ORDER AND OPINION
STANWOOD DUVAL JR., District Judge
Before the Court are the "Motion for Partial Summary Judgment" filed on behalf of plaintiff Barbara Winget (Doc. 13) and the "Motion for Summary Judgment" filed on behalf of defendant Corporate Green, LLC ("Corporate Green"). Having reviewed the pleadings, memoranda, and relevant law, the Court, for the reasons assigned, denies the defendant's motion for summary judgment and grant's plaintiff's motion in part and denies it in part as explained herein after.
BACKGROUND
From July 2006 until December 24, 2009 Barbara Winget worked for Corporate Green, a landscaping business in Baton Rouge. Initially Ms. Winget worked in the Corporate Green office and received overtime pay for any hours over 40 hours per week. However, beginning around July 15, 2007, Ms. Winget began working on a detail crew. As a member of the detail crew, Ms. Winget traveled to the property of various customers and planted bushes and flowers as well as mulched and cleaned flower beds.
Corporate Green did not pay overtime to its detail crew employees who worked more than forty hours per week. Rather, the company paid detail crew workers based on "budgeted hours," which Chris Casselberry, the Chief Financial Officer of Corporate Green, described as follows: "[e]very one of our jobs have a budgeted time that we allow people to work on it. That's what we paid you. If you went over or if you went under, that's what you got paid." Doc. 15-3, Deposition of Casselberry, p. 23. He also stated that in determining the budgeted hours "a computer form" and "historical facts of what our crews normally do that job in" were relied upon and that the budgeted time was "a high estimation . . . All our crews always did it under those hours. They always received a bonus." Id. In describing the bonus Mr. Casselberry stated "let's say you worked ten hours, but the budgeted hours was 12. You got paid for 12 but you only worked ten. All of our crews historical got bonus hours." Doc. 13-4. Deposition of Casselberry, p. 24. Additionally he stated "that's why we gave them extra, because all the people we talked to, that's how we compensated for overtime actually, tell you the truth. Okay. They are earning more than they would have on straight time plus overtime." Id. at p. 27. Corporate Green also paid members of the detail crew budgeted hours for travel for driving from one job to another, and paid detail crew workers $8.00 for a weekly employee meeting regardless of the length of the meeting.
Barbara Winget filed suit against Corporate Green alleging that it violated the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., ("FLSA") by failing to pay her overtime for her work in excess of 40 hours per week. Plaintiff seeks to recover unpaid overtime as well as liquidated damages for Corporate Green's violation of the FLSA.
It is apparent from deposition testimony filed in connection with these motions, that Corporate Green has been audited by the Department of Labor with respect to the failure to pay overtime, and has been ordered to make overtime time payments to a number of employees including a payment of $1,089.00 to Ms. Winget. Doc. 15-3, Deposition of Castelberry, p. 50. It is not apparent from the record whether the audit predated Ms. Winget's suit.
Plaintiff filed a motion for partial summary judgment seeking an order that she is entitled to overtime for all hours worked over 40 per week and that she is entitled to liquidated damages because defendant cannot demonstrate a good faith belief that its practices were in compliance with the FLSA. Defendant opposes the motion contending that it paid plaintiff more money in wages than she would have under the FLSA and that Corporate Green made honest and reasonable efforts to comply with the FLSA, including consulting an attorney and receiving legal advice regarding its pay practices. Defendant has filed a motion for summary judgment seeking dismissal of all of plaintiff's claims on the same grounds on which it opposes plaintiff's motion for summary judgment and alternatively urges that if plaintiff is determined to be entitled to overtime that defendant receive credit a "credit or offset for all sums paid to Winget during her employment in accordance with the FLSA.
SUMMARY JUDGMENT STANDARD
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law" Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651 (5th Cir. 1996), (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir.) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986))). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995).
Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). Finally, this Court notes that the substantive law determines materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
LAW AND ANALYSIS
A. Entitlement to Overtime
It is undisputed that plaintiff frequently worked more than 40 hours per week as a member of the detail crew while employed by Corporate Green. Corporate Green asserts that because it paid plaintiff more under its budgeted hours system than she would have earned had she been paid overtime, it is not subject to overtime payments. Corporate Green's contention is not persuasive.
In general, the FLSA provides that:
no employer shall employ any of his employees who in any workweek is . . . employed in an enterprise engaged in commerce . . ., for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.
29 U.S.C. § 207(1). "The purposes of the overtime requirement are two-fold: (1) to spread employment by placing financial pressure on the employer to hire additional workers rather than employ the same number of workers for longer hours, and (2) to compensate employees who do work `overtime' for the burden of having to do so."
Donovan v. Brown Equipment and Service, 666 F.2d 148, 152 (5
th Cir. 1982). There are exceptions to the overtime provisions of the FLSA;
however, significantly Corporate Green has not cited, nor has the Court located, any exception to the FLSA applicable to plaintiff which would take her outside the protection of § 207(a)(1). Accordingly, the Court grants plaintiff's motion for summary judgment to the extent that it seeks an order that plaintiff is entitled to overtime compensation for any hours worked in excess of forty (40) hours per weeks for the time that she was employed by Corporate Green on a detail crew, and denies defendant's motion for summary judgment to the extent that it seeks a determination that plaintiff is not subject to the provisions of § 207(a)(1).
However, the conclusion that plaintiff is entitled to overtime compensation for any week in which she worked more than forty (40) hours per week does not fully address the issues raised in the parties' motions for summary judgment. Having concluded that plaintiff worked in excess of forty (40) hours per week, an issue remains as to whether Corporate Green owes plaintiff additional compensation for the overtime hours she worked, or whether under the "budgeted hours" approach utilized by defendant, plaintiff has already been adequately compensated for the overtime hours she worked.
"The FLSA requires any employee working over 40 hours in a week to be paid overtime, premium compensation at the rate of one and one-half times their `regular rate' of pay." York v. City of Wichita Falls, 48 F.3d 919, 921 (5th Cir. 1995) (citing 29 U.S.C. § 207(a)(1)). To determine whether plaintiff has been adequately compensated for her overtime hours, it is first necessary to determine her regular rate of pay. The "regular rate" of pay includes "all remuneration for employment paid to, or on behalf of, the employee" except for certain payments which are specifically excluded, including:
(5) extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or workweek because such hours are worked in excess of eight in a day or in excess of the maximum workweek applicable to such employee under subsection (a) of this section or in excess of the employee's normal working hours or regular working hours, as the case may be;
(6) extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days or rest, or on the sixth or seventh day of the workweek, where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in nonovertime hours on other days.
29 U.S.C. § 207(e).
Defendant has not introduced any evidence raising a genuine issue of material fact with respect to the issue of whether any amounts paid to plaintiff as part of her compensation was intended as a "premium rate" within the meaning of § 207(e)(5) or (6) or satisfies the requirements of any exclusions set out in § 207(e)(1)-(7). Therefore, the compensation that defendant denominates as a "bonus" under the budgeted hours pay scheme must be used in calculating plaintiff's "regular rate" of pay. Additionally, because the "bonus" is properly considered in calculating plaintiff's regular rate of pay, any "bonus" payment made may not be offset against overtime due under the FLSA. See Hesseltine v. Goodyear Tire Rubber Co., 301 F.Supp. 2d 509, 521 (E.D. Tx. 2005).
Chris Casselberry concedes that the "budgeted hours" pay scheme is a "piece rate salary." Doc. 1503, Deposition of Casselberry, p. 27. Additionally plaintiff states that she was "clearly paid pursuant to a piece rate salary" Doc. 13, p. 5. The method of calculating the regular rate of pay of a "pieceworker" is set forth in 29 C.F.R. § 778.11 which provides in pertinent part:
When an employee is employed on a piece-rate basis, his regular hourly rate of pay is computed by adding together his total earnings
for the workweek from piece rates and all other sources (such as production bonuses) and any other hours worked (except statutory exclusions): This sum is then divided by the number of hours worked in the week for which such compensation was paid, to yield the pieceworker's "regular-rate" for that week. For his overtime work, the piece-worker is entitled to be paid, in addition to his total weekly earnings at this regular rate for all hours worked, a sum equivalent to one-half this regular rate of pay multiplied by the number of hours worked in excess of 40 in the week.
29 C.F.R. § 778.111(a). That provision appears to be applicable to plaintiff who received pay for "budgeted hours" for each landscaping job, the equivalent of a "piece" under § 778.111, and also received pay for budgeted hours for travel as well as additional compensation for a weekly meeting.
The Court notes that while plaintiff in one part of her memorandum in support of her motion for partial summary judgment urges that the "pieceworker" calculation of § 778.111 applies, she later in the same memorandum she contends that the provisions of § 778.112 governing "Day rates and job rates" apply to determine her regular rate of hourly pay. The Court concludes that § 778.112 does not apply to plaintiff. That section provides in pertinent part:
If the employee is paid a flat sum for a day's work or for doing a particular job, without regard to the number of hours worked in the day or at the job, and if he receives no other form of compensation for services, his regular rate is determined by totaling all of the sums received at such day rates or job rates in the workweek and dividing by the total hours actually worked. He is then entitled to extra half-time pay at this rate for all hours worked in excess of 40 in the workweek.
79 C.F.R. § 778.112. Unlike the worker identified in § 778.112, it is undisputed that plaintiff received compensation not just for the particular jobs performed, but also for travel time and for the weekly meeting. Thus, § 778.112 is inapplicable. The Court grants plaintiff's motion for summary judgment to the extent that she seeks a determination that 29 C.F.R. § 778.111 establishes the proper method of calculating her "regular rate" for purposes of determining the amount owed to her for the hours she worked in excess of forty (40) hours each week during the time she was employed by Corporate Green on a detail team.
B. Liquidated Damages
Plaintiffs seeks an order stating that she is entitled to liquidated damages for defendant's failure to pay overtime pursuant to the FLSA. Under the FLSA, an employer who violates § 207 by failing to pay overtime compensation is liable for the unpaid overtime compensation and "an additional amount equal amount as liquidated damages." 29 U.S.C. § 216.(b). Although "[l]iquidated damages are awarded as a matter of course for violations of 29 U.S.C. § 207 . . . [p]ursuant to 29 U.S.C. § 260, . . . a district court may decline to award liquidated damages if the employer demonstrates that it acted reasonably and in good faith." Solis v. Hooglands Nursery, L.L.C., 2010 WL 1404022 (5th Cir. April 7, 2010), citing Heidtman v. County of El Paso, 171 F.3d 1038, 1042 (5th Cir. 1999).
It is undisputed that prior to implementing the budgeted hours payment method Chris Casselberry consulted with an attorney to determine whether the budgeted hour method of compensation complied with the FLSA and that the attorney Mr. Casselberry consulted advised him that the budgeted hour method was "legal." Doc. 13-4, Deposition of Chris Casselberry, p. 44, 46. Plaintiff however, contends that Corporate Green cannot establish its good faith because it disregarded without investigating information provided to it by plaintiff that indicated that the method of pay being used violated the FLSA and Corporate Green did not consult a lawyer after plaintiff challenged the failure to pay her overtime. Although defendant may ultimately be unsuccessful in establishing that it acted reasonably and in good faith in failing to pay plaintiff appropriate overtime, it has produced sufficient evidence to raise a genuine issue of material fact on that issue. Thus, plaintiff is not entitled to summary judgment on that issue.
er 19:6-12. Instead, the Plaintiffs urged the Court to follow the editorial comments in the draft version of the Restatement and hold that "unjust enrichment can sound at law, in equity, or both."
Id. 19:12-15. Second, the Plaintiffs "dispute that there are adequate remedies at law."
Id. 20:13-14. Giving Maine as an example, the Plaintiffs argued that their decision to seek only unjust enrichment and "not to proceed with the Maine Consumer Protection Act claim" proved that the Plaintiffs did not have an adequate remedy at law.
Id. 20:16-21:3. Third, the Plaintiffs concluded
that because Rule 8 and the First Circuit recognize "that plaintiffs may plead alternative theories of relief,"
id. 18:12-21 (citing
Dopp v. HTP Corp., 947 F.2d 506 (1st Cir. 1991)), it is inappropriate to dismiss their unjust enrichment claims "at this point in time."
Id. 24:20-23.
In fairness to PM, the Court considered allowing it to respond in writing to the Plaintiffs' newly-made arguments. However, PM responded to these new points at oral argument and at the close of argument, the parties agreed that this motion and PM's causation motion, unlike the class certification motion, were ready for decision. Tr. 165:7-21.
In their brief, the Plaintiffs referenced Rule 8 when describing the standard for judgment on the pleadings. Pls.' Resp. at 2. They did not argue that Rule 8 authorizes pleading alternative theories of relief.
2. Legal or Equitable
a. Unjust Enrichment
In a diversity case, the sufficiency of the unjust enrichment claims is a question of substantive law governed by the law of the forum state. Erie, 304 U.S. at 78 (holding that for federal courts sitting in diversity, state law governs substantive rules of state common law); Cabán Hernández v. Philip Morris USA, Inc., 486 F.3d 1, 11 (1st Cir. 2007) (describing how "a federal court sitting in diversity is bound to apply state substantive law"); Commercial Union Ins. Co. v. Keebler Co., No. 89 C 8405, 1990 WL 93324, at *1 (N.D. Ill. June 20, 1990) (stating that the sufficiency of plaintiff's unjust enrichment claim is an issue of state substantive law). Furthermore, under state law an "adequate remedy at law" is a defense to claims in equity.
Federal courts sitting in diversity in Washington D.C. "ascertain and apply District of Columbia law" even though Erie is limited to the states. Anchorage-Hynning Co. v. Moringiello, 697 F.2d 356, 360 (D.C. Cir. 1983) (stating that "the Erie doctrine is to be analogously applied by federal courts exercising diversity jurisdiction in the District").
At oral argument, the Plaintiffs asserted that the affirmative defense varied among states. Tr. 22:3-5 (stating the "[s]ome states refer to it as an adequate remedy at law; others refer to it as an adequate and complete remedy at law"). However, the Plaintiffs did not suggest that some states do not recognize the defense at all. Id. 22:1-2 (stating that the answer to whether there was an adequate remedy at law would depend on "how different states interpret the adequate remedy at law standard").
Acknowledging these principles, the Plaintiffs argue that "whether a claim sounds at law or in equity" is a question of federal law and applying federal law, that unjust enrichment is a legal, not equitable claim. Pls.' Resp. at 3 (citing Simler, 372 U.S. at 222). The Court does not agree, however, that Simler stands for the proposition that in the usual case federal law controls whether a claim sounds in equity or law. It is true the United States Supreme Court in Simler concluded that "the characterization of that state-created claim as legal or equitable for purposes of whether a right to jury trial is indicated must be made by recourse to federal law." Simler, 372 U.S. at 222. However, the Supreme Court was addressing whether federal courts sitting in diversity should use state or federal law to characterize a claim to decide "whether a claimant has a right to a jury trial." Id. at 221. Noting that "[t]he federal policy favoring jury trials is of historic and continuing strength," the Simler Court emphasized that "[o]nly through a holding that the jury trial right is to be determined according to federal law can the uniformity in its exercise which is demanded by the Seventh Amendment be achieved." Id. at 222. Thus, the Court restricted its holding to determining "whether a right to jury trial is indicated." Id. On its face, Simler appears limited to the Seventh Amendment context. See Arrowsmith v. United Press Intern., 320 F.2d 219, 230 (2d Cir. 1963) (finding Simler inapplicable to service of process question because decision driven by the Seventh Amendment).
Had the Plaintiffs framed a congruent argument, namely that characterizing unjust enrichment as equitable would deprive them of their Seventh Amendment right to trial by jury, Simler would be apposite but they made no such claim.
The Court recognizes that the district court in Dastgheib read Simler more broadly and applied the two-part federal test to determine whether a state claim for unjust enrichment sounded in equity or law. Dastgheib, 457 F. Supp. 2d at 539. In Dastgheib, the defendant moved to dismiss the plaintiff's unjust enrichment claim on the ground that it was equitable and he had an adequate remedy at law. Id. The federal district court, quoting Simler, acknowledged that state law governed the "substantive dimension of the claim" but stated that federal law determined "the characterization of that state-created claim as legal or equitable." Id. (quoting Simler, 372 U.S. at 222). However, the district court did not address whether Simler extends beyond the Seventh Amendment context and its holding is at odds with other federal courts that have decided similar motions. See, e.g., In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1163 (N.D. Cal. 2009) (accepting the defendants' argument that state law determines whether unjust enrichment claims are barred).
The Court is not convinced that the application of federal as opposed to state law makes a difference in determining whether unjust enrichment sounds in equity or law, and the Court does not reach this question. The two-part federal analysis set forth in Simler and Dastgheib is unarguably a valid way of approaching the question and it may be that some states follow the federal framework.
On the one hand, courts frequently refer to unjust enrichment as an "equitable claim." See, e.g., Cummings v. Bean, 2004 ME 93, ¶ 9, 853 A.2d 221, 224 (distinguishing unjust enrichment, "which is firmly rooted in equity," from quantum meruit, which "sound[s] in law, not equity"). On the other hand, at least one jurisdiction characterizes claims for unjust enrichment as either equitable or legal depending on the remedy requested. See, e.g., Burns Philp Food, Inc. v. Cavalea Cont'l Freight, Inc., 135 F.3d 526, 527-28 (7th Cir. 1998) (applying statute of limitations to claim of unjust enrichment based on finding that request for restitution meant that the unjust enrichment cause of action sounded at law, not equity); Hanley v. Trendway Corp., No. 94 C 5406, 1995 WL 103748, at *2-3 (N.D. Ill. Mar. 6, 1995) (stating that because unjust enrichment is not necessarily an equitable action, "the existence of a full and adequate remedy at law . . . is not always an appropriate reason for dismissal").
The current draft of the Restatement (Third) of Restitution and Unjust Enrichment endorses the Illinois theory: "[l]iabilities and remedies within the law of restitution and unjust enrichment may have originated in law, in equity, or a combination of the two." Restatement (Third) of Restitution and Unjust Enrichment § 4 (Tentative Draft No. 7, 2010). The Restatement goes further, stating that "[a] claimant otherwise entitled to a remedy for unjust enrichment, including a remedy originating in equity, need not demonstrate the inadequacy of available remedies at law." Id. As yet, no jurisdiction has endorsed this second, more novel proposition.
The parties did not thoroughly brief this issue, and at oral argument, although the parties staked out opposing positions, they were unable to give comprehensive answers for all jurisdictions. In the context of this case with its multiple state variations, the issue is tricky and because the Court resolves PM's motion on different grounds, it demurs on this one. Should PM make a similar argument in the future, the parties are alerted to the issue.
b. Restitution, Disgorgement, Injunctions
Again, the Plaintiffs focus on the character of the remedy, appearing to concede that "lack of an otherwise adequate remedy" is necessary before courts can grant equitable relief. Compute-A-Call, Inc. v. Tolleson, 687 S.W.2d 129, 130 (Ark. 1985). However, the Plaintiffs provide no support for their assertion that the authorization of equitable remedies by state statutes converts traditionally equitable claims into claims that are "legal in nature." Pls.' Resp. at 8. Instead,
Although both parties assume that state law governs whether an equitable remedy exists, the Court is not sure. Whether federal courts sitting in diversity are bound by state limits on equitable remedies is a matter of some dispute. Perfect Fit Indus. v. Acme Quilting Co., Inc., 646 F.2d 800, 806 (2d Cir. 1981) (stating that federal court's equitable powers are not governed by state law even when state law provides the rule of decision); cf. Sims Snowboards, Inc. v. Kelly, 863 F.2d 643, 647 (9th Cir. 1988) (stating that state law governs availability of equitable remedies); 19 Charles Alan Wright, Arthur R. Miller Edward H. Cooper, Federal Practice and Procedure § 4513 (stating that the general rule is that when state law defines the underlying substantive right, state law also governs the availability of equitable remedies); see also Bogosian v. Woloohojian Realty Corp., 923 F.2d 898, 904 (1st Cir. 1991) (noting that courts are divided as to whether state or federal law governs the availability of equitable relief).
However, the Court's decision does not depend on its resolution: an "adequate remedy at law" precludes equitable remedies under both state and federal law. Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962) (stating that "a necessary prerequisite to the right to maintain a suit for an equitable accounting, like all other equitable remedies, is . . . the absence of an adequate remedy at law"); Santiago-Negron v. Castro-Davila, 865 F.2d 431, 439 (1st Cir. 1989).
state courts consistently refer to equitable remedies sought pursuant to state statutes as "equitable relief." Gaidon v. Guardian Life Ins. Co. of Am., 255 A.D.2d 101, 102 (N.Y. App. Div 1998) (referring to "plaintiffs' claims for equitable relief" under the statute at issue in Tang); State v. Excel Mgm't, Servs., Inc., 331 N.W.2d 312, 315 (Wis. 1983) (noting that the plaintiff "requested equitable relief" under the Wisconsin statute at issue in Nikolic). The Court does not accept the Plaintiffs' unsupported contention that because a state statute refers to an otherwise equitable remedy, the remedy necessarily becomes a remedy at law.
Although the Court easily resolves this part of the Plaintiffs' argument, the Court remains unsure whether all the claims are equitable. At a minimum, however, injunctive relief is equitable, and the Court must inquire into whether there is an adequate remedy at law.
3. Adequate Remedy at Law
a. Unjust Enrichment
In general, a party is allowed to "state as many separate claims or defenses as it has, regardless of consistency." Fed.R.Civ.P. 8(d)(3). Although an adequate remedy at law might prevent plaintiffs from eventually prevailing on equitable claims, nothing prevents the plaintiffs from pleading both types of causes of action. See, e.g., Rodriguez v. It's Just Lunch, Int'l, No. 07 Civ. 9227 (SHS) (KNF), 2010 WL 685009, at *11 (S.D.N.Y. Feb. 23, 2010) (denying motion to dismiss unjust enrichment claim because enforceable contract not yet proven and the federal rules allow plaintiffs to plead alternative and inconsistent claims); So. Wine and Spirits of Nev. v. Mountain Valley Spring Co., LLC, 2008 WL 2186176, at *2 (W.D. Ark. May 23, 2008) (denying motion to dismiss unjust enrichment claim because federal rules allow plaintiffs to plead regardless of consistency); GMAC Commercial Mortg. Corp. v. Gleichman, 84 F. Supp. 2d 127, 136-37 (D. Me. 1999) (denying motion to dismiss state unjust enrichment claim because the federal rules allow plaintiffs to plead alternative forms of relief). In general, courts cannot determine the adequacy of a legal remedy from the pleadings. See, e.g., Weydert Homes, Inc. v. Kammes, 917 N.E.2d 64, 73 (Ill. App. Ct. 2009) (overturning trial court's dismissal of an unjust enrichment claim as premature because could not tell from the pleadings whether a binding contract existed).
The possible exception is when the legal cause of action provides an exclusive remedy. In such situations, courts may dismiss claims of unjust enrichment because the legal cause of action precludes parallel equitable claims. See, e.g., Frein v. Windsor Weeping Mary, LP, ___ S.W.3d ___, 2009 Ark. App. 774 (Ark. Ct. App. 2009) (affirming dismissal of unjust enrichment claim because valid contract meant that breach of contract claim provided exclusive remedy); Springfield Heating and Air Conditioning, Inc. v. 3947-55 King Drive at Oakwood, LLC, 901 N.E. 2d 978, 985-86 (Ill. App. Ct. 2009) (upholding dismissal of unjust enrichment claim because state Mechanics' Lien Act provided exclusive remedy); Batt v. City and County of San Francisco, 65 Cal. Rptr. 3d 716, 721-22 (Cal. Ct. App. 2007) (denying equitable claims because administrative tax refund action was exclusive remedy); Myskina v. Conde Nast Publ'ns, Inc., 386 F. Supp. 2d 409, 420 (S.D.N.Y. 2005) (granting summary judgment because state privacy statute provided an exclusive remedy, precluding separate common law causes of action). Even in this context, however, courts deny motions to dismiss when there is a question whether the exclusive remedy applies. See, e.g., Gleichman, 84 F. Supp. 2d at 236-37 (refusing to dismiss an unjust enrichment claim even though two separate counts alleged breach of contract); June Robert Agency, Inc. v. Venture Props., Inc., 676 A.2d 46, 49 n. 1 (Me. 1996) (stating that although "the existence of a contract precludes recovery on a theory of unjust enrichment because unjust enrichment describes recovery for the value of the benefit retained when there is no contractual relationship," a plaintiff is "not precluded from pleading both theories because a factfinder may find that no contract exists and may still award damages on the theory of unjust enrichment"). Here, PM does not assert that state legislatures intended state consumer protection laws to provide exclusive remedies to consumers.
The Court's research confirms that state consumer protection laws do not provide exclusive remedies to consumers. None of the statutes states that it provides the sole remedy for defrauded consumers and state courts typically allow plaintiffs to bring both consumer protection and unjust enrichment claims. See, e.g., Hall v. Sprint Spectrum L.P., 876 N.E.2d 1036 (Ill. App. Ct. 2007) (upholding class certification for claims based on the Illinois Consumer Fraud Act, other consumer protection statutes, and unjust enrichment).
Furthermore, it makes intuitive sense to allow plaintiffs to plead both causes of action: unjust enrichment is aimed at the defendant's gain whereas consumer protection statutes focus on plaintiff's loss. See County of San Bernardino v. Walsh, 69 Cal. Rptr. 3d 848, 855-56 (Cal. Ct. App. 2007) (clarifying that unjust enrichment is broader than causes of action for restitution because deprives defendant of unjust benefit regardless of corresponding loss to plaintiffs).
Instead, PM presses that the existence of any legal remedy constitutes a sufficiently adequate remedy to justify dismissal. Pointing to the outcome in Curtis, the Minnesota district court case, PM argues that state consumer protection statutes provide the Plaintiffs with a sufficiently adequate remedy to preclude unjust enrichment claims. PM's Mot. at 10 ( Curtis, No-27-CV-01-18042 at 2). The district court in Curtis granted the motion for judgment on the pleadings because it concluded that the Minnesota consumer protection statutes "provided adequate legal remedies and precluded an unjust enrichment claim." Curtis, No-27-CV-01-18042 at 2. As a general proposition, the Court has no quarrel with the Curtis Court's conclusion that if there is an adequate remedy at law, an equitable remedy is precluded. Where the Court and the district court in Curtis part ways is whether the determination can be made at this stage in the proceedings.
At oral argument, PM further defined what constitutes an adequate remedy. Rejecting the Plaintiffs' argument that the adequacy of a legal remedy turns on whether the Plaintiffs can recover under it, PM described equity as a "gap filler" that "steps in" only "where the law has not provided a remedy." Tr. 15:20-22. PM contends that the Plaintiffs "have not identified anything that makes the remedy [at law] incomplete." Id. 23:9-10. Rather, PM argues that the Plaintiffs' unjust enrichment claims track their consumer protection claims: both allege that consumers "went out and bought a product, it wasn't what it was supposed to be, and as a result suffered an economic loss." Id. 23:11-13.
PM's argument inverts the presumption that state legal remedies are not considered exclusive remedies. Absent specific legislative intent to the contrary, "[l]egislatures are deemed to draft legislation against the backdrop of the common law" and state statutes are interpreted not to displace state common law causes of action. See, e.g., Maietta Constr., Inc. v. Wainwright, 2004 ME 53, ¶ 10, 847 A.2d 1169, 1174. At this stage, the Plaintiffs may assert multiple and duplicative legal and equitable claims for relief. See, e.g., Levine v. First Am. Title Ins. Co., 682 F. Supp. 2d 442, 468-69 (E.D. Pa. 2010) (denying motion to dismiss unjust enrichment claim because the state statute "does not provide an exclusive statutory remedy" and plaintiff can plead unjust enrichment in the alternative); In re Wal-Mart Wage and Hour Employment Practices Litig., 490 F. Supp. 2d 1091, 1121 (D. Nev. 2007) (denying dismissal of unjust enrichment claims because Maine has not addressed whether the remedy provided by wage and hour statute is an adequate legal remedy and it is too early in the proceedings for the Court to decide) (applying Maine law).
b. Restitution, Disgorgement, and Injunctive Relief
PM's motion fares even worse in relation to the Plaintiffs' request for restitution, disgorgement, and injunctive relief. Money damages are not the Plaintiffs' exclusive remedy: state consumer protection statutes specifically contemplate that plaintiffs will seek both legal and equitable remedies. See, e.g., N.Y. Gen. Bus. Law § 349 (authorizing persons to bring an action to enjoin "such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions"). PM cites no cases to the contrary. Even so, PM may ultimately be proven correct and the Plaintiffs may be unable to recover in equity what they recover at law; nevertheless, the Court cannot make this determination on the pleadings. See, e.g., Klayman v. Judicial Watch, Inc., Civil Action No. 06-670 (CKK), 2007 WL 140978, at *15 (D.D.C. Jan. 17, 2007) (denying motion to dismiss the plaintiffs' equitable remedies because unable to conclude at this stage of the proceedings whether available).
The cases that PM does cite, such as Kakaes v. George Washington Univ., 790 A.2d 581, 583-84 (D.C. 2002), refused to grant equitable relief where the plaintiff had not proven why damages did not provide complete relief. PM's Mot. at 5.
C. Whether Unjust Enrichment is a Cause of Action in Mississippi
For its conclusion that Mississippi does not allow unjust enrichment as an independent cause of action, PM cites a string of federal district courts sitting in diversity, including two Mississippi federal district courts. PM's Reply at 6. Cruz v. Lawson Software, Inc., Civil No. 08-5900 (MJD/JSM), 2010 WL 890038, at *6 (D. Minn. Jan. 5, 2010); In re Potash Antitrust Litig. (Potash Antitrust), 667 F. Supp. 2d 907, 948 (N.D. Ill. 2009); Cole v. JMR Chevron USA, Inc., 554 F. Supp. 2d 655, 671 (S.D. Miss. 2007); Coleman v. Conseco, Inc., 238 F. Supp. 2d 804, 813 (S.D. Miss. 2002), partially abrogated on other grounds by Sweeney v. Sherwin Williams Co., 304 F. Supp. 2d 868 (S.D. Miss. 2004).
The view that unjust enrichment is a theory of recovery, not an independent cause of action, can be traced to Coleman:
Regarding Plaintiffs' unjust enrichment claim, "[t]he phrase
`unjust enrichment' does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so." 66 Am. Jur. 2d Restitution and Implied Contracts § 9 (2002) (emphasis added). Plaintiffs have cited no case law establishing "unjust enrichment" as an independent compensable tort, and the Court is aware of none.
Coleman, 238 F. Supp. 2d at 813 (brackets in the original).
The other district courts simply carried
Coleman's analysis forward.
The portion of Restitution and Implied Contracts cited by Coleman quotes a California, not Mississippi, case. 66 Am. Jur. 2d Restitution and Implied Contracts § 9 (quoting Lauriedale Assocs., Ltd. v. Wilson, 9 Cal. Rptr. 2d 774, 780 (Cal. Ct. App. 1992) ("The phrase `Unjust Enrichment' does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so.")).
Cole, one of the Mississippi federal district court cases, cited Estate of Johnson v. Adkins, 513 So. 2d 922, 926 (Miss. 1987) as further support. Cole, 554 F. Supp. 2d at 671; Potash Antitrust, 667 F. Supp. 2d at 948 (positively referring to Cole's citation of Estate of Johnson). The Cole Court, however, did not say why it concluded that Estate of Johnson stood for the proposition that unjust enrichment is a measure of damages, not an independent theory of recovery. Cole, 554 F. Supp. 2d at 671.
In the Court's view, Estate of Johnson supports the conclusion that unjust enrichment is a stand-alone cause of action. Estate of Johnson, 513 So. 2d at 926 (concluding that the claim of quantum meruit, not unjust enrichment, applied to the facts). The Mississippi Supreme Court found that the type of recovery alone distinguished between the claim of quantum meruit it allowed and the claim of unjust enrichment it rejected: "[t]he measure of recovery is a distinction between quantum meruit and unjust enrichment. Recovery in quantum meruit is measured by the reasonable value of the materials or service rendered, while recovery in unjust enrichment is that to which the claimant is equitably entitled." Id. Because the plaintiff's claims were based on value of services rendered, the Court concluded that "quantum meruit is the proper measure of recovery." Id. In view of later Mississippi case law describing unjust enrichment as an action, Estate of Johnson has not persuaded the Court that it is not.
Contrary to Coleman and its federal progeny, however, there is a substantial body of Mississippi case law that treats unjust enrichment as a separate cause of action. In Koval v. Koval, the Supreme Court of Mississippi stated that "[t]he facts of the case at bar lend themselves to a recovery by the plaintiffs under the theory of unjust enrichment." 576 So. 2d 134, 137 (Miss. 1991). Quoting Hans v. Hans, 482 So. 2d 1117, 1122 (Miss. 1986), the Koval Court described the theory:
[t]he doctrine of unjust enrichment . . . applies to situations where there is no legal contract but where the person sought to be charged is in possession of money or property which in good conscience and justice he should not retain but should deliver to another, the courts
impos[e] a duty to refund the money or the use value of the property to the person to whom in good conscience it ought to belong.
Id. at 136. Although quoting
Estate of Johnson for the proposition that "[u]njust enrichment is an equitable remedy closely associated with `implied contracts' and trusts," the
Koval Court appears to have interpreted the use of the term "remedy" broadly.
Id. (quoting
Estate of Johnson, 513 So. 2d at 926). In other words, Mississippi courts describe unjust enrichment as an "equitable remedy" to mean an equitable solution that encompasses a cause of action, not merely a type of recovery. Thus, in
Milliken Michaels, Inc. v. Fred Netterville Lumber Co., the Supreme Court of Mississippi noted that the plaintiff "laments that [the defendant] is
unjustly enriched," which seems to describe a cause of action, and affirmed a lower court determination that money paid to another by mistake is subject to repayment on the theory of unjust enrichment.
676 So. 2d 266, 269 (Miss. 1996);
see also Prism Marketing Co., Inc. v. Casino Factory Shoppes, LLC, No. 2:08CV163-SA-SAA,
2009 WL 4348952, at *5 (N.D. Miss. Nov. 30, 2009) (holding that the plaintiffs' unjust enrichment claims survived the defendant's motion for summary judgment);
Blades v. Countrywide Home Loans, Inc., Civil Action No. 1:06CV1000-LG-JMR,
2007 WL 2746678, at *5 (S.D. Miss. Sept. 17, 2007) (holding that Mississippi courts recognize the existence of an unjust enrichment theory of recovery);
Dunn v. Dunn, 853 So. 2d 1150, 1153-54 (Miss. 2003) (affirming lower court's holding that the defendant had been unjustly enriched);
Manning v. Tanner, 594 So. 2d 1164, 1169 (Miss. 1992) (upholding recovery under the theory of unjust enrichment, stating that "the chancellor's finding of unjust enrichment is well supported by the law").
To the extent there is any lingering doubt, the Supreme Court of Mississippi in Owens Corning v. R.J. Reynolds Tobacco Co. described the requirements for an "action for unjust enrichment":
Mississippi law provides that, in an action for unjust enrichment, the plaintiff need only allege and show that the defendant holds money which in equity and good conscience belongs to the plaintiff.
868 So. 2d 331, 342 (Miss. 2004).
The view that unjust enrichment is a cause of action distinct from restitution is echoed in
Omnibank, in which the Supreme Court
of Mississippi described unjust enrichment as a cause of action distinct from restitution:
Owens Corning also described the plaintiff in Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76 (Miss. 1992), as bringing "an unjust enrichment action." 868 So. 2d at 342.
The mere fact that a third person . . . benefits from an arrangement between two other persons . . . does not make such third person liable in quasi contract, unjust enrichment, or restitution.
607 So. 2d at 92-93;
see In re Worldcom, Inc., 06 Cv. 2134 (BSJ),
2010 WL 334980, at *6 (S.D.N.Y. Jan. 29, 2010) (stating the elements of a claim for unjust enrichment under Mississippi law);
In re Zyprexa Prods. Liab. Litig., 671 F. Supp. 2d 397, 431 (E.D.N.Y. 2009) (stating that "causation is an essential element of the State's fraud, negligence, and unjust enrichment claims under Mississippi common law").
Even if the Court applied the logic from Lauriedale, the Court would still recognize unjust enrichment as a cause of action. The Lauriedale Court denied the unjust enrichment claim on the facts, not because no unjust enrichment claim existed. Lauriedale Associates, 9 Cal. Rptr. 2d at 780 n. 2 (stating "we need not consider whether appellants' `unjust enrichment' cause of action is barred by the provisions of the Corporations Code"). Lauriedale makes the semantic distinction that the action is restitution, the effect unjust enrichment. Id. at 1448-49.
The Court concludes that unjust enrichment is a separate cause of action under Mississippi state law.
III. CONCLUSION
The Court DENIES PM's Motion for Judgment on the Pleadings on Plaintiffs' Unjust Enrichment Claims and Other Requests for Equitable Relief (Docket # 185).
SO ORDERED.