Sidney Jacobs v. Mandalay Corp.

FILED
NOT FOR PUBLICATION MAY 07 2010

MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS

FOR THE NINTH CIRCUIT

SIDNEY JACOBS, No. 08-17765

Plaintiff - Appellant, D.C. No. 2:08-cv-00640-RLH-
LRL
v.

MANDALAY CORP., DBA Mandalay MEMORANDUM *
Bay Resort and Casino,

Defendant - Appellee.

Appeal from the United States District Court
for the District of Nevada
Roger L. Hunt, Chief District Judge, Presiding

Argued and Submitted March 8, 2010
San Francisco, California

Before: HALL, NOONAN and THOMAS, Circuit Judges.

Sidney Jacobs (“Jacobs”) filed suit on behalf of himself and a putative class

of plaintiffs against Mandalay Bay Corporation (“Mandalay”) and unnamed

defendants in Nevada state court. In his complaint, Jacobs claims that Mandalay

failed to pay overtime wages to Jacobs and similarly situated employees in

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
violation of Nevada law. Mandalay removed the case to the United States District

Court for the District of Nevada, asserting that Jacobs’s case presents a federal

question that bestows subject matter jurisdiction pursuant to 28 U.S.C. § 1331.

Once in district court, Jacobs moved to amend his complaint and remand to

state court. The district court denied Jacobs’s motions, holding that Jacobs’s claim

is subject to preemption under section 301 of the Labor Management Relations Act

(“LMRA”), 29 U.S.C. § 185(a). The district court then granted Mandalay’s motion

to dismiss for Jacobs’s failure to exhaust non-judicial remedies pursuant to the

collective bargaining agreement between Jacobs and Mandalay. We now review

the district court’s denial of Jacobs’s motions to amend and remand, and we

reverse.

We review de novo the district court’s finding of preemption under section

301 of the LMRA. Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 689 (9th

Cir. 2001) (en banc). For this analysis, we rely on Jacobs’s proposed “Second

Amended Complaint” because dismissal without leave to amend is improper unless

“the complaint could not be saved by any amendment.” See Polich v. Burlington

N., Inc., 942 F.2d 1467, 1472 (9th Cir. 1991).

Jacobs is a banquet server employed by Mandalay, and his employment is

governed by the terms of a collective bargaining agreement (“CBA”). The CBA

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sets forth an agreement that banquet servers are to be paid an hourly wage and a set

percentage of banquet service charges, called “gratuities.” It contains no provision

for overtime wages for banquet servers. In his complaint, Jacobs alleges that

Mandalay’s failure to pay overtime wages constitutes a violation of Nevada

Revised Statute section 608.018, which requires that employers pay overtime to all

employees except certain exempt classes. See N EV. R EV. S TAT. § 608.018(1)-(3).

Preemption under section 301 requires a two-step analysis. See Burnside v.

Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007). First, we must determine

“whether the asserted cause of action involves a right conferred upon an employee

by virtue of state law, not by a CBA.” Id. If the right is conferred by the CBA,

preemption applies, but if it is conferred by state law, the inquiry moves to step

two.

Here, the right claimed by Jacobs clearly inheres in the Nevada statute.

Jacobs’s Second Amended Complaint asserts a cause of action only under section

608.018(2), and makes no claim to a violation of the CBA. While section 608.018

exempts from coverage those employees “covered by collective bargaining

agreements which provide otherwise for overtime,” N EV. R EV. S TAT. §

608.018(3)(e), Mandalay does not claim that the CBA provides for overtime for

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banquet servers. Because Jacobs’s right to overtime is conferred by state law,

independent of the CBA, we move to step two.

At the second step, we must determine whether Jacobs’s claim is

“nevertheless ‘substantially dependent on analysis of a collective-bargaining

agreement.’” Burnside, 491 F.3d at 1059 (quoting Caterpillar, Inc. v. Williams,

482 U.S. 386, 394 (1987)). If the claim requires the court to “interpret,” rather

than merely “look to,” the CBA, then the claim is substantially dependent on the

CBA and is preempted by section 301. See id. at 1060.

Mandalay argues that Jacobs may be “exempt” from protection under state

law, and that the court must interpret the terms of the CBA to determine whether

Jacobs is in fact exempt. However, under the Supreme Court’s decision in Livadas

v. Bradshaw, a purported waiver or bargaining away of state law protections would

have to be “clear and unmistakable . . . for a court even to consider whether it

could be given effect.” 512 U.S. 107, 125 (1994) (internal quotations and citations

omitted). That a CBA lacks a clear waiver of state rights requires only that the

court look to, and not interpret, the CBA. Burnside, 491 F.3d at 1071. Here, there

is no clear statement that banquet servers have bargained away their state law

overtime protections.

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Section 608.018 provides that overtime pay is to be calculated at one and a

half times an employee’s regular wage rate. N EV. R EV. S TAT. § 608.018(1)-(2).

For employees paid other than by an hourly wage rate, Nevada Administrative

Code section 608.125 sets forth a method for calculating an hourly rate for the

purpose of overtime pay. N EV. A DMIN. C ODE § 608.125(2). The CBA does not

need to be interpreted.

The parties dispute whether Jacobs’s “regular wage rate” under section

608.018 includes only his hourly wages, or includes both his hourly wages and his

per job commissions, such that section 608.125 would also apply to him. Contrary

to the district court’s finding, the meaning of “regular wage rate” as provided in

section 608.018 is a question of state law, requiring no reference to the terms of

the CBA. Depending on Nevada’s definition of “regular wage rate,” a court can

calculate the exact amount of overtime pay that is owed by looking to the CBA and

the past wages paid. Referring to the CBA in this way, for the purpose of

calculating damages, does not require an interpretation of the CBA. See Livadas,

512 U.S. at 125 (“[T]he mere need to ‘look to’ the collective-bargaining agreement

for damages computation is no reason to hold the state-law claim defeated by §

301.”); Burnside, 491 F.3d at 1074 (“[D]amages may have to be calculated, and in

the course of that calculation, reference to—but not interpretation of—the CBAs,

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to determine the appropriate wage rate, would likely be required.”). Accordingly,

resolution of Jacobs’s overtime claim does not substantially depend on the terms of

the CBA, and therefore the claim is not preempted by section 301.

Because we hold that Jacobs’s claim for overtime wages is not preempted

under section 301, we REVERSE the decision of the district court, and REMAND

with instructions to remand to the Eighth Judicial District Court of the State of

Nevada, Clark County.