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Kenney v. Helix TCS, Inc.

United States Court of Appeals, Tenth Circuit

September 20, 2019

ROBERT KENNEY, individually and on behalf of all others similarly situated, Plaintiff-Appellee,
HELIX TCS, INC., Defendant-Appellant.

          Appeal from the United States District Court for the District of Colorado (D.C. No. 1:17-CV-01755-CMA-KMT)

          Jordan D. Factor, (Jeremy T. Jonsen and Carissa V. Sears, with him on the briefs) Allen Vellone Wolf Helfrich & Factor, P.C., Denver, Colorado, for Defendant-Appellant.

          Lyndsay R. Itkin, (Michael Andrew Josephson, with her on the brief) Josephson Dunlap Law Firm, Houston, Texas for Plaintiff-Appellee.

          Before HARTZ, SEYMOUR, and EID, Circuit Judges.


         Plaintiff Robert Kenney is a former employee of Defendant Helix TCS, Inc. ("Helix"), which provides security services for businesses in Colorado's state-sanctioned marijuana industry. Mr. Kenney filed this lawsuit against Helix under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201–219, alleging that Helix misclassified him and similarly situated workers as exempt from the FLSA's overtime obligations. Helix moved to dismiss Mr. Kenney's claim based on the Controlled Substance Act ("CSA"), 21 U.S.C. §801, et seq, arguing that Mr. Kenney's employment activities are in violation of the CSA and are thus not entitled to FLSA protections. The district court denied Helix's motion to dismiss. We affirm.


         Between approximately February 2016 and April 2017, Mr. Kenney worked as a security guard for Helix. Mr. Kenney alleges that he and other similarly situated security guards regularly worked more than forty hours per week. Nevertheless, Helix classified these workers as exempt employees under the FLSA and paid them a salary instead of overtime. Mr. Kenney initiated this action against Helix under the collective action provisions of the FLSA, see 29 U.S.C. § 216(b), contending that Helix misclassified the security guards as exempt employees even though they frequently performed non-exempt job duties. He claims Helix is in violation of 29 U.S.C. § 207(a) by willfully failing to pay overtime.

         Helix provides security, inventory control, and compliance services to the marijuana industry in Colorado. Kenney v. Helix TCS, Inc., 284 F.Supp. 3d 1186');">284 F.Supp. 3d 1186, 1188 (D. Colo. 2018). Mr. Kenney's job duties at Helix included monitoring security cameras, patrolling assigned locations, investigating and documenting all facility-related incidents, and enforcing client, local, state, and federal policies and regulations. Id. Helix asserts that the FLSA does not apply to workers such as Mr. Kenney because Colorado's recreational marijuana industry is in violation of the Controlled Substances Act. It therefore moved to dismiss Mr. Kenney's FLSA claim for want of jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure or, alternatively, under Rule 12(b)(6) for failure to state a claim.

         The district court denied Helix's motion to dismiss and then certified Helix's interlocutory appeal of its order. Exercising jurisdiction pursuant to 28 U.S.C. § 1292(b), we affirm.


         Both parties agree that we review de novo the district court's denial of Helix's motions to dismiss. A Rule 12(b)(1) motion to dismiss only requires the court to determine whether it has authority to adjudicate the matter. Helix argued below that the district court lacked subject matter jurisdiction because there is no federal interest at stake. The district court correctly rejected this argument, identifying it as a challenge to the legal sufficiency of Mr. Kenney's claims rather than the jurisdiction of the federal courts. Kenney, 284 F.Supp. 3d at 1189 (citing Arbaugh v. Y & H Corp., 546 U.S. 500, 516 (2006) (holding statute's definitional requirement of who qualifies as employer "is an element of a plaintiff's claim for relief, not a jurisdictional issue")). Helix only cursorily mentioned this argument in its opening brief and dropped the issue entirely in its reply brief.

         A Rule 12(b)(6) motion to dismiss requires the court to evaluate the sufficiency of the plaintiff's allegations. "At this stage in the litigation, we accept as true the well pleaded factual allegations and then determine if the plaintiff has provided enough facts to state a claim to relief that is plausible on its face." Hogan v. Winder, 762 F.3d 1096, 1104 (10th Cir. 2014) (internal citation and quotation marks omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw ...

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