Gromina v. Forexonia, LLC

Background

Elina Gromina sued Alex Kazmarck, Forexonia, LLC, and Kazmarck Capital, LLC, under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). The court had entered a default judgment against the two limited liability companies on January 9, 2024, after they failed to retain counsel. Alex Kazmarck was the only remaining defendant.

Gromina alleged that she was hired in October 2019 as a trader or project manager for Forexonia and Kazmarck Capital. She alleged that the companies operated or did business in New York and that Kazmarck controlled and managed them, including their personnel and employee decisions. She claimed that she worked six days a week, generally from 7:30 a.m. until 6:00 p.m. or later, sometimes until 10:00 or 11:00 p.m. She alleged that she worked until April 2020, was paid only four times, received a total of $2,640, and was never paid an overtime rate.

Gromina also alleged that she did not receive information about her pay rate or accurate wage statements. After she complained to Kazmarck about the infrequency and inadequacy of her pay, she alleged that she was fired. She further alleged that Kazmarck threatened her immigration status and temporarily withheld her passport and immigration-related documents.

Kazmarck’s Motion

Kazmarck moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction, Rule 12(b)(2) for lack of personal jurisdiction, and Rule 12(b)(6) for failure to state a claim. He argued that the relationship was an informal, noncommercial arrangement rather than an employment relationship, and argued that Gromina had not alleged enough control by him to make him an employer under the FLSA or NYLL. He also argued that diversity jurisdiction was lacking, although Gromina relied on federal-question jurisdiction rather than diversity jurisdiction.

Subject-Matter Jurisdiction

The court denied the Rule 12(b)(1) challenge. It explained that whether a worker qualifies as an employee under the FLSA is generally a merits question, not a jurisdictional requirement. The relevant definitions of “employer,” “employee,” and “employ” appear in the statute’s definitions section rather than in a provision governing the court’s jurisdiction.

Because Gromina alleged that she suffered FLSA violations by Kazmarck, who oversaw personnel at the two companies, the complaint adequately raised a federal question for jurisdictional purposes. The court therefore also had supplemental jurisdiction—authority to hear related state-law claims—over Gromina’s NYLL claims. The court rejected the subject-matter-jurisdiction challenge.

Personal Jurisdiction

The court also denied the challenge to personal jurisdiction, meaning Kazmarck’s argument that this court could not adjudicate claims against him. The court did not resolve whether Kazmarck was domiciled in New York when the complaint was filed, which would have supported general jurisdiction. Instead, it found specific jurisdiction based on Kazmarck’s connections to the claims and to New York.

The court found that Kazmarck had resided in New York during the alleged events, managed two companies that conducted business and maintained physical addresses in New York, and managed personnel decisions involving Gromina. Gromina was also alleged to have been a New York resident when she was hired and while she worked for the companies. The court concluded that her wage, notice, and retaliation claims had a sufficient connection to Kazmarck’s New York activities and that exercising jurisdiction was fair and reasonable.

Failure to State a Claim

The court denied the Rule 12(b)(6) challenge. For the FLSA minimum-wage and overtime claims, the court considered whether Gromina plausibly alleged that she was Kazmarck’s employee, that the work involved interstate activity for entities with at least $500,000 in annual gross sales, and that she was not adequately paid. Kazmarck did not dispute the interstate-activity, annual-sales, or inadequate-compensation allegations. His principal argument was that the payments reflected mutual support among friends involved in a shared venture rather than employment compensation.

The court applied the FLSA’s “economic reality” test. That test considers whether the alleged employer had power to hire and fire, supervised work schedules or employment conditions, determined pay, maintained employment records, exercised operational control, and had managerial power. The court found that Gromina’s allegations supported several of these factors, including Kazmarck’s alleged control over personnel decisions, day-to-day operations, pay-related matters, and her termination after she complained about compensation. The court noted that the absence of an allegation that Kazmarck maintained employment records was not decisive.

The court also found that Gromina adequately alleged an employer-employee relationship under the NYLL’s common-law control test. Relevant considerations included her fixed schedule, full-time work, Kazmarck’s direction of personnel matters, and the alleged withholding of her passport and immigration documents as a means of controlling her ability to seek other work or leave the country. The court concluded that the allegations plausibly supported Kazmarck’s status as an employer under both the FLSA and NYLL.

Disposition

The court denied Kazmarck’s motion to dismiss. It directed him to file an answer within fourteen days after the opinion and order. The court closed the motion at docket number 57 and directed the Clerk of Court to mail a copy of the opinion and order to Kazmarck, who was proceeding without a lawyer.