Russo v. Federal Medical Services, Inc.

Background

Alexander Russo alleged that he worked as a janitor beginning in May 2019, first for Ben Fitzgerald Real Estate Services, LLC and later for Federal Medical Services, Inc. He alleged that both companies failed to pay required minimum and overtime wages, provide required meal and rest breaks, and provide itemized wage statements. He also alleged that Abigail Woulfe supervised him at both companies and that Jim Slattery and Jerry Tate owned or led the respective companies.

Russo asserted six causes of action under the California Labor Code, the California Unfair Competition Law, and the federal Fair Labor Standards Act. Federal Medical and Slattery filed one motion to dismiss, and Ben Fitzgerald, Tate, and Woulfe filed another, both under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

California Labor Code claims

The court held that Russo adequately pleaded the California minimum-wage, overtime, meal-and-rest-break, and wage-statement claims against the relevant employer defendants. It also held that Russo adequately alleged individual liability against Slattery and Woulfe under California Labor Code section 558.1. That provision can impose liability on an owner, officer, director, or managing agent who violates or causes violations of specified wage-and-hour laws, but the complaint must allege the person’s personal involvement.

The court found the allegations sufficient as to Slattery and Woulfe because Russo alleged that they had authority over hiring and firing, work schedules and conditions, compensation, and employment records. The court reached a different result as to Tate. Although Russo alleged that Tate was Ben Fitzgerald’s chief executive officer and owner, he did not allege facts connecting Tate personally to the wage-and-hour violations. The section 558.1 claim against Tate was therefore dismissed with leave to amend.

The court rejected the Ben Fitzgerald defendants’ argument that Russo’s claims were time barred. At the motion-to-dismiss stage, dismissal on statute-of-limitations grounds was proper only if the complaint itself established that the claims were unquestionably late. The court found that determining when Russo’s employment with Ben Fitzgerald ended would require an inference against Russo, which the court could not draw at this stage.

The court also rejected the argument that Russo’s collective references to the defendants violated the pleading rules. The allegations grouped defendants who were alleged to have engaged in the same or similar conduct and gave each group fair notice of the claims. The complaint did not make the timing of Russo’s employment entirely clear, but the court said that issue could be developed through discovery and did not prevent the defendants from understanding the claims.

Federal overtime claim

The court held that Russo adequately pleaded an overtime claim under the Fair Labor Standards Act against Federal Medical, Slattery, and Woulfe. The statute defines an employer to include a person acting directly or indirectly in an employer’s interest. The court concluded that the allegations concerning Slattery’s and Woulfe’s control over wage-related decisions plausibly supported individual liability. The motion to dismiss this claim was denied.

Unfair Competition Law claim

Russo’s California Unfair Competition Law claim was based on the alleged labor-law and Fair Labor Standards Act violations. The court held that the claim was adequately pleaded against the defendants other than Tate. The statute-of-limitations and group-pleading arguments failed for the same reasons discussed above. Because the underlying labor-law and federal overtime violations were adequately pleaded against Slattery and Woulfe, the related claim against them was also adequately pleaded. The court dismissed the Unfair Competition Law claim against Tate.

Disposition

The court stated that Russo’s claims against Tate were dismissed with leave to amend. The motions to dismiss were otherwise denied. The court set August 29, 2024, as the deadline for an amended complaint if Russo chose to file one.

Review note

The opinion states that Russo filed the action in state court on October 9, 2024, while the opinion is dated August 9, 2024 and separately refers to an initial complaint filed on October 9, 2023. Those dates appear internally inconsistent, so the filing-date history is unclear.