
• Contract Claims in At‑Will Settings: The decision reinforces that at‑will employment is nonetheless contractual, enabling employees to press breach claims for unpaid salary or reimbursements even when no fixed term exists.
• Unpublished but Persuasive: The opinion is unpublished and thus not precedential under 5th Cir. R. 47.5. Still, it will likely be cited persuasively in district courts within the circuit, especially on alternative pleading of quasi-contract claims and the treatment of FLSA exemptions at the pleading stage.

Complex Concepts Simplified

• FLSA Minimum Wage Claim: To state a claim, a worker must plausibly allege (a) coverage (e.g., engaging in interstate commerce) and (b) failure to pay the required minimum wage for hours worked.
• FLSA Exemptions: Certain employees (executive, administrative, professional, and highly compensated) are exempt from minimum wage and overtime. The employer must satisfy three tests: duties (what the employee does), salary-level (minimum pay threshold), and salary-basis (paid a predetermined amount each week regardless of hours). The employer bears the burden to prove an exemption, but dismissal at the pleading stage is permitted if the exemption is obvious from the complaint.
• Salary-Basis Test: Typically requires a guaranteed weekly amount (historically $684/week) not subject to reduction based on quality or quantity of work. The panel did not deeply analyze whether nonpayment defeats salary-basis; rather, it rejected the argument that nonpayment alone erases an otherwise applicable exemption where the plaintiff offered no supporting authority.
• At‑Will Employment as Contract: In Texas, at‑will employment is terminable by either party at any time without cause, but it is still a contract that can be breached (e.g., by failing to pay agreed compensation while the employment relationship persists).
• Fraudulent Inducement: A form of fraud requiring a misrepresentation that causes the plaintiff to enter a contract. Post‑contract statements encouraging continued performance typically do not constitute inducement into the contract. Fraud must be pleaded with particularity (the who, what, when, where, and how).
• Quantum Meruit: An equitable claim to recover the reasonable value of services rendered and accepted when no enforceable contract governs. Plaintiffs can plead it in the alternative to a contract claim; they must later prove reasonable value if the case proceeds.
• Unjust Enrichment: Two Texas variants:
  • Active: The defendant obtained a benefit by fraud, duress, or undue advantage.
  • Passive: The defendant passively retained a benefit that would be unconscionable to keep.
  An express, valid contract governing the subject matter generally bars unjust enrichment recovery at the merits stage, but not alternative pleading.
• Rule 28(a)(5) Forfeiture: On appeal, issues not listed in the statement of issues are forfeited, even if discussed elsewhere in the brief.

Conclusion

Peterson v. Lottery.com delivers three principal takeaways. First, while an employee can plausibly allege an FLSA minimum‑wage violation based on nonpayment, a complaint showing an applicable exemption on its face will be dismissed unless the plaintiff pleads a viable basis to avoid the exemption; nonpayment alone will not suffice—at least under the court’s unpublished guidance echoing Wells. Second, Texas at‑will employment relationships are valid contracts; employees may therefore pursue breach claims for unpaid wages where essential terms (duties and pay) are alleged. Third, plaintiffs may plead quantum meruit and unjust enrichment in the alternative, and general allegations of rendered and accepted services without compensation are enough to cross the plausibility threshold, with the panel clarifying that passive unjust enrichment does not require third‑party involvement.

Although unpublished, the decision clarifies pragmatic routes for unpaid executives and other high‑level employees: FLSA claims may be constrained by exemptions, but state‑law contract and quasi‑contract remedies remain potent. Employers facing cash‑flow crises should not assume FLSA inapplicability insulates them from liability; breach and equitable restitution claims can and often will survive to discovery and adjudication.