Opinion
07 Civ. 335 (NRB).
November 30, 2007
MEMORANDUM AND ORDER
Plaintiff Owusu Akwesi and fourteen other named plaintiffs ("plaintiffs") bring this purported class action against their former employer, Uptown Lube C/W, Inc. ("Uptown Lube" or "defendant") seeking unpaid wages, attorneys fees, and costs under the Fair Labor Standards Act, ("FLSA") 29 U.S.C. § 201 et seq., as well as under various New York state employment statutes and regulations. Specifically, plaintiffs allege that Uptown Lube: (1) failed to pay overtime at one and one half times the hourly rate, as required by 29 U.S.C. § 207; (2) failed to pay overtime at one and one half the hourly rate, as required by 12 N.Y.C.R.R. § 142-2.2; (3) failed to pay "spread of hours" pay as required by 12 N.Y.C.R.R. § 142-2.4; (4) made certain illegal deductions from wages in violation of New York Labor Law §§ 190, 193, and 198; and (5) failed to make overtime payments in a timely manner, as required by New York Labor Law § 191.
Presently before the Court is defendant Uptown Lube's motion to dismiss and/or remand to state court. For the reasons that follow, the defendant's motion is denied in its entirety.
Background
Defendant Uptown Lube operated a car wash and oil change/oil lube business in Upper Manhattan from 1997 until sometime in October or November, 2006.
Plaintiffs are former employees of Uptown Lube, who either washed cars or changed oil at Uptown Lube. Some of the named plaintiffs allege that they worked for Uptown Lube for the entirety of its nine year existence, others worked for Uptown Lube for only a matter of months.
On June 14, 2005, Mahady Drame, one of the named plaintiffs in this case and a car wash employee at Uptown Lube, filed a complaint with the New York State Department of Labor ("NYS DOL") claiming that Uptown Lube failed to pay its employees proper overtime wages. NYS DOL subsequently began an investigation into Uptown Lube's payroll practices, and sent a team of investigators to Uptown Lube's premises on July 18, 2005, and again for a follow up exam on August 25, 2005. NYS DOL reviewed time records, payroll sheets, and bank statements for Uptown Lube. The exact time period covered by the NYS DOL investigation is disputed.
See NYS DOL "Final Report," March 10, 2006, Defendant's Exhibit 3.
Id.
NYS DOL issued a "Final Report" on its Uptown Lube investigation on March 10, 2006. NYS DOL determined that Uptown Lube had "paid overtime", but had "failed to pay spread of hours for the period 10/03 — 11/05." "Spread of hours" is a species of overtime payment required by New York state labor regulations, but not by federal law. See 12 N.Y.C.R.R. § 142-2.4. The New York "spread of hours" regulation provides that "an employee shall receive one hour's pay at the basic minimum hourly wage rate, in addition to the minimum wage required in this Part for any day in which: (a) the spread of hours exceeds 10 hours; or (b) there is a split shift; or (c) both situations occur." In other words, in addition to overtime at one and one half times the regular rate, an employer must pay an employee one extra hour's worth of wages for every day the employee's workday extends beyond ten hours.
NYS DOL "Narrative Report," August 8, 2006, Defendant's Exhibit 3.
NYS DOL "Final Report," March 10, 2006, Defendant's Exhibit 3.
The term "spread of hours" is defined as the interval between the beginning and end of an employee's workday, including working time plus time off for meals plus intervals off duty. ( 12 N.Y.C.R.R § 142-2.18)
Based on Uptown Lube's failure to pay these "spread of hour" wages, NYS DOL determined that Uptown Lube owed a total of $14,192.99 to its present and former employees. Uptown Lube did not contest the finding, and thereafter made these payments, in monthly installments in March, April, May, and June of 2006. Plaintiffs do not contest that these payments were made, and even acknowledge that each named plaintiff in this case received a check from NYS DOL for the "spread of hours" violations.
NYS DOL "Narrative Report," August B, 2006. Defendant's Exhibit 3.
See Plaintiff's Amended Complaint ¶ 61.
After the completion of the NYS DOL investigation, and due to circumstances not relevant here, Uptown Lube closed its business either in October or November, 2006.
According to defendants, Uptown Lube closed down on or about November 11, 2006. (Defendant's motion to dismiss and/or remand, at p. 5). According to plaintiffs, all employees were terminated on or about October 11, 2006. (Amended Complaint ¶ 60).
On January 16, 2007 plaintiffs filed the instant complaint against Uptown Lube in this Court, alleging one federal and four state law causes of action. On February 7, 2007, defendants made a motion for a more definite statement pursuant to Fed.R.Civ.P. 12(e). After a conference with the parties, this Court granted the defendant's motion on April 17, 2007. Plaintiffs then filed an Amended Complaint on May 8, 2007.
This motion to dismiss and/or remand to state court followed.
Discussion
Defendant's motion to dismiss and/or remand to state court takes a blunderbuss approach in seeking dismissal of this action. The motion appears to argue for dismissal of the complaint on four separate grounds.
First, defendant argues that this Court lacks subject matter jurisdiction, see Fed.R.Civ.P. 12(b)(1), because no case or controversy exists within the meaning of Article III of the Constitution. (Defendant's Memorandum of Law, at 9). Defendant argues that the finding of the NYS DOL investigation that Uptown Lube had paid overtime, combined with the subsequent payment of $14,192.99 made by Uptown Lube for the "spread of hours" violation, has rendered plaintiffs' causes of action moot.
Second, Uptown Lube argues that plaintiffs have failed to state a claim on which relief may be granted. See Fed.R.Civ.P. 12(b)(6). According to defendant's reading of the complaint, plaintiffs have admitted that they were paid overtime at one and one half times their regular rate, as required by federal and state law, but are now seeking overtime pay at one and one half times a "premium rate," inclusive of commissions on sales and/or tips. Since federal law does not require overtime pay to be one and one half times any "premium rate," see 29 U.S.C § 207(e), defendant argues that plaintiffs have failed to state a cognizable claim under federal law.
The complaint does not define "premium rate."
Third, defendant claims that plaintiffs have convinced NYS DOL to re-open its investigation of Uptown Lube. Therefore, with a state administrative action currently pending, any federal court action would be inappropriate under the abstention principles set forth in Buford v. Sun Oil Co., 319 U.S. 315 (1943).
Fourth, and finally, Uptown Lube argues that this Court should decline to exercise supplemental jurisdiction over plaintiffs' state law claims.
We address each of these arguments in turn below. First, however, we note that this Court may not remand this case to state court. This action was originally filed in federal court, and "[a] case originally filed in federal court cannot be remanded to state court." Payne v. Merrill Lynch, Pierce. Fenner Smith, Inc., 75 Fed. Appx. 903 (4th Cir. 2003) (citing First Nat'l Bank of Pulaski v. Curry, 301 F.3d 456, 461 (6th Cir. 2002). Remand is only proper if a case has been removed from state court. See. e.g., 28 U.S.C. § 1441(c). Our only options at this stage of the litigation would be to dismiss or not. Accordingly, we treat defendant's motion as a motion to dismiss.
A. The Preclusive Effect of the NYS DOL Investigation
Defendant's first argument is that the complaint should be dismissed for lack of subject matter jurisdiction, under Fed.R.Civ.P. 12(b)(1), because any case or controversy has been rendered moot by the NYS DOL findings and subsequent payments.
At this stage of the proceedings, however, plaintiffs' claims are not moot. We need not even address the question of whether the NYS DOL findings — the judicially unreviewed findings of a state administrative agency — are entitled to preclusive effect in this Court, for it is clear that Uptown Lube remained in business for a period of time after the conclusion of the NYS DOL investigation, and therefore this Court would retain jurisdiction over at least portion of plaintiffs' claims even if we were to give preclusive effect to the NYS DOL findings.
The parties vehemently dispute what time periods were in fact covered by the NYS DOL investigation, (see, e.g., Defendant's Reply Memorandum of Law, at 4). NYS DOL also appears to be confused: one letter from NYS DOL states that their investigation concluded in June, 2005, whereas the NYS DOL "Final Report" mentions findings up through November 27, 2005. But even assuming the very last possible date for completion of the investigation, (March 10, 2006, which was the date of NYS DOL's "Final Report"), the NYS DOT, investigation ended at least a number of months prior to when Uptown Lube closed its doors in October or November of 2006. On the basis of this gap in time period between the NYS DOL report and Uptown Lube's closing, plaintiffs' claims are not entirely moot.
Compare plaintiff's Exhibit 2, Letter from John R. Hopkins, Supervisor of Labor Standards, NYS DOL, to Abdool Hassad, Esq., dated May 21, 2007 ("The period of investigation was from June 2002 through June 2005."); with NYS DOL Final Report, defendant's Exhibit 3, (suggesting November 27, 2005 as last date covered by investigation).
We also note that it will be unlikely that defendant can assert preclusion on the basis of the NYS DOL investigation. While unreviewed factual determinations of state agencies may be given preclusive effect in federal court, University of Tennessee v. Elliott, 478 U.S. 788, 799 (1986), this is not so in all circumstances, and appears not be so in suits brought under the FLSA.
Federal courts apply preclusion doctrines, such as collateral estoppel, to the unreviewed findings of state administrative agencies in accord with the analysis set forth in the Supreme Court's decision in Elliott. Elliott hold that common law principles of preclusion should be measured against congressional intent in enacting the particular statute that gives rise to plaintiff's cause of action. 478 U.S. at 796. In a suit brought under both 42 U.S.C. § 1983 and under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Court held that collateral estoppel applied to the § 1983 claim, but not to the Title VII claim. The Court reasoned from the legislative nistory of both statutes, and determined that Congress specifically intended Title Vll to give employees the right to a trial de novo despite the findings of a state administrative agency. Elliott, 478 U.S. at 795-96. Since decisions by the federal Equal Employment Opportunity Commission ("EEOC") do not bind federal courts, the Court found it not "plausible to suggest that Congress intended federal courts to be bound further by state administrative agencies than by decisions of the EEOC." id. at 793.
Since Elliott, neither the Supreme Court nor the Second Circuit has ruled on the preclusive effect of unreviewed state administrative findings in suits brought under the FLSA. However, the Second Circuit has suggested that the FLSA shares the distinguishing features of Title VII that the Supreme Court found persuasive in not applying preclusion in Elliott. Solomino v. Astoria Federal Sav. and Loan Ass'n, 901 F.2d 1148 (2d Cir. 1990), aff'd 501 U.S. 104 (1991). In Solomino, the Second Circuit held that unreviewed state agency findings have no preclusive effect in suits brought under the Age Discrimination in Employment Act ("ADEA"), and in dicta suggested that no preclusive effect would be given to suits under the FLSA either. Responding to the appellant's argument that provisions of the ADEA derived from the FLSA, and not from Title VII (and therefore the case was distinguishable from Elliott), the Second Circuit noted:
In any event, assuming drguendo that we should look to the FLSA instead of jnstead of Title VII for guidance as to the preclusion issue in this ADEA suit, [appellant] fails to cite any part of the FLSA or its interpretive caselaw that indicates Congress intended in the FLSA to give preciusive effect to the judicially inreviewed fact-finding of a state administrative agency.Solomino, 901 F.2d at 1152 (internal citations omitted). The Court elaborated in a footnote, "Such caselaw may not exist because the FLSA does not mandate recourse to state agencies."Id. at 1152 n. 4.
Indeed, the broad remedial purpose underlying the FLSA seems antithetical to common law doctrines of preclusion. See Barrentme v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 740 (1981) ("The statutory scheme [of the FSLA] grants individual employees broad access to the courts. . . . No exhaustion requtirecent or other procedural barriers are set up, and no other forum for enforcement of statutory rights is referred to or created by the statute.") The legislative history of the FLSA reveals that Congress' intent was to ensure broad access to the federal courts: "[the FLSA] was designed to give specific minimum protections to individual workers and to ensure that each employee covered by the act would receive `a fair day's pay for a fair day's work,' and would be protected from `the evil of overwork as well as underpay.' Id., at 739 (citing 81 Cong.Red. 4983 (1937) (message of President Roosevelt)). To encourage such access, the FLSA permits employees to sue for back wages and liquidated damages, as well as to receive attorney's fees and costs. 29 U.S.C. § 216(b). Perhaps most revealirgly, courts have construed employees' rights under the FLSA as non-waivable, subject to two very limited exceptions. See, e.g., Simel v. JF Morgan Chase, No. 05 CV 9750, 2007 WL 809689 (S.D.N.Y. Mar. 19, 2007).
However, this is not to say that the defendant does not have affirmative defenses such as payment. Furthermore, should the facts found sustain the defendant's position that no additional payments are owed plaintiffs, such a finding would be relevant to any award of attorney's fees.
B. Failure to State a Claim
Uptown Lube's next basis for dismissal is that plaintiffs' FLSA cause of action fails to state a claim upon which relief may be granted. See Fed.R.Civ.P. 12(b)(6). According to Uptown Lube, plaintiffs are seeking overtime pay at one and one half times a "premium rate," inclusive of commissions, whereas the FLSA only mandates that employers pay overtime at one and one half times a "regular rate." See 29 U.S.C. § 207(e). According to the Uptown Lube, plaintiffs thereby fail to state a cognizable claim underthe FLSA.
Plaintiffs undoubtedly allege that they were denied overtime at one and one half times a "premium rate." See Amended Complaint at ¶ 71 ("Defendant continued to exclude commission payments from the calculation of the required overtime premium rate even after the NYS DOL investigation.") It is unclear what plaintiffs are referring to, or whether this claim is ultimately actionable. However, we need not decide this now because plaintiffs undoubtedly also allege, elsewhere on the face of their Amended Complaint, that they were denied overtime at one and one half times their "regular rate." See, e.g., Amended Complaint at ¶¶ 1, 2, 56, 96. ("At all times relevant herein and for the time Plaintiffs were employed by Defendant, Defendant failed and wilfully failed to pay Plaintiffs an overtime rate of one and one half times their regular rate of pay for all hours worked in excess of forty hours in a week." ¶ 56) This claim may be brought under 29 U.S.C. § 207(a)(1), and we need not look further on a motion under Rule 12(b)(6). Roth v. Jennings, 489 F.3d 499 (2d Cir. 2007) ("In considering a motion under Fed.R.Civ.P. 12(b)(6) to dismiss a complaint for failure to state a claim on which relief can be granted, the district court is normally required to look only to the allegations on the face of the complaint.")
As an initial matter, however, it is unclear from the record before us exactly what kinds of "commissions" these were, how they were calculated, and thus whether or not they fit within the kinds of "premiums" that are not considered part of the "regular rats" for the purposes of overtime calculations under 29 U.S.C. § 207(e). The Court passes no judgment on this question.
Accordingly, defandant's motion under Fed.R.Civ.P. 12(b)(6) is denied.
C. Pendency Before NYS DOL
Defendant next argues that because plaintiffs have convinced NYS DOL to reopen its investigation into Uptown Lube, this Court should stay its hand pursuant to various federal abstention doctrines. Defendant cites, inter alia, to Younger v. Harris, 401 U.S. 37 (1971) and Buford v. Sun Oil Co., 319 U.S. 315 (1943).
It is clear that since this case has been pending in federal court, plaintiffs' attorney, Abdool Hassad, Esq., has been in contact with investigators from NYS DOL. Uptown Lube asserts that Mr. Hassad has been trying to get NYS DOL to reopen its investigation, whereas Mr. Hassad asserts that he has merely been seeking clarification about NYS DOL's original investigation, and assisting NYS DOL by adding further information to its file. While these communications may result in NYS DOL re-opening its investigation, Mr. Hassad maintains that NYS DOL has not in fact done so, and that plaintiffs' claims are only being litigated in this Court.
See Plaintiff's Opposing Memorandum, at 2-3; Defendant's Reply Memorandum of Law, at 4-5.
In May, 2007, Mr. Hassad asked this Court to set an expedited discovery schedule so that he could present more information to NYS DOL when he met with them. This request was denied by Letter, dated May 24, 2007.
Thus, under these circumstances, it would be inappropriate to abstain. Plaintiffs are not seeking to enjoin a state proceeding, as was the plaintiff in Younger, and they bring a valid claim that arises under federal law, rendering Buford inapposite.
D. Supplemental Jurisdiction
Finally, Uptown Lube urges this Court to decline supplemental jurisdiction over plaintiffs' state law causes of action. Uptown Lube musters a number of reasons why we should decline supplemental jurisdiction, but relies most heavily on the proposition that plaintiffs' state law claims "predominate over" their federal claims. See 28 U.S.C. § 1367(c)(2); Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988).
Uptown Lube primarily makes this argument in the context of its contention that plaintiffs' FLSA claim — its lone federal cause of action — is moot. Had we dismissed the FLSA claim, we would have an option to dismiss the state claims. See 28 U.S.C. § 1367(c)(3) ("The district courts may decline to exercise supplemental jurisidction over a claim . . . if the district court has dismissed all claims over which it has original jurisdiction"). While we need not consider that contention, because we have not dismissed plaintiffs' FLSA claim, we nevertheless address the supp-emcntal jurisdiction argument.
Such an argument, at best, only gives this Court discretion to decline supplemental jurisdiction. See 28 U.S.C. § 1367(c)(2). The burden remains on defendant to persuade us that plaintiffs' claims are better litigated elsewhere. Defendant has failed to do so at least at this stage. It is not enough to point out that plaintiffs bring numerically more state law claims that federal claims. Since defendant has been unsuccessful in dismissing the plaintiff's federal claim at this time, and since all the claims arise from the same nucleus of events, the exercise of supplemental jurisdiction at this stage is entirely appropriate.See 28 U.S.C. § 1367(a); United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966).
Section 1367(a) states: "Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties."
We note further that none of the other three discretionary factors listed in 28 U.S.C. § 1367(c) for declining supplemental jurisdiction are applicable here either. There appear to be no novel issues of state law, 28 U.S.C. § 1367(c)(1); we have not dismissed plaintiffs federal cause of action, 28 U.S.C. § 1367(c)(3); and no other "exceptional circumstances" or "compelling reasons" exist. 28 U.S.C. § 1367(c)(4).
However, we note that a change in the litigative posture of this case could result in a different ruling on this issue.
Conclusion
For the foregoing reasons, defendant's motion to dismiss and/or remand to state court is denied in its entirety. The parties are hereby instructed to submit a proposed joint scheduling order to this Court by December 18, 2007 providing for the completing of all fact discovery by June 30, 2008.