Perez Perez v. Escobar Construction, Inc.

Background

Marco Antonio Perez Perez and Jose Eduardo Sanchez Arias brought a proposed collective and class action against Escobar Construction, Inc., Nations Construction, Inc., JRS Services, LLC, and Jhony Aris Escobar, Elias Osmin Alvarez Palacios, and Jenny Carolina Alvarez. They alleged violations of the Fair Labor Standards Act (FLSA), the federal wage-and-hour law, and the New York Labor Law. Their claims included unpaid overtime, unpaid workdays, inadequate wage and hour records, and missing wage notices and pay information.

The defendants moved to dismiss the Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(2) and Rule 12(b)(6). A Rule 12(b)(6) motion tests whether a complaint alleges enough facts to state a legally plausible claim. The plaintiffs also objected to Magistrate Judge Gorenstein’s denial of their request to file a Third Amended Complaint adding six plaintiffs and related state-law allegations.

Objection to Amendment

Judge Gorenstein had denied leave to amend because the plaintiffs did not show good cause to modify the scheduling order under Rule 16 and, alternatively, because their request was unduly delayed under Rule 15. Judge Swain reviewed the objection for clear error because the denial rested on procedural grounds rather than a decision about the proposed claims’ merits.

The court found no clear error. The plaintiffs had not explained why they could not add the proposed plaintiffs before the amendment deadline. The court also agreed that the proposed amendment came after discovery had closed and could require reopening discovery, particularly because the proposed new plaintiffs had not been deposed. Judge Swain therefore overruled the objection. The court stated that this denial was without prejudice to the six additional plaintiffs’ ability to assert their claims separately.

Motion to Dismiss

The court held that a plaintiff must plausibly allege that a defendant was an employer under both the FLSA and the New York Labor Law. It applied the economic-reality test, which examines the total circumstances of the alleged work relationship. The court focused on four forms of formal control: the power to hire and fire, supervision of schedules or working conditions, control over pay, and maintenance of employment records.

As to Mr. Escobar, the complaint included factual allegations that he hired and fired the plaintiffs and set their pay. But the court found those allegations insufficient because the remaining allegations did not plausibly show that he controlled the plaintiffs’ schedules or maintained their employment records. The court declined to rely on boilerplate statements merely repeating the four factors.

As to Mr. Palacios, the complaint included nonconclusory allegations mainly concerning paychecks and payment calculations. The court found the other allegations either contradicted one another or merely repeated the legal factors without factual support. It therefore found no plausible allegation that Mr. Palacios was the plaintiffs’ employer.

As to Ms. Alvarez, the court found no specific facts showing that she employed the plaintiffs. Allegations that she hired a supervisor, signed paychecks, received payments, paid workers, or controlled work conditions were too general to establish an employment relationship with these plaintiffs.

The court also rejected the claims against the Corporate Defendants. Although the plaintiffs alleged common ownership, shared staff, and other connections among the companies, the court held that those allegations did not plausibly show that any company controlled the plaintiffs as employees. The court did not analyze additional factors concerning functional control because the parties had not presented arguments or factual allegations addressing them.

Disposition

Because the plaintiffs failed to plead the threshold employer relationship required by both statutes, the court granted the Motion to Dismiss. It did not reach the defendants’ other dismissal arguments. Judge Swain also overruled the Objection to Judge Gorenstein’s order. The Clerk was directed to enter judgment dismissing the Second Amended Complaint and close the case.