McDonald v. H & M Hennes & Mauritz, L.P.

Background

Terrill McDonald and Mariel Baez sued H&M Fashion USA Inc. individually and on behalf of proposed groups of workers. They alleged that H&M paid retail workers every two weeks rather than weekly, violating the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). They also alleged that H&M's scheduling practices violated New York City's Fair Workweek Law (FWW).

McDonald worked for H&M in New York City during two periods, ending in October 2023. Baez worked for H&M through September 2023. The complaint alleged that both spent more than 25 percent of their shifts performing physical tasks and that H&M paid them biweekly.

FLSA Claim

The plaintiffs argued that H&M's violation of the NYLL's weekly-pay requirement for manual workers also violated the FLSA's requirement for prompt payment of wages. The court rejected that theory. It explained that a state-law violation does not automatically establish an FLSA violation and that FLSA prompt-payment claims must be evaluated using objective standards, such as an unreasonable delay, the absence of a legitimate business purpose, or an effort to avoid minimum-wage or overtime obligations.

The court concluded that the plaintiffs alleged no facts beyond H&M's failure to follow New York's weekly-pay rule. It therefore held that the allegations were insufficient to state an FLSA claim. The court granted H&M's motion to dismiss the FLSA claim with prejudice, concluding that further amendment would be futile.

FLSA Collective-Certification Motion

While H&M's dismissal motion was pending, the plaintiffs moved under 29 U.S.C. § 216(b) for preliminary certification of an FLSA collective, court-authorized notice, and expedited discovery. Because the court dismissed the FLSA claim, it denied that motion as moot.

Jurisdiction Over the State Claims

After dismissing the FLSA claim, the court concluded that it no longer had supplemental jurisdiction—authority to hear related state-law claims based on a federal claim—over the NYLL and FWW claims. The plaintiffs also relied on the Class Action Fairness Act (CAFA), which can provide federal jurisdiction over qualifying class actions.

H&M argued that CAFA's home-state exception required the court to decline jurisdiction. That exception applies when at least two-thirds of proposed class members and the primary defendant are citizens of the state where the action was filed. The parties disputed H&M's principal place of business. The plaintiffs pointed to records identifying a New Jersey office, while H&M argued that its headquarters in Manhattan was its corporate center and submitted evidence concerning senior personnel working there.

The court found that the record did not adequately explain the role of the New Jersey office or establish H&M's principal place of business. It ordered limited jurisdictional discovery on that issue and on whether the home-state exception applies. The plaintiffs may also request data related to the residence of proposed class members to test H&M's submitted analysis.

The court denied without prejudice H&M's motion to dismiss for lack of subject-matter jurisdiction, allowing H&M to renew that motion after jurisdictional discovery. The court deferred ruling on H&M's motion to dismiss the NYLL and FWW claims on their merits until it determines whether federal jurisdiction exists. H&M may renew its motion concerning the merits of the FWW claims together with any renewed jurisdictional motion.

Disposition

The court granted in part and denied in part H&M's motion to dismiss. The FLSA claim was dismissed with prejudice. The motion to dismiss the remaining claims was denied without prejudice to renewal after jurisdictional discovery. The plaintiffs' motion to certify an FLSA collective was denied as moot. The court also scheduled an initial pretrial conference to address the discovery schedule.