Appeal from the United States District Court for the District of Nevada, Philip M. Pro, District Judge, Presiding, D.C. No. CV-04-01738-PMP.
The opinion of the court was delivered by: Cudahy, Circuit Judge
Argued and Submitted February 15, 2007 -- San Francisco, California
Before: J. Clifford Wallace, Richard D. Cudahy,*fn1 and M. Margaret McKeown, Circuit Judges.
Three former employees of the Castaways Hotel, Casino and Bowling Center (the Castaways) and their local union sued the Castaways' individual managers for unpaid wages under state and federal law. The district court dismissed the plaintiffs' claims. This appeal raises three issues: (1) whether the Castaways' individual managers can be held liable for unpaid wages under Nevada law; (2) whether the union has standing to raise the state law claim; and (3) whether the managers can be held liable under the Fair Labor Standards Act (FLSA). We certified the first issue to the Nevada Supreme Court as a question of first impression under Nevada law. The state court held that individual managers cannot be held liable as "employers," and therefore that claim was properly dismissed by the district court, making the issue of the union's standing moot. The only remaining issue is whether a claim exists under federal law. We hold that it does, and therefore reverse and remand the FLSA claim to the district court.
The Castaways filed for Chapter 11 bankruptcy protection on June 26, 2003.*fn2 The individual plaintiffs were discharged in January 2004, when the Castaways was operating as the debtor-in-possession. On February 10, 2004, after the plaintiffs were discharged, the Chapter 11 petition was converted to a Chapter 7 liquidation, and the Castaways ceased operations. The individual plaintiffs, Ardith Ballard, Thelma Boucher and Joseph Kennedy III, filed suit in Nevada state court seeking to recover unpaid wages for themselves and for a class of Castaways employees.*fn3 Ballard alleges that she has not been paid for the last pay period that she worked at the Castaways. Boucher alleges that she was not paid for the final pay period until two weeks after her employment was terminated. All three individual plaintiffs allege that they have not been paid their accrued vacation and holiday pay. Culinary Workers Union, Local 226 (Local 226 or the union) seeks to recover wages that were withheld as dues from the paychecks of Thelma Boucher and other employees. The plaintiffs assert claims under Chapter 608 of the Nevada Revised Statutes and the FLSA, 29 U.S.C. § 206(a).
The defendants are three Castaways' managers. Dan Shaw was the Chairman and Chief Executive Officer of the Cast-aways at the time the plaintiffs were discharged. Michael Villamor was responsible for handling labor and employment matters at the Castaways. And James Van Woerkom was the Castaways' Chief Financial Officer. Shaw had a 70 percent ownership in the Castaways, and Villamor had a 30 percent ownership interest. The plaintiffs allege that each defendant had custody or control over the "plaintiffs, their employment, or their place of employment at the time that the wages were due."
The plaintiffs filed this lawsuit in Nevada state court on October 14, 2004. On December 21, 2004, Defendant Shaw removed the case to the United States District Court for the District of Nevada and filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Villamor and Van Woerkom separately filed motions to dismiss, alleging the same grounds for dismissal as Shaw. The district court granted the defendants' motions and dismissed all of the plaintiffs' claims. Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D. Nev. Jan. 25, 2005); Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D. Nev. Feb. 18, 2005); Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D. Nev. Apr. 11, 2005). The district court concluded that the defendants were not "employers" under Nevada law, Local 226 lacks standing to bring a claim under Nevada law and the plaintiffs cannot maintain a cause of action under the Fair Labor Standards Act against the defendants. Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL), slip op. at 1-2 (D. Nev. Jan. 25, 2005). The plaintiffs challenge each of these conclusions on appeal. We certified the state law question to the Nevada Supreme Court, and stayed the case pending its resolution. The Nevada Supreme Court has answered the state law question, and we incorporate that court's reasoning into our decision.
This court reviews de novo dismissals for failure to state a claim under Fed. R. Civ. P. 12(b)(6). See Simon v. Hartford Life, Inc., 546 F.3d 661, 663-64 (9th Cir. 2008) (citation omitted). All allegations of material fact shall be taken as true and construed in the light most favorable to the nonmoving party. See id. at 664.
A. Whether Managers Can Be "Employers" Under State Law
Chapter 608 of the Nevada Revised Statutes provides a statutory scheme for wage protection. "An employer shall pay to the employee wages for each hour the employee works." Nev. Rev. Stat. § 608.016. "Whenever an employer discharges an employee, the wages and compensation earned and unpaid at the time of such discharge shall become due and payable immediately." Nev. Rev. Stat. § 608.020. "If an employer fails to pay: (a) Within 3 days after the wages or compensation of a discharged employee becomes due... the wages or compensation of the employee ...