Robbins v. Candy Digital, Inc.

Background

Charles Robbins was Candy Digital’s Vice President of Engineering. He alleged that, after adopting his deceased sister’s six-year-old biological daughter, he told Candy Digital’s chief executive officer on or about May 12, 2022, that he intended to take 12 weeks of parental leave later that year under the Family and Medical Leave Act (FMLA). Candy Digital initially denied the request because Robbins had not yet worked there for one year. Robbins alleged that he explained he planned to take leave no earlier than November 2, 2022, when he would have become eligible, but that the Candy Defendants did not tell him about his future FMLA eligibility or benefits available under Candy Digital’s employee handbook.

Robbins alleged that Candy Digital terminated him in July 2022, about two months after his notice of intent to take leave. He also alleged that company leaders expressed hostility toward employees with families and that three other engineering-team members who were parents of young children were terminated around the same time. He claimed that Fanatics Holdings, Inc. and Fanatics, LLC approved the termination and exercised control over Candy Digital’s employment matters.

Earlier State Proceedings

Robbins previously filed a complaint with the New York State Division of Human Rights alleging discrimination and retaliation based on familial or caregiver status and his planned parental leave. The agency found no probable cause and concluded that Robbins had not connected his family status or alleged protected activity to the challenged actions. It also found that the Candy Defendants had given a legitimate, nondiscriminatory reason for his treatment that had not been shown to be a pretext.

Robbins then challenged that determination in a New York Supreme Court proceeding. On January 21, 2025, the state court upheld the agency’s determination and dismissed Robbins’s petition, finding that the investigation was not arbitrary or unlawful and that Robbins had received a full and fair opportunity to present his claims and rebuttals.

Candy Defendants’ Motion

The Candy Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the earlier state proceedings barred both of Robbins’s FMLA claims through collateral estoppel, also called issue preclusion. Issue preclusion prevents a party from relitigating an issue that was actually and necessarily decided in an earlier proceeding when that party had a full and fair opportunity to litigate it.

Judge Liman held that the court could consider the public records from the state proceedings without converting the motion into a motion for summary judgment. He also held that the Candy Defendants could raise the failure-to-state-a-claim defense through the current motion even though they had not raised collateral estoppel in their earlier motion. The court explained that, after the pleadings closed, the motion could be treated as a motion for judgment on the pleadings, which uses the same standard.

The court concluded that issue preclusion barred Robbins’s FMLA retaliation claim. The state proceedings necessarily decided that Robbins was not terminated because of his family status or his request for parental leave. Although the state proceedings did not expressly decide an FMLA claim, issue preclusion depends on whether the same decisive issue was resolved, not whether the earlier and later claims had identical legal labels. The court also rejected Robbins’s arguments that he lacked a full and fair opportunity to litigate or that the state proceedings violated due process. The state court’s review of the agency determination supplied the required procedural protections.

The court reached a different conclusion regarding FMLA interference. That claim was based on the alleged denial of leave and failure to inform Robbins about his future eligibility. Neither the agency nor the New York Supreme Court decided whether Robbins was entitled to FMLA leave when he planned to take it, whether his request was protected, or whether the defendants interfered with his FMLA rights. The earlier proceedings therefore did not preclude the interference claim.

Fanatics Defendants’ Motion

The Fanatics Defendants argued that Robbins had not adequately alleged that they were his employer under the FMLA. Judge Liman applied the single-integrated-enterprise theory, under which closely affiliated entities may be treated as one employer when their operations, labor relations, management, and ownership are sufficiently connected.

The court found Robbins’s allegations sufficient at the pleading stage. He alleged that Fanatics’s chief technology officer conducted his final interview and had to approve his hiring; Fanatics reviewed and changed Candy Digital’s employment policies; Fanatics executives supervised Candy Digital employees on joint projects; Fanatics controlled the appointment of Candy Digital board members and its board chair; and Fanatics Holdings owned a controlling stake in Candy Digital. These allegations plausibly showed centralized control over labor relations, interrelated operations, common management, and common ownership. Whether the companies were sufficiently integrated was generally a factual question not suitable for resolution on a motion to dismiss.

Disposition

The court granted in part and denied in part the Candy Defendants’ motion to dismiss. The ruling bars Robbins’s FMLA retaliation claim against those defendants but leaves his FMLA interference claim unaffected by collateral estoppel. The court denied the Fanatics Defendants’ motion to dismiss. The opinion does not separately restate the claim-by-claim dismissal language in the final conclusion, but its discussion identifies retaliation as precluded and interference as not precluded.