Acharya v. 7-Eleven, Inc.

Background

Devendra Raj Acharya sued 7-Eleven, Inc. and Jimmy K. Solanki individually and on behalf of a proposed group of similarly situated current and former employees. He alleged violations of the Fair Labor Standards Act (FLSA), the New York Labor Law (NYLL), and a claim based on the value of work performed. Acharya alleged that he worked at a 7-Eleven convenience store owned by Solanki, a 7-Eleven franchisee, from July 24, 2015, through June 29, 2017. He alleged that he regularly worked overnight shifts, five to seven days per week, and was not paid for 2,443 hours of overtime and 120 additional hours that should have been paid at his regular rate.

7-Eleven moved to dismiss the First Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a claim for relief. 7-Eleven argued that Acharya had not plausibly alleged that the franchisor was his joint employer with Solanki. 7-Eleven also made an alternative motion under Rule 12(f) to strike the proposed class and collective-action allegations or other material from the pleading.

Court’s analysis

The court explained that both the FLSA and NYLL generally use an employer test focused on the economic reality of the relationship. The relevant considerations include formal control—such as the power to hire and fire, control over schedules and working conditions, setting pay, and maintaining employment records—and functional control, including supervision, use of premises and equipment, and whether the work is integral to the alleged employer’s business.

The court held that the First Amended Complaint did not allege enough specific facts to show that 7-Eleven exercised the required formal or functional control over Acharya. The complaint alleged that 7-Eleven created management and operating policies, required certain clothing, collected work hours, provided a time-recording system, inquired about Acharya’s activities, and had systems that could monitor him. But it did not allege who made Acharya’s job offer, that 7-Eleven had hiring or firing authority, or that 7-Eleven controlled his schedule, working conditions, hours, or pay. The court concluded that the allegations were too general and unsupported to establish 7-Eleven as an employer under either the FLSA or NYLL.

Disposition

Judge Paul A. Crotty granted 7-Eleven’s Rule 12(b)(6) motion to dismiss the First Amended Complaint, with leave for Acharya to amend. Because the court granted the dismissal motion, it declined to consider 7-Eleven’s alternative Rule 12(f) motion. The court noted that the First Amended Complaint appeared to provide little support for the proposed class and collective-action claims. The order directed Acharya and Solanki to submit a Second Amended Civil Case Management Plan and directed the Clerk to close the motion at Docket 21.