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finding standing where plaintiffs had “added specific allegations that the inaccurate wage notices and wage statements resulted in them or the putative [c]lass [m]embers being underpaid for nearly nine months,” and commenting that “the allegations are more robust than those in the Eastern District of New York cases which asserted technical violations and did not specifically tie harm to the WTPA notices”
Summary of this case from Kyong Ho Ahn v. MB Rye Metro Nail, Inc.Opinion
19-CV-10104 (ER) (KHP)
11-15-2022
MICHELE METCALF and HANNAH LAWSON, individually and on behalf of all others similarly situated, Plaintiffs, v. TRANSPERFECT TRANSLATIONS INTERNATIONAL, INC., Defendants.
HONORABLE EDGARDO RAMOS, UNITED STATES DISTRICT JUDGE
OPINION AND REPORT AND RECOMMENDATION ON MOTION TO AMEND
KATHARINE H. PARKER United States Magistrate Judge
This action arises out of Plaintiffs' claims that Defendantsfailed to properly pay them in compliance with New York wage law. The Court previously denied Defendants' motion to dismiss for lack of subject matter jurisdiction over Plaintiffs' wage claims, but dismissed Plaintiffs' claims for violation of New York's Wage Theft Protection Act (“WTPA”), NYLL § 195(3), for lack of standing because Plaintiff failed to plead an injury in fact from Defendants' failure to provide proper wage notices. (ECF Nos. 171, 196.) The Court's decision permitted Plaintiffs the opportunity to replead.
Defendants TransPerfect Global, Inc., TransPerfect Document Management, Inc., TransPerfect, Inc., and TransPerfect Remote Interpreting, Inc. were previously dismissed from this action. (ECF No. 83.) Plaintiffs submitted a corrected TAC with their reply brief to clarify that they are not re-asserting claims against the dismissed Defendants.
Plaintiffs now move to amend to replead their claim against Defendant TransPerfect Translations International, Inc. (“Defendant”) for violation of NYLL § 195(3), which they contend is now supported by sufficient facts to demonstrate they were in fact injured by the violation. (ECF No. 176.) The TAC also continues to assert claims pursuant to NYLL § 195(1). For the reasons set forth below, the motion to amend is GRANTED as to the NYLL § 195(3) claims. As to the NYLL § 195(1) claims, I recommend that the motion be DENIED.
FACTS ALLEGED IN PROPOSED THIRD AMENDED COMPLAINT
The Court assumes familiarity with the background of this case and includes only those facts relevant to this motion, which concerns whether the proposed Third Amended Complaint (“TAC”) sufficiently pleads an injury in fact from Defendant's alleged failure to comply with New York's wage notice law.
Citations herein are from the second version of the TAC at ECF No. 190-2.
NYLL § 195(1)(a) requires employers to provide employees with wage notices at the time of hiring. The notices must contain:
“the rate or rates of pay and the basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or other; allowances, if any, claimed as part of the minimum wage, including tip, meal, or lodging allowances; the regular pay day designated by the employer in accordance with section one hundred ninety-one of this article; the name of the employer; any “doing business as” names used by the employer; the physical address of the employer's main office or principal place of business, and a mailing address if different; the telephone number of the employer; plus such other information as the commissioner deems material and necessary. . . . For all employees who are not exempt from overtime compensation as established in the commissioner's minimum wage orders or otherwise provided by New York state law or regulation, the notice must state the regular hourly rate and overtime rate of pay.”NYLL § 195(1)(a). The law also requires employers to notify employees in writing of any changes to the information provided at the time of hiring at least seven calendar days prior to the time of such changes, unless the changes are reflected in the employees' wage statement. NYLL § 195(2). The law imposes civil penalties for failing to provide the required notice at time of hire. NYLL § 198(1-b).
In addition to the above, New York law requires employers to furnish accurate wage statements to employees with each paycheck. For overtime-eligible employees, the statements must include, among other things, regular and overtime pay rates and regular and overtime hours worked in the pay period. NYLL § 195(3). The law also imposes civil penalties for violation of this law. NYLL § 198(1-b).
Plaintiffs and the putative Class Members were treated as exempt, salaried employees when hired. Their wage notices therefore provided them with their base salary amount. Due to a change in New York law that increased the base salary amount needed to categorize an employee as exempt from overtime, Plaintiffs assert they became non-exempt because their salaries were not increased to meet the minimum threshold for the exemption. (TAC ¶ 18.) Defendant failed to provide Plaintiffs and the putative Class Members with a notice of their change in status (or an accurate new hire notice for those hired during the relevant period) setting out their hourly and overtime rates of pay as required by New York law. (TAC ¶¶ 2324.) Defendant also failed to include information on Plaintiffs' and the putative Class Members' regular wage statements reflecting their straight time and overtime rates, number of regular hours worked and overtime hours worked-information that also would have informed them of their entitlement to overtime and change in pay status. (TAC ¶¶ 27-28.) Defendant also failed to pay Plaintiffs and the putative Class Members overtime after they became non-exempt. (TAC ¶ 19.) Defendant eventually realized-after nine months-that they had not paid Plaintiffs the appropriate salary rate to maintain their exempt status and made retroactive payments in an attempt to remedy the mistake. (TAC ¶ 20, n.4.) Plaintiffs contend the retroactive payments were insufficient to cover their overtime worked during the period they were entitled to overtime. (Id.)
Plaintiffs allege that New York's wage notice requirements provide employees with vital information about their pay and without accurate notices, employees (including the Plaintiffs and putative Class Members) could not confirm that they were being paid accurately under federal and state law and in accordance with the terms of their employment. (TAC ¶¶ 22, 24-25, 27, 29-30.) According to Plaintiffs, by providing inaccurate wage notices and statements that failed to disclose their straight time and overtime rates during the period when they were eligible for overtime pay, Plaintiffs and the putative Class Members were denied relevant information needed to determine whether they were being underpaid. (TAC ¶¶ 24, 29.) They also contend that by withholding information that Plaintiffs and the putative Class Members were entitled to overtime pay, Defendant denied them the means to determine whether any subsequent retroactive payments were sufficient to cover previously withheld overtime pay. (TAC ¶¶ 25, 30.) They state had they been provided the notices and statements as required, they would have been able to determine that they were being underpaid and by what amount, including the extent to which the retroactive payments were insufficient to cover their overtime. (TAC ¶¶ 24-25, 29-30.)
Plaintiffs further allege that Defendant's failure to provide accurate notices and wage statements facilitated Defendant's ongoing wage theft because Defendant withheld the means through which Plaintiffs and putative Class Members could identify the withheld overtime wages they were owed. As a result, Plaintiffs and putative Class Members were deprived of legally required pay for almost nine months. (TAC ¶¶ 52, 53, 59, 60.)
DISCUSSION
A. LEGAL STANDARD FOR AMENDING A PLEADING
Under Rule 15(a) of the Federal Rules of Civil Procedure, a party may amend its pleading once as a matter of course within specified time periods not applicable here. Fed.R.Civ.P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). The Second Circuit has stated that “[t]his permissive standard is consistent with our strong preference for resolving disputes on the merits.” Williams v. Citigroup Inc., 659 F.3d 208, 212-13 (2d Cir. 2011) (citation omitted). Under Rule 15, leave to amend should be given “absent evidence of undue delay, bad faith or dilatory motive on the part of the movant, undue prejudice to the opposing party, or futility.” Monahan v. N.Y.C. Dep't of Corrs., 214 F.3d 275, 283 (2d Cir. 2000).
A court may deny a motion to amend a complaint when the proposed amendments are futile. Proposed amendments are futile when they would fail to state a claim under Rule 12(b)(6). IBEW Local Union No. 58 Pension Tr. Fund & Annuity Fund v. Royal Bank of Scotland Grp., PLC, 783 F.3d 383, 389 (2d Cir. 2015) (quoting Panther Partners Inc. v. Ikanos Commc'ns, Inc., 681 F.3d 114, 119 (2d Cir. 2012)). “The party opposing the amendment has the burden of demonstrating that leave to amend would be futile.” Margel v. E.G.L. Gem Lab Ltd., 2010 WL 445192, at *3 (S.D.N.Y. Feb. 8, 2010) (citation omitted). Because determination of futility is subject to the same standards as a motion to dismiss under Rule 12(b)(6), “[f]utility is generally adjudicated without resort to any outside evidence,” and the court must accept all facts pleaded as true. Wingate v. Gives, 2009 WL 424359, at *5 (S.D.N.Y. Feb. 13, 2009) (citing Nettis v. Levitt, 241 F.3d 186, 194, n.4 (2d Cir. 2001)).
Where, as here, there is a scheduling order in place that establishes a deadline for seeking leave to amend, “the lenient standard under Rule 15(a), which provides leave to amend ‘shall be freely given,' must be balanced against the requirement under Rule 16(b) that the Court's scheduling order ‘shall not be modified except upon a showing of good cause.'” Holmes v. Grubman, 568 F.3d 329, 334 (2d Cir. 2009); see also Fed.R.Civ.P. 16(b)(4) (a scheduling order “may be modified only for good cause and with the judge's consent.”). The determination of whether “good cause” exists under Rule 16(b) largely turns on the diligence of the moving party. Holmes, 568 F.3d at 335; see also Perfect Pearl Co., Inc. v. Majestic Pearl & Stone, Inc., 889 F.Supp.2d 453, 457 (S.D.N.Y. 2012) (to show good cause, moving party must demonstrate that “despite its having exercised diligence, the applicable deadline could not have been reasonably met”) (citation omitted).
In January 2020, Defendants moved to dismiss the Second Amended Complaint but did not raise the issue of lack of standing with respect to the WTPA claims. Defendants succeeded in securing dismissal of certain Defendants. Two years later, in February 2022, the remaining Defendant moved to dismiss on the ground that Plaintiffs failed to meet the jurisdictional threshold under the Class Action Fairness Act. In their reply in support of the motion, filed in May 2022, Defendant raised for the first time its view that Plaintiffs lacked standing to assert claims under the WTPA based on the Supreme Court's decision in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021), issued in June 2021. This Court issued a Report and Recommendation that the WTPA claims be dismissed as pleaded for lack of standing but that Plaintiffs be permitted to replead. Plaintiffs promptly moved to amend. Thus, Plaintiffs were diligent in seeking to replead and did so at this Court's invitation. Therefore, there is good cause within the meaning of Rule 16. Defendant argues that the amendment should nevertheless be denied because the TAC fails to sufficiently plead standing. The Court addresses this argument below.
B. FUTILITY
1. Standing
At the motion to dismiss stage, the plaintiff “bears the burden of alleging facts that affirmatively and plausibly suggest” they have standing. Calcano v. Swarovski N. Am. Ltd., 36 F.4th 68, 75 (2d Cir. 2022) (citation omitted). Article III of the United States Constitution confines the judicial power of the federal courts to cases where the plaintiff shows, inter alia, that she suffered a concrete injury in fact. TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2203 (2021) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). A plaintiff cannot rely on the fact that the defendant committed a statutory violation: an “injury in law” does not amount to an “injury in fact” for purposes of Article III standing. Id. at 2205. Rather, a “concrete” harm is something with at least a “‘close relationship' to a harm ‘traditionally' recognized as providing a basis for a lawsuit in American courts-such as physical harm, monetary harm, or various intangible harms.” Id. at 2200 (citing Spokeo, Inc. v. Robins, 578 U.S. 330, 340-41, (2016)).
There have been several decisions post-dating the TransUnion decision issued in the Eastern District of New York where the court found that the Plaintiffs did not adequately plead a concrete injury from a WTPA violation. See, e.g., Sevilla v. House of Salads One LLC, 2022 WL 954740, at *7 (E.D.N.Y. Mar. 30, 2022); Wang v. XBB, Inc., 2022 WL 912592, at *13 (E.D.N.Y. Mar. 29, 2022); Francisco v. NY Tex Care, Inc., 2022 WL 900603, at *7 (E.D.N.Y. Mar. 28, 2022).
This Court is aware of only one decision within this District post-dating the TransUnion decision where the Court addressed whether a Plaintiff had sufficiently pleaded an injury in fact from a violation of the WTPA. In that case, the Honorable Lorna G. Schofield denied a motion to dismiss, finding the plaintiff had sufficiently pleaded an injury in fact from the defendant employer's failure to provide accurate wage statements. Mateer v. Peloton Interactive, Inc., 2022 WL 2751871 (S.D.N.Y. July 14, 2022). There, the plaintiffs alleged that the defendant failed to provide accurate wage notices at their time of hire and on wage statements that deprived them of the ability to know exactly how much compensation they were entitled to and led to the underpayment of wages. As in this case, the plaintiffs alleged that they were non-exempt for periods of their employment due to changes in pay practices and duties but that the defendant failed to provide accurate wage statements or notices reflecting changes in status. As a consequence, the plaintiffs asserted there was no way for them to know how much was earned or to accurately check that they were being paid properly, resulting in them being underpaid. Judge Schofield characterized the allegations made in the Eastern District of New York cases as bare bones assertions of a violation. Id. at *2. In contrast, she found the allegations in the Mateer complaint to be sufficient to plausibly suggest standing because the plaintiffs had alleged that the WTPA violation resulted in the underpayment of wages and monetary injury is a concrete injury sufficient for standing. Id.
Like the plaintiffs in Mateer, Plaintiffs in this case have now added specific allegations that the inaccurate wage notices and wage statements resulted in them or the putative Class Members being underpaid for nearly nine months. The Supreme Court in TransUnion recognized that monetary harm is a concrete injury sufficient to show standing. 141 S.Ct. 2190; see also Imbarrato v. Banta Mgmt. Servs., Inc., 2020 WL 1330744, at *9 (S.D.N.Y. Mar. 20, 2020) (holding that plaintiffs asserted a concrete injury in the form of underpayment of wages arising from defendant's failure to provide them with wage notices and statements). Contrary to what Defendant asserts, the allegations are more robust than those in the Eastern District of New York cases which asserted technical violations and did not specifically tie harm to the WTPA notices. Defendant's argument that Plaintiffs' pleading is deficient because they did not also plead that they looked at their wage statements and relied on them is unpersuasive. At the pleading stage, Plaintiffs need only allege facts that affirmatively and plausibly suggest standing. The allegations here plausibly suggest that had Defendant provided accurate notices and statements, Plaintiffs or the putative Class Members would not have gone underpaid for nearly nine months. No more is required.
2. Failure to State a Claim
Defendant also argues that the amendment would be futile as to the claim for violation of the WTPA's new hire notice requirements. In particular, they argue Plaintiffs do not personally have a claim for failure to provide notice at time of hire because they were hired before the relevant class period and Plaintiff Metcalf was hired to work in Washington, D.C. and therefore Plaintiffs fail to state a claim. Plaintiffs do not dispute this in their reply brief.
Defendants did not raise this argument in their three previous motions to dismiss and this claim has existed in all versions of the complaint.Nevertheless, futility may be raised in opposition to a motion to amend, and the law is somewhat unclear whether this argument in opposition to a motion to amend, while evaluated under Rule 12(b)(6), is prohibited under Rule 12(g). At least one court in this Circuit has held that Rule 12(g) prohibits a party from raising a 12(b)(6) argument for the first time in opposition to a motion to amend when that argument could have been raised in an earlier motion to dismiss. See Falcon v. City Univ. of New York, 2016 WL 3920223, at *14 (E.D.N.Y. July 15, 2016). However, the Court is not aware of any cases in this district reaching the same conclusion, and regardless, Plaintiffs did not contest that they do not have individual claims under NYLL § 195(1) in their reply.
Defendants' first motion to dismiss, filed on November 15, 2019, argued that Plaintiffs failed to satisfy the $75,000 threshold for diversity jurisdiction. Plaintiffs amended the complaint in response. Defendants' second motion to dismiss, filed on January 27, 2020, alleged that Plaintiffs failed to satisfy the monetary threshold for subject matter jurisdiction under CAFA based on the local controversy and home state exceptions to CAFA and on the ground that the various defendants initially named were not joint employers of Plaintiffs jointly and severally liable for the alleged wage violations. Defendants' third motion to dismiss filed on February 25, 2022, again challenged subject matter jurisdiction under CAFA, but based on the amount in controversy. They then raised standing under the WTPA in their reply brief.
Rule 12(g) prohibits parties from bringing new 12(b)(6) arguments not raised in an earlier Rule 12 motion. The reason for this rule is to prevent piecemeal consideration of a case. Advisory Committee Notes to Rule 12(g), 1966 Amendment. Defendant offers no explanation for not raising this issue in its prior Rule 12 motions and has indeed litigated issues on a piecemeal basis, which is inconsistent with its obligation under Rule 1 to employ the Rules to secure the just and inexpensive determination of every action or proceeding. Defendant's method of litigation has resulted in delay to this case and wasted judicial resources.
New York Labor Law provides a private cause of action for violations of NYLL Sections 195(1) (new hire notices) and 195(3)(wage statements). NYLL §§ 198(1-b) & 198(1-d). It does not provide a private cause of action or damages for violations of NYLL Section 195(2), which requires employers to notify employees in writing of changes to the information provided in the new hire notice. It is clear from the face of the TAC that neither Named Plaintiff has an individual claim under NYLL § 195(1) because each was hired before December 31, 2018, the date when they claim they became non-exempt due to a change in New York law, and they do not contend that their individual new hire notices were incorrect. Guan Ming Li v. Benihana N.Y. Corp., 2012 WL 7620734, at *8 (S.D.N.Y. Oct. 23, 2012), report and recommendation adopted, 2013 WL 829098 (S.D.N.Y. Feb. 27, 2013) (in context of Rule 23 motion, recognizing that “only employees who did not receive a proper wage and hour notice at the time of hiring can sue for a penalty” for violation of NYLL § 195(1) and recommending against certification of class claim under that section of NYLL). Additionally, NYLL § 195(1) did not apply to Metcalf's hire because she was hired in Washington, D.C. and transferred to New York in January 2018-again prior to the critical date when both Plaintiffs contend they became non-exempt and should have received notice of change in their status by changes to their wage statements (and per NYLL § 195(2)). See In re Stage Presence, Inc., 2019 WL 2004030, at *10 (S.D.N.Y. May 7, 2019) (recognizing that NYLL does not apply extraterritorially).
Thus, the individual Named Plaintiffs do not have viable claims under NYLL § 195(1).
CONCLUSION
For the reasons set forth above, Plaintiffs' motion for leave to amend their complaint is GRANTED as to the NYLL § 195(3) claims but I recommend that it be denied as to the Plaintiffs' individual NYLL 195(1) claims.
NOTICE
The parties shall have fourteen days, from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days only when service is made under Fed.R.Civ.P. 5(b)(2)(C) (mail), (D) (leaving with the clerk), or (F) (other means consented to by the parties)). A party may respond to another party's objections after being served with a copy. Fed.R.Civ.P. 72(b)(2).
The parties shall have fourteen days from receipt of any objections to serve and file any response. Any objections and any responses to such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Edgardo Ramos at the Thurgood Marshall United States Courthouse, 40 Foley Square, New York, New York 10007, and served on the other parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Ramos. The failure to file timely objections shall result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).