939 F.3d 1106
10th Cir.2019Background
- Plaintiff Robert Kenney worked as a security guard for Helix TCS, Inc. (Feb 2016–Apr 2017), a company providing security and compliance services to Colorado’s state‑sanctioned marijuana industry.
- Kenney alleges he and similarly situated guards regularly worked >40 hours/week but were misclassified as exempt and paid a salary without overtime, so he sued under the FLSA § 216(b).
- Helix moved to dismiss under Rule 12(b)(1) and (6), arguing the Controlled Substances Act (CSA) makes the marijuana business illegal and therefore FLSA protections should not apply (effectively an implied repeal/repugnancy argument).
- The district court denied Helix’s motion; Helix obtained interlocutory review under 28 U.S.C. § 1292(b).
- The Tenth Circuit affirmed the denial: it held Kenney sufficiently pleaded an FLSA claim, the CSA does not implicitly repeal or exempt marijuana‑industry employers from FLSA obligations, and employers violating one federal law are not thereby excused from complying with another.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FLSA § 207(a) cover Kenney (an employee working >40 hrs for a marijuana‑industry employer)? | Kenney: He is an employee covered by the plain text of the FLSA and worked overtime. | Helix: CSA renders the business illegal; FLSA should not apply (would create conflict/implied repeal). | FLSA applies; Kenney plausibly alleges coverage and Helix cannot show an exemption or repeal. |
| Is the challenge jurisdictional under Rule 12(b)(1)? | Kenney: The argument attacks the merits, not federal jurisdiction. | Helix: Claimed lack of federal interest so federal courts lack jurisdiction. | Rejected: Argument is merits‑based and therefore not jurisdictional; waiver where raised late. |
| Does the CSA implicitly repeal or conflict with FLSA such that FLSA exemptions or limits should be read in? | Kenney: No; repeals by implication are disfavored; FLSA’s plain text and remedial purpose cover workers like him. | Helix: Congressional purpose of the CSA conflicts with FLSA; courts should harmonize by denying FLSA to illegal marijuana commerce. | Rejected: Implied repeal disfavored; courts enforce FLSA’s plain terms and statutory purposes are not incompatible. |
| Should courts read a "lawful commerce" requirement into the FLSA (analogous to trademark's "lawful use in commerce")? | Kenney: No; adding "lawful" would undermine FLSA’s remedial goals and encourage illegal employers. | Helix: FLSA should require lawful interstate commerce to avoid rewarding illegal activity. | Rejected/waived: Court declines to read "lawful" into commerce requirement; trademark analogy inapposite and Helix waived some arguments. |
Key Cases Cited
- Arbaugh v. Y & H Corp., 546 U.S. 500 (clarifies distinction between jurisdictional requirements and elements of a claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausibility)
- Artis v. D.C., 138 S. Ct. 594 (statutory interpretation begins with plain text)
- Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (presumption disfavoring implied repeals)
- Lederman v. Frontier Fire Protection Inc., 685 F.3d 1151 (10th Cir.) (employer bears burden to prove FLSA exemption)
- Schoenhals v. Cockrum, 647 F.2d 1080 (10th Cir.) (exemptions must plainly and unmistakably apply)
- Lucas v. Jerusalem Café, LLC, 721 F.3d 927 (8th Cir.) (applied FLSA despite CSA-based arguments)
- Gonzales v. Raich, 545 U.S. 1 (context on CSA’s purposes regarding marijuana)
- United States v. Sullivan, 274 U.S. 259 (illegality does not excuse compliance with other federal obligations)
- Powell v. United States Cartridge Co., 339 U.S. 497 (specific statutory exemptions imply coverage for those not exempt)
- Citicorp Indus. Credit, Inc. v. Brock, 483 U.S. 27 (FLSA exemptions construed narrowly)