Opinion
Civ. No. 15-CV-0298
05-11-2016
TISHA REED, NATASHA WALKER, and KAYLEE METZ, on behalf of themselves and all others similarly situated, Plaintiffs v. FRIENDLY'S ICE CREAM, LLC and TICC, INC., Defendants
MEMORANDUM
In this putative class and collective acti on, Plaintiffs assert clai ms against Defendants for vi olations of the Fair Labor Standards Act of 1938 ("FLSA") as well as state labor and wage laws relating to, inter alia, unpaid overtime and tipped versus non-tipped work duti es and pay ra tes for servers em ployed at Friendly's restaurants owned by Defendant s. Presently before the court are two m otions for partial dismissal, one filed by Defendant Friendly's Ice Cream, LLC and one by Defendant TICC, Inc., seeking t o dismiss: (1) Plaintiffs' claim s against independently owned franchisees not na med as defendants; (2) Plaintiffs' allegations of a joint employment relationship among Defendants and the owners of other Friendly's restaurants nationwi de; and (3) Plaintiffs' FLSA claim s and requests for inj unctive relief against TICC . For the reasons stated herein, the motions will be denied.
I. Background
"As a general matter, a district court ruling on a motion t o dismiss may not consider matters extraneous to the pleadings." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). Thus, for the purposes of t he motions sub judice, the court onl y considers the allega tions contained in the co mplaint (Doc. 25), and will accept as true all we ll-pleaded factual allegations containe d therein. See Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts, Inc., 140 F.3d 478, 483 (3d Cir. 1998) (citing Warth v. Seldin, 422 U.S. 490, 501 (1975)).
A. Facts
Plaintiffs Tisha Reed ("Reed"), Nata sha Walker ("Walker"), and Kay lee Metz ("Metz" and, collectivel y with Reed and Walker, "Plaintiffs") were, at all relevant times, employed as servers at Friendly's® restaurants owned by Defendant Friendly's Ice Cream, LLC ("FIC") and Defendant TICC, Inc. ("TICC"). (Doc. 25, ¶¶ 9-11.) FIC is headquartered in Massachusetts, but operates more than 300 Friendly's restaurants throughout fourteen states stretching from Maine to Florida, including approxi mately sixty restaurants in Pennsylvania. (Id. at ¶ 14.) Roughly half of t he Friendly's restaurants are owned by FIC, and the other half are owned by franchisees. ( Id.) TICC has its headquarters in Pennsylvania and i s the largest franchi see of Friendly's restaurants in the Commonwealth with six restaurants. ( Id. at ¶ 15.) Reed and Walker were employed at a Friendly's restaurant in Gettysburg, Pennsylva nia owned by FIC, while Metz worked at a Friendly's restaurant in Lancaster, Pennsylvania owned by TICC before moving to the Gettysburg location. (Id.)
As alleged in the complaint, FIC required servers at Friendly's restaurants to perform work tasks "off-the-clock," bo th during unpaid meal breaks and after clocking out at the end of shifts. (Id. at ¶ 12.) Servers also regularly worked m ore than forty hours per week, but were not paid overtime. In additi on, although Plaintiffs were paid at the tipped m inimum wage of $2.83 per hour, they spent more than twenty percent of their tim e at work on non-ti pped work such as cleaning and restocking, for which they should have been paid the non-tipped minimum wage of $7.25 per hour. (Id.)
Plaintiffs allege that FIC oversaw the day-to-day operations of all Friendly's restaurants, created and enforced all policies related to employees' wages and work tasks, and in fact operated as a joint em ployer and integrated enterprise with its franchisees due to its level of oversight of and involvem ent with each restaurant. (Id. at ¶¶ 16-20, 33.) FIC's website de scribes extensive "on-going operations support" of its franchisees, which includes "quality assurance visits, marketing and advertising services and m any others." (Id. at ¶ 22 (citing http://www.friendlys.com/about-friendlys/franchising (last visited May 28, 2015) ). Plaintiffs further allege that these em ployment policies as well as the publicly-stated goals for customer experience and satis faction at all Friendly's restaurants are identical among restaurants owned by FIC and re staurants owned by franchisees. ( Id. at ¶¶ 34-37.)
B. Procedural History
Former plaintiff Lacey Zartman initiated this action on February 11, 2015 by filing a class and collective action com plaint against FIC. (Doc. 1.) Ms. Zartman, however, was bound by a mandatory arbitr ation agreement she had si gned with FIC which prevented her from instituting litigation against FIC. In lieu of filing a motion to dismiss, FIC consented to an amended co mplaint, which was filed on June 1, 2015, namin g Reed and Walker as Plaintiffs and removing Ms. Zart man. (Doc. 13.) On July 1, 2015, FIC filed a partial motion to dismiss on the basis that Reed and Walker lacked standing to purs ue claims against Friendly's restauran ts owned by franchisees. (See Doc. 19.)
After the court granted an extension of time (Doc. 24), Plaint iffs responded to the m otion to dismiss by filing a second amended com plaint on August 28, 2015, which added Plaintiff Metz and Defendant TICC, and incl uded joint employment allegations regarding FIC, TICC, and all other Friendly's franchisees (see Doc. 25). The court granted extensions of time to respond for each Defendant (Docs. 28 & 33), and on Sept ember 25, 2015, FIC filed another partial motion to dismiss, arguing tha t Plaintiffs do not have standing t o pursue claim s against unnamed franchisees and that Plaintiffs ha ve not met their pleading burden with regard to the joint employment allegations in the second amended complaint. (See Doc. 34.)
On October 19, 2015, the court granted a request to stay the case pending mediation. (Doc. 40.) Mediation prove d unsuccessful, however, and on February 4, 2016, t he court ordered the stay li fted and set the briefing schedul e on FIC 's outstanding motion to dism iss. (Doc. 48.) The February 4, 2016 order also imposed a March 2, 2016 deadline for TI CC to respond to the second am ended complaint and placed the expiration of t he limitations period running on putative class and collective action claims on the same date. (Id.)
On March 2, 2016, TICC filed its own partial motion to dismiss the second amended complaint (Doc. 55) and a brie f in support thereof (Doc. 56), whil e Plaintiffs filed their opposition to FIC 's motion to di smiss (Doc. 57). FIC submitted its reply to Plaintiffs' oppos ition on March 16, 2016. (Doc. 59.) On March 21, 2016, Plaintiffs filed their opposition to TICC's motion to dismiss (Doc. 60), and TICC replied on March 31, 2016 (Doc. 67).
Thus, both motions to dism iss have b een fully briefed and are ripe for disposition.
II. Legal Standard
A. Motions to Dismiss - 12(b)(1) and (6) Standards
Defendants each seek dismissal of certain claims pursuant to Federal Rule of Civil Procedure 12(b)(1). A motion t o dismiss pursuant to Rule 12(b)(1) asserts a lack of subject m atter jurisdiction over t he complaint in the ab sence of standing. See Fed. R. Civ. P. 12(b)(1); see also Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007). The standing analysi s focuses on whether the "plai ntiff is the proper party to bring th[e] suit." Raines v. Byrd, 521 U.S. 811, 818 (1997). A motion attacking standing may be brought either as a challenge to standing in fact or as a facial challenge specific to the allegations in the complaint. See Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). "In reviewing a facial challenge under Rule 12(b)(1), the standards relevant to Rule 12(b)(6) apply." Samsung Elecs. Co. v. ON Semiconductor Corp., 541 F. Supp. 2d 645, 648 (D. Del. 2008).
Rule 12(b)(6), which governs Defendant s' argument that Plaintiffs' joint employment allegations should be dismissed for failure to state a claim upon which relief can be granted, incorporates the requirement of Fede ral Rule of C ivil Procedure 8 that a co mplaint set forth "a short and plain statement of the claim showing that the pleader is entitled to relie f." Fed. R. Civ. P. 8(a)(2). For a complaint to survive dism issal it "must contain sufficient factual matter, accepted as true, to 'state a cl aim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citi ng Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007)). Thus, the court must "accept all factual allegations as tr ue, construe the complaint in the light m ost favorable to the plai ntiff, and determ ine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." United States v. Pennsylvania, 110 F. Supp. 3d 544, 5 48 (M.D. Pa. 2015) (quoting Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3 d Cir. 2012)); see also Fed. R. Civ. P. 12(b)(6).
III. Discussion
In their second amended com plaint, Plaintiffs bring put ative class and collective action clai ms against FIC and TICC for violations of the FLSA, the Pennsylvania Minimum Wage Act ("MW A"), and the Pennsylvania Wage Payment and Collection Law ( "WPCL") for the employment practices described supra, and state thei r intent to add other franchisees of FIC as defendants after certification of the class. In its m otion to dismiss, FIC argues th at Plaintiffs lack standing to pursue claims against franchisees other than TICC, and that Plaintiffs have failed to allege sufficient facts to support a joint em ployment relationship between FIC and its franchisees. ( See Doc. 35.) TICC argues in its m otion that Plaintiff Metz's cl aims for equitable and injunctive relief should be dism issed because those forms of relief are not available under any of the labor laws listed in the second amended complaint, or, alterna tively, because Met z lacks standing to bring such claims as a former employee a nd, further, because Metz's FLSA claim is time-barred. (See Doc. 56.) Because FIC and TICC have m oved to dism iss different claims and for different reasons , the court will address each motion and the arguments contained therein separately.
A. FIC's Motion to Dismiss
FIC first argues that Plaintiffs lack standing t o pursue claims against both FIC and the unna med Friendly's fra nchisees because n either FIC nor those franchisees ever em ployed Plaintiffs. Pl aintiffs argue in response that FIC's motion to dismiss conflates standing with issues of class certification and contains premature arguments regarding issues of comm onality and typic ality among potential class plaintiffs who worked at other restaurants owned by FIC and unnamed franchisees. ( See Doc. 57, pp. 6-7 of 17.) The court agrees with Plaintiffs.
Plaintiffs have standing if t hey allege in a co mplaint that they suffered an injury in fact that is traceable to cond uct of the defendant and is li kely to be redressed by a favorable de cision from the court. See Lujan, 504 U.S. at 560. Here, Plaintiffs have alleged that Reed and Walker were injured by being paid less than required by the FLSA, MWA and WPCL. Plaintiffs further allege that FIC was the party responsible for both paying Reed and Walker for their work and for establishing the policies used by its franc hisees that allegedly violate t he FLSA, MWA and WPCL. Finally, Plaintiffs' injuri es would clearly be redressed with a monetary award from the court for th eir underpayment. Thus, for pleading purposes, Plaintiffs have established that they have standing against FIC and TICC, respectively, to pursue their clai ms. FIC's motion to dism iss the class and collective action clai ms is t herefore a premature motion to strike the clas s allegations. "District courts within th e Third Circuit typi cally conclude that motions to strike class action allegatio ns filed before plaintiffs m ove for class certification are premature." Goode v. LexisNexis Risk & Info. Analytics Grp., Inc., 284 F.R.D. 238, 244 (E.D. Pa. 2012); see also Korman v. Walking Co., 503 F. Supp. 2d 755, 762 (E.D. Pa. 2007) ("Several district courts have held that . . . motions to strike class allegations are pr emature and that the proper a venue is to oppose the plaintiff' s motion for class cer tification.") (citations om itted). Only "[i]n rare cases where it is clear from the complaint itself that the requirements for maintaining a class action cannot be met" will the court "strike the class allegations before a m otion for class certification is filed." NBL Flooring, Inc. v. Trumball Ins. Co., Civ. No. 10-cv-4398, 2011 WL 4481 918, *1 (E.D. Pa. Sept. 27, 2011). This case is not one of those rare situations where dismissal of the class allegations is appropriate before the class certification stage.
Here, Plaintiffs have established sta nding against FIC and have alleged that the same illegal em ployment practices to ok place at two separate Friendly's restaurants. Plaintiffs have further alle ged that FIC maintains the same policies at all of the restaurants it owns and opera tes, and, through a joint em ployment relationship with its franchisees, enforces the same policies at restaurants owned by franchisees. On the face of the complaint, Plaintiffs have met the requirement s for maintaining a class action. FIC's reque st for dismissal of the class action and collective claims based on the fact that Plaintiffs only worked at a single FIC-owned restaurant, therefore, hinges on its argument that Plaintiffs have not sufficiently alleged facts to support a fi nding of a joint em ployment relationship among FIC and its franchisees.
"A 'single individual may stand in th e relation of an em ployee to two or more employers at the same time under the [FLSA].'" In re Enterprise Rent-A-Car Wage & Hour Emp't Practices Litig., 683 F.3d 462, 467 (3d Cir. 2012) (quoting 29 C.F.R. § 791.2(a)). "A determ ination as to whether a defendant is a joint employer 'must be based on a consideration of the total employment situation and the economic realities of the work relationship.'" Id. at 469 (quoting Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470-71 (9th Cir. 1983)). "In order to determine whether a defendant is a 'joint employer' under the FLSA, a court must apply the multi-factor Enterprise test." Richardson v. Bezar, Civ. No. 15-cv-0772, 2015 WL 5783685, *1 (E .D. Pa. Oct. 5, 2015) (citing Enterprise, 683 F.3d at 468-69). The factors to be considered under the Enterprise test include whether the alleged em ployer had: (1) aut hority to hire and fi re the relevant employees; (2) authority t o promulgate work rul es and assignm ents and to set conditions of em ployment such as compen sation, benefits, and work hours; (3) involvement in day-to-day employee supe rvision, including discipline; and (4) control of employee records, including payroll, insurance, and taxes. Id. at 469.
Here, Plaintiffs have alleged in the complaint that FIC was actively engaged in the day-to-day operation of all Frien dly's restaurants, including restaurants it owned as well as those owned by franchisees. (Doc. 25, ¶ 19.) Plaintiffs further allege that FIC set the polic ies for all Friendly's restau rants, "including policies relating to hiring, training, hours of work, overtim e, timekeeping and compensation." (Id. at ¶ 28.) Plaintiffs also alle ge that FIC provides "on-goi ng operations support" to franchisees th rough "an assigned Fra nchise Business Consultant," has the authority to hire and fire em ployees, inspect and supervi se their work through quality assurance visits, and uses the same payroll system at all restaurants. (Id. at ¶¶ 20, 22, 26, 32.) At least at the pleading stage, the court is satisfied that Plaintiffs have sufficie ntly alleged facts to support a joint employment relationship bet ween FIC and its franchisees. See Olvera v. Bareburger Group LLC, 73 F. Supp. 3d 201, 207 (S.D.N.Y 2014) (holding tha t plaintiffs' pleaded facts, including that fra nchisor set hiring, training, timekeeping and payroll policies, were enough at the pleading stage to allege a joint employment relationship between franchisor and franchisee).
Accordingly, the court will not dismiss Plaintiffs' class and collective action claims or strike any of their joint employment allegations, and will deny FIC's motion in its entirety.
B. TICC's Motion to Dismiss
TICC's motion seeks to dism iss certain claims in the co mplaint alleged by Metz, who was the o nly Plaintiff to work for TICC. In its motion, TICC argues that equitable and injunctive relief are not available to private citizens under the FLSA, MWA, and WPCL, and, in the altern ative, those forms of relief shoul d be dismissed because Metz lacks standing to pursue them as a former employee. (See Doc. 56, p. 1.) TICC also argues t hat Metz's FLSA claim is time-barred by the two-year statute of limitations and Metz has not sufficiently alleged the willfulness required for t he three-year lim itations period to apply. ( Id.) Metz argues in response that equitable and injunctive relief are available under the MWA and WPCL, and that she has proper ly alleged, at this sta ge of the litigation, that TICC willfully violated the FLSA. ( See Doc. 60, pp. 1-2.) The court will address TICC's arguments in turn.
1. Private Actions for Injunctive Relief Under Pennsylvania Wage Laws
As an initial matter, Metz concedes in her opposition to TICC's m otion to dismiss that equitable and injunctive relief are not available to her under the FLSA, and she has withdrawn her request for su ch relief in connection with her FLSA claim. (Doc. 7, p. 7); see also Balgowan v. N.J., Dep't of Transp., 115 F.3d 214, 218 (3d Cir. 1997) ("Only the Secretary of Labor m ay initiate an action for injunctive relief under the FLSA.") (citi ng 29 U.S.C. § 211(a)). Metz disagrees, however, with TICC's assertion that priv ate actions for equitable and injunctive relief are not available under the MWA a nd WPCL. In support of its argument, TICC points to the fact that, as with th e FLSA at the fed eral level, it is the Pennsylvania Labor Secretary that has th e right to enforce Pennsylva nia's wage laws. See 43 Pa. Con. Stat. Ann. § 333.109 ("The Secretary shall enforce the [Minimum Wage] Act.") TICC further argues that, as with the FLSA, the MW A and WPCL do not include references to equitable or injunctive relief and such omission from these statutes - while including provi sions for equitable and injunctive relief in other sections of Title 43 - suggests that the Pennsylvania General Assembly intended not to authorize such forms of relief in private actions brought pursuant to the MWA or WPCL. (Doc. 56, p. 5.)
While TICC's statutory argument is somewhat persuasive, and TICC is correct that neither the MWA nor the WP CL expressly provide for equitable or injunctive relief, see 43 Pa. Cons. Stat. §§ 260. 9a, 333.113, neither do those statutes proscribe those form s of relief. Indeed, the c ourt is unaware of any case holding that private actions for equitabl e or inj unctive relief under the MWA or WPCL may not be maintained. To the contrary, several cases have allowed claims for injunctive relief under those statutes to proceed. See Felix De Asencio v. Tyson Foods, Inc., 130 F. Supp. 2d 660 (E .D. Pa. 2001) (granting judicial facilitation of opt-in notices in a collective action s eeking injunctive relief under the WPCL); Feret v. Corestates Fin. Corp., Civ. No. 97-cv-6759, 1998 WL 512933 (E.D. Pa. Aug. 18, 1998) (certifying a class of employees seeking, inter alia, injunctive relief pursuant to the WPCL); Borcky v. Liberty Travel, Inc., Civ. No. 95-cv-7834, 2002 WL 34100669 (Pa. C.C.P. June 20, 2002) (sam e). In light of the statutes' silence as to equitable and injunctive relief and the holdings in the above cases, the court is in no position to declare that private actions for equitable or injunctive relief under the MWA or WPCL are prohibited.
Nonetheless, TICC argues that, even if a private action may be brought under the MWA and WPCL for equitable or injunctive relief, Metz lacks standi ng to pursue the same against TICC as a former employee. (Doc. 56, p. 6.) In support thereof, TICC points to several courts, in cluding the United States Supreme Court, which have stated that "plaintiffs no longer em ployed by [t he employer] lack standing to seek injunctive or declaratory relief against its employment practices." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 364 (2011); see also Arizonans for Official English v. Arizona, 520 U.S. 43, 67 (1997) (stati ng that former employee "lacked a still vital claim for prospective relief."). Because Metz stopped working for TICC in 2013, TICC argues that she lack s standing to seek injunctive relief. (Doc. 25, ¶ 11.) However, Metz left her employment at a TICC-owned Friendly's restaurant to then work at the same FIC -owned Friendly's restaurant as Reed and Walker. The complaint alleges that Metz began her employment at the FIC-owned restaurant in 2013 a nd continues to work there at present. ( Id.) As discussed above with regard to FIC's motion to dismiss, at this early stage of the litigation, the court finds that Plaintiffs have sufficiently alleged a joint em ployment relationship between FIC and TICC, thus making Metz an employee, for purposes of her claims, of both FIC and TICC. Accordingly, the court will deny TICC's motion to dism iss Plaintiffs' claim s for equitable and inju nctive relief under t he MWA and WPCL.
Rather than arguing that no jo int employment relationship exists between itself and FIC, TICC chose to reserve its right to address that argument later in this litigation. (See Doc. 56, p. 3 n.1.)
2. Applicable Statute of Limitations for FLSA Claims
TICC's final argument is that Metz's FLSA claims are time-barred because she became a part o f the instant litigation more than two years after h er claims accrued and it is the two-year, rather than three-year, limitations period that applies to her FLSA claims. (See id., pp. 8-11.) Metz argues in response that the three- year limitations period applies to her cl aims because Plainti ffs have sufficiently alleged that Defendants' FL SA violations were willful , and the determ ination of whether conduct was willful is a question to be resolved by the fact-finder. (Doc. 60, pp. 3-5.)
A two-year statute of limitations applies to ordinary violations of the FLSA, but the limitations period is extended to three years for willful violations. See 29 U.S.C. § 255(a). For the three-year lim itations period to apply to a claim, a plaintiff must allege, at the pleading st age, that "the em ployer either knew or showed reckless disregard for t he matter of whether its conduct was prohibited by statute." McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988) (citing Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 128 (1985)). In the joint employment context, which Plaintiffs have alleged applies to their claims, "all joint employers are responsible, bot h individually and jointly, for compliance with all the applicable provisions of the [FLSA]." 29 C.F.R. § 791.2(a). In this setting, the willful misconduct of one joint em ployer is frequently imputed to its co-joint employers. See, e.g., Chao v. A-One Med. Servs., Inc., 346 F.3d 908, 918 (9th Cir. 2003) (holding both joint employers jointly and severally liable for damages based on "a will ful violation" under 29 U.S.C. § 255(a)); Wandrey v. CJ Professional Satellites, Inc., Civ. No. 14-cv-5087, 2014 WL 4425799, *4 (W.D. Ark. Sept. 9, 2014) (allowing claim for willful violation of FLSA to survive m otion to dismiss and stating that "[b]ecause they are allege d to be joint em ployers and part of an enterprise, all Defendants are alleged to have comm itted the violations [plaintiff] pleads.").
Here, TICC argues that Metz has not alleged that it acted willfully in violation of the FLSA, but instead allege s that FIC set and enforc ed all of the violative policies. (Doc. 56, pp. 10-11.) As with its argument that Metz lack s standing as a former em ployee to s eek injunctive relief, TICC's argument regarding willfulness fails because Plain tiffs have successfully pleaded that FIC and TICC are joint em ployers under the FLS A. Plaintiffs have pleaded sufficient facts to support a finding tha t FIC willf ully violated the FLSA, and as a joint employer, TICC is jointly and severally liable for FIC's violations. Thus, the court finds that Plaintiffs have alleg ed a plau sible claim that FIC and TICC willfully violated the FLSA. Moreover, whether De fendants acted willfully is a question of fact that is typically inappropriate for summary judgment, much less at the motion to dismiss stage. See Pierce v. Dolgencorp, Inc., Civ. No. 09-cv-0079, 2011 WL 398366, *13 (M.D. Pa. Fe b. 3, 2011) (c iting Pignataro v. Port Auth. of N.Y. & N.J., 593 F.3d 265, 273 (3d Cir. 2010)). Accordi ngly, TICC's motion to dismiss Metz's claims as time-barred will be denied.
IV. Conclusion
For the reasons stated herein, the court finds that Plaintiffs have sufficie ntly alleged, at this early st age of the litigation, putativ e class and collective action claims for violations of the FLSA, MW A, and WPCL against Defendants. The court also finds that Plaintiffs have ad equately alleged that Defendants are join t employers and that they willfully violated the FLSA. Accordingly, both m otions to dismiss will be denied in their entirety.
An appropriate order will issue.
s/Sylvia H. Rambo
United States District Judge Dated: May 11, 2016